**UPDATE: Added comments from Yara International senior vice president, digital farming, Stefan Fürnsinn**
ATC is the maker of Adapt-N, a software tool for agronomists that combines data around soil types and weather with crop modeling and field management to provide farmers with detailed fertilizer prescriptions, to avoid overuse and wastage.
Its Adapt-N and N-Insight products provide nitrogen management solutions in partnership with agricultural retailers, agricultural technology companies, and farmers.
Yara is a Norwegian chemical producer dealing in fertilizers, animal nutrition, and other industrial chemicals along with relevant safety and control services around their use, but its largest product is nitrogen fertilizer. The firm is listed on the Oslo stock exchange and reported kr95.2 billion ($11.7 billion) in revenue for 2016.
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Though the parties have decided not to release a price tag on the deal, Yara International senior vice president for digital farming Stefan Fürnsinn told AgFunderNews that the investment was “significant” but ” strategic.”
“It was not in the range of $1 billion to $550 million, but it was also not $1 million,” he said.
Though ATC is now wholly owned by Yara, the company’s main products will remain under their current names and the team will keep its current location and general responsibilities. The small team has members in New York, the Bay Area, Idaho, and Iowa. ATC will become part of Yara’s digital farming group — a team of roughly 100 within Yara’s 16,000 global employees, according to Fürnsinn.
CEO and ATC cofounder Steve Sibulkin told AgFunderNews that the startup had originally planned to raise one or two additional rounds, but was able to sustain growth based on existing investment and revenue until it hit something of a distribution ceiling within its existing capacity.
“When you’re running a startup, you’re constantly winnowing the opportunities – putting some aside, putting some on the back-burner,” said Sibulkin. “Our distribution was a peephole because we’ve never invested in it. Now the aperture has expanded in a profound way.”
ATC raised a $2.2 million Series A round in 2014 from B2B software VCs Armory Square Ventures and Arthur Ventures, along with New York state-focused VC Cayuga Venture Fund. The acquisition by Yara was finalized on November 1 and announced today.
‘Adapt-N is Superior to Climate Corp’
Yara has been building a suite of digital tools that it distributes to its customers in 160 countries.
This move to acquire relevant digital tools is mirrored by several other multinational agriculture companies’ recent efforts, through acquisition and the allocation of internal resources, to offer customers digital services that complement their core products.
The original of these acquisitions was Monsanto’s 2013 acquisition of The Climate Corporation, with which Fürnsinn says Adapt-N and ATC’s related products are competitive.
“ATC’s Adapt-N is a competing solution with [Climate Corp’s] Field View. That is what we are excited about. There are scientific trials and proof that Adapt-N is superior.” Fürnsinn continued to say that Yara sees potential to grow its digital offerings apart from its fertilizers.
“It doesn’t only have to be linked to physical fertilizer. Three or five years ago this might not have happened but we have higher aspirations for North America now. We will bring the digital solutions to the US,” said Fürnsinn.
Cargill told AgFunderNews this month that it had released the first of a suite of digital tools across its animal nutrition business — Dairy Enteligen — and will announce at least four more before the second half of next year. Cargill will invest in its own proprietary sensing technologies, which could involve acquisitions, or create preferred partnerships, potentially through equity investments.
Multinationals Put Pieces in Place with M&A
Sibulkin said that though many large corporates have been moving toward digital tools over the last few years, there was a palpable uptick in interest in the last seven months.
“I certainly think the opportunities crystallized for the buyers that there is growing momentum and importance of these types of solutions. There are some recent acquisitions, which really highlight the importance of data solutions,” he said.
Most of Yara’s acquisitions over the last 10 years have been fertilizer and chemical companies or mining outfits. The acquisition of ATC along with Yara’s 2013 acquisition of ZIM Plant Technologies, a sensor company that uses the pressure within the leaf to gauge moisture levels (now called Yara Water Solution) and its 2015 acquisition of Eastern-Europe-based farm management platform Agro Office, make up the firm’s digital offering in addition to internally developed tools. These include a tractor-mounted remote-sensing system to adjust nitrogen applications, an app with similar capabilities, and a handheld nitrogen measurement device, among others.
Fürnsinn said that Yara’s R&D team has been developing these sensors for more than 10 years; evidence that the company caught on to precision agriculture earlier than most.
Further Fürnsinn added that despite the recent acquisitions and announcements by other large multinational agriculture firms, there is no sense of pressure to acquire things quickly in light of competition and rising valuations.
“We are not desperate to acquire something. We don’t need to invest $500 million just to have something. We would not do crazy things,” he said.
Perhaps unlike other digital acquisitions by major multinationals, ATC will have hard work ahead in order to update its offering to cater to all of Yara’s 160 markets and varied growers. The four-year-old startup to date has catered specifically to corn growers in North America. Expanding to serve all of Yara’s various markets and new crops, mainly wheat will take additional work up front.
“When we move into a new geography, we need to map the soil to our soil taxonomy. We need to make sure the type of climates match the types that we’ve modeled and there is always localization,” said Sibulkin of the necessary adjustments to the original model developed at Cornell University in 2002 to enter a completely unique climate.
A major upside is this deal doesn’t conflict with Sibulkin’s existing network of retailers in the US. “Yara’s presence is tremendous, but in the US it is growing so it doesn’t create the same level of conflict that some our other opportunities have created,” he explained.
The Business of Sustainability
When asked about the new incentives behind fertilizer recommendations now that they are owned by a fertilizer producer, Sibulkin said that the incentives were no different from those of their current retailers.
He further explained that Yara “views profitable sustainability as being imperative for business viability,” meaning that healthier soil will be required to meet future production goals – and therefore sales goals for fertilizer sellers.
Before the acquisition, Sibulkin and his team met with growers to find out if they would have concerns about their potential sale to a large multinational fertilizer provider.
“Our experience is that growers are more concerned about seed insights and yield insights, not fertilizer,” he said.
ATC Corp announced in July that its Adapt-N technology is compatible with the John Deere Operations Center. Sibulkin said that no US partnerships and agreement will immediately change as a result of the acquisition.