If you’re going to build a venture-backable startup, you’d better have a product or service someone actually wants, says Jarrod Sutton, managing director of Indiana-based Purdue University’s agtech accelerator DIAL Ventures. In other words, you’d better have an actual customer — or better yet, several.
“That sounds like business 101, but the reality is, there are a number of startups that don’t have a customer,” he explained during a recent conversation with AgFunderNews.
Agtech, in particular, has suffered in the past from a number of “solutions looking for problems,” a scenario Sutton and his team are keen to avoid.
That in mind, DIAL Ventures operates off a venture studio model, creating companies based on current needs, trends or problems in agriculture.
“By design, it’s a venture studio model that brings in great entrepreneurs and doesn’t try to predetermine outcomes,” says Tim Dixon, also a managing director at DIAL Ventures. “We let founders co-create with the industry. Most startup programs are all about building something and then trying to push it out the door. We do it the other way around.”
Digitizing the world’s least digital industry
DIAL Ventures launched in 2021, a few years after McKinsey released its now-famous ranking that showed agriculture to be the “least digitized” of all major industries.
Dixon, Sutton and the team took a hint, subsequently designing the venture studio to support and develop software-based ag technologies.
“That was where we felt we could most easily innovate and leverage the companies,” says Dixon.
Since inception, DIAL Ventures has put 40 entrepreneurs through the program and created multiple companies with platforms that address land management (Oaken), labor management (Croft), equipment maintenance (Gripp), data analytics (Nuel), and marketing (Make Hay).
Purdue University, which is typically ranked among the top US universities for agriculture, provided around $11 million in funding to launch the initiative as part of the Purdue Applied Research Institute.
The separate Gold & Black Agrifood fund was then established jointly with startup creation firm High Alpha Innovation in order to bridge into portfolio company exits and, as Dixon says, “achieve an evergreen model” for the program. High Alpha Innovation serves as the general partner for this fund, in order to protect Purdue’s nonprofit status.
How it works
For each cohort, the DIAL Ventures team chooses six innovators “seasoned in technology and entrepreneurship,” says Dixon.
Over a six-month period, the cohort participates in five “sprints,” each lasting about three to four weeks:
The Opportunity Sprint is “an intense and immersive” period where entrepreneurs interact in-person with the agrifood industry. The goal of this sprint is to identify more than 100 “opportunity areas” with well-defined “jobs to be done” in the industry. Participants might interact with several dozen leaders from 20 to 30 companies during this phase, says Dixon.
Of those 100-plus opportunities, the top 12 are discussed with industry experts during the Problem Sprint, which is the period where those jobs to be done turn into crisp problem definitions which are then tested at an in-person industry workshop event.
The Solution Sprint, Product Sprint, and Business Model Sprint define value propositions, build initial product definitions and wireframes, and develop go-to-market strategies, among other activities.
A key component of the DIAL Ventures approach is a heavy focus on the problems rather than the solutions.
“More than half the duration of the program we’re in what we call ‘the problem space,'” says Dixon. “We spend an inordinate amount of time talking to industry and trying to understand their problems. We want to get a full grasp of the problem, and we’ve found that the more time we spend in the problem space, that the faster we get to great solutions and businesses.”
As far as the theme of each cohort, that’s partly determined by its participants, say Dixon and Sutton.
“Almost every cohort is dependent upon the dovetailing of the entrepreneur and their history and what they are bringing into the discussion,” says Dixon, adding that identifying problems and solutions is a combination of entrepreneurs’ past experiences and engagement with industry through the venture studio process.
The current cohort is focused on climate-smart solutions for sustainable agriculture.
“We talk about topics from multiple points across the agrifood value chain,” adds Sutton. “[By doing that], you can see where certain themes start to arise.
“In Indiana, we’re lucky to have Corteva and Elanco, which are within earshot of the university, and so we had the chance to meet with execs in those companies. And you get a different perspective on sustainability from each one of those. Then we go down to, for example, St Louis and meet with Purina and AB InBev, getting a CPG’s point of view.”
What’s next
The current cohort concludes on December 6 with a pitch day, after which the DIAL Ventures investment committee decides which, if any of, three businesses will get up to $1 million in funding.
In January 2025, it’s on to the next cohort, which will explore “food-as-health” as its theme. “We are confident our proven venture studio model will uncover unique challenges to the agrifood industry where a novel digital solution(s) would fit,” says Dixon.
DIAL Ventures also plans to deepen its work with the Economy Index in order to find further insights across agrifood on which problems most need solving now.
