“It takes time; a lot more time than people were prepared for…”
Speaking about VC-backed farm management software company Conservis, founder Pat Christie hit the nail on the head when we chatted early last year. The Minneapolis-based company, which was founded in 2009 and one of the very first generation of agtech companies, was fast approaching concerning territory for VC investors wondering when an exit might come.
Well, that exit came this week, and it wasn’t a run-of-the-mill acquisition or public listing; the company was acquired by a joint venture between global food and agriculture financial services company Rabobank and Telus Agriculture, the ag arm of the Canadian telecom giant.
Before the acquisition, Conservis had a three-year partnership with Rabo AgriFinance – a Rabobank subsidiary that serves agricultural producers in North America – where the pair sought to enhance the platform’s financial reporting capabilities to make it easier for farmers to apply for loans. The partnership significantly accelerated Conservis’ adoption on the farm, particularly in the last year, as Rabo promoted it to their clients, according to insiders.
The intention of the new joint venture is to combine this work and Rabobank’s relationships across the food value chain with Telus’ growing portfolio of ag technologies. The Canadian business has been executing a roll-up strategy in agtech with acquisitions including Agrian, Decisive Farming, and Farm at Hand, as well as some significant investments such as remote sensing company Hummingbird Tech out of the UK and livestock analytics startup AgriWebb out of Australia.
Unfortunately, the financials of the deal were not disclosed, so it’s hard to determine what return on investment Conservis’ shareholders — which include leading agritech VCs Cultivian Sandbox and Pontifax AgTech — received.
When I put this question to Pontifax partner Phil Erlanger, he said that the “incredible value driver” created by the partnership between Rabobank and Telus enabled Conservis to push the price up to a point where it was “compelling for us” – though of course, that’s the expected response.
Whatever the financial outcome, the complicated transaction that, according to Erlanger, took “a significant amount of time, effort, focus, and commitment,” is an interesting deal – if a little “odd,” according to one veteran agrifoodtech VC I spoke to. But I think it’s a great indicator of what’s needed to ensure the scalable deployment of agtech, particularly farm management solutions.
When I interviewed Christie last January, he was clear that Conservis’ go-to-market strategy had been the company’s biggest challenge over the years.
“I think if we tried to start this company today, I don’t know if we could get the capital or the time to build what we have. I think a lot of agtech capital is hard to raise in serious amounts unless you’re going really big,” he said at the time.
“Generally, venture capital is highly functional capital looking for short-term results. I think because we got early commercial success, we were able to build systemic partnerships with other tech tools. But if I was coming to market with a new technology today, going to market as a standalone product would be very hard, very expensive, and I’m not sure it’s a workable model.”
In essence, what Telus is building, and Rabobank is aligning with, is a full-stack platform for farmers that’s able to meet most if not all of their needs. At the very least, it’s combining agronomic insights with business planning tools that aid interactions with suppliers including ag retailers, banks, and insurers, to create a digitalized and collaborative supply chain that Telus Agriculture has hinted could soon reach downstream to the grocery store and the consumer.
According to a press release announcing the acquisition, the joint venture will “aggregate a farm’s data into a single resource, providing the tools that a farm needs for supply chain validation, agronomic decisions, financial management, resource and inventory management, and more.”
This type of full-stack solution is pretty much essential for digital tools on the farm to succeed, as many have learned the hard way, and is the reason we’ve seen so many partnerships and collaborations emerge over the past few years. In fact, it’s a theme I explored as moderator of a panel about “closing the loop on digital ag to bring a full service offering to the farm” in March at the World AgriTech Summit. The keyword of the session was ‘co-opetition’ and Chris Terris, VP of global strategy at Telus, Kevin Kimm, vice president, commercial, OCP North America, Rob Saik, CEO of AgvisorPro, Ryan Risdal, vice president, product & strategy, Ag Solutions at Proagrica, and Lance Ruppert from Growmark all agreed collaboration is essential.
That Telus is partnering with Rabobank in this way speaks volumes to the hard task of successful digital adoption on the farm.
Nish Majarian, interim president of Telus Agriculture and founder of one its acquired companies, Agrian, told me: “Frankly, in my 18 years of agtech experience, our greatest competitor is not other digital providers; it’s paper and Excel spreadsheets. The more we can have all the partners surrounding the grower, the faster we can move them into a digital environment, streamlining their operations and creating a faster route to scalable, profitable futures for a lot of these businesses.”
And while it might have taken Conservis a long time to get here, and we’re not sure what monetary value the founders and shareholders ultimately got from it, the company should be praised for its staying power up until this point, and for realizing what it would take to be a lasting digital ag company.