Twenty fifteen was a busy year for water and irrigation technology as the subsector raised $670 million across 20 deals, according to AgFunder’s upcoming investment report.
And 2016 is off to a good start with Californian precision irrigation management company Hortau closing a $10 million equity funding round. The company raised the capital from US farm credit system-backed Advantage Capital Agribusiness Partners (ACAP), US investment firm BDC Capital, Canadian food and ag VC Avrio Capital, and Capital régional et coopératif Desjardins (CRDC), a Canadian SME investor.
The 14-year old company has not identified which round this represents.
ACAP and BDC are new equity investors, although ACAP provided a $5 million debt facility for Hortau last June. Avrio Ventures II and CRDC were existing equity investors.
Hortau will use the funding to expand the distribution of its irrigation management system, which includes both hardware and software components that report to growers how crops are faring in real time.
It will also continue to make improvements to its platform such as adding new features like advanced data analytics tools, new dashboards and responsive data reporting, according to Jocelyn Boudreau, CEO of Hortau.
To do all of this, the company will expand its technical, grower support and R&D teams. It is also looking to establish some partnerships in the industry to help with distribution, a trend occurring in precision agriculture.
“We want to accelerate our subscriptions sales and start positioning our platform to work with channel partners on providing our services alongside them,” Boudreau told AgFunderNews.
“I think there is a trend towards these types of partnerships in precision agriculture as a way to integrate technologies for farmers as they outsource more and more. Will we see a one size fits all? I doubt it, but I think farmers could use a set of specialised tools that they can choose from depending on their focus, and I think partnerships will help with this.”
Hortau is ACAP’s first and only agtech investment after the Rural Business Investment Company — backed by the Farm Credit System under a USDA initiative —was attracted to its drought-mitigating potential. Alyson Appleton, vice president of communications, marketing and policy at ACAP cited the technology’s potential to reduce water usage by 25 percent as a particular draw.
It’s unlikely to be ACAP’s last agtech investment, according to Appleton. “The ag tech space is a fast-moving, exciting area that will only continue to grow. Technology and innovation are the future of farming in America.” ACAP, which has made $32 million worth of investments from its $154.5 million fund, is focused on “providing private capital, small business investment and quality jobs to rural America”, she added.
As 2015’s funding data show, there is a growing universe of irrigation technologies in the market. Some of those that raised funding in 2015 include AgSmarts and Israel’s CropX. There are also some more established players that raised larger rounds such as Israel’s Netafim, and India’s Jain Irrigation. So how does Hortau differentiate itself from others?
“We set ourselves apart from our competitors with the parameters we are using in data capture and analysis,” said Boudreau. “It’s easy to overwhelm growers with too much information, so we need to cut through the complexity and focus on the essentials. So in that regard, we need to be measuring the right thing, analyzing the information to reach a conclusion farmers can use quickly and save time.”
With a $5 million debt facility and $10 million in new equity funding, it’s full steam ahead for Hortau.
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Image: Hortau’s new ST8 smart irrigation system in almonds, which allows growers to measure eight different inputs and are solar powered.