Tom Shields is a venture partner at AgFunder and works with the deal team on sourcing and leading investments. A serial entrepreneur, he has co-founded two highly successful companies, NetGravity (IPO 1998) and Yieldex (acquired by AppNexus/AT&T in 2015), both exited for over $100 million. Managing director of an early-stage venture firm, he has been a board member and investor in dozens of startups ranging from network equipment to design automation. Tom went through the dot com and spent six years in VC, so he brings an important historical perspective from being in the valley for over 20 years to the AgFunder team. Fun fact: Tom sings in the San Francisco a capella group, The Fog City Singers.
Here we ask Tom what makes him tick in the agri-foodtech space.
What excites you most about foodtech and agtech?
What excites me most is the opportunity to work with smart, inspiring entrepreneurs who are using technology to transform and improve the entire food system. There are so many challenges in sustainability, nutrition, and food access, and so many ways we can continue to develop and deploy technology to help solve these challenges. I’m energized by the positive impact that we can have on both people and the planet.
Specifically, I’m excited by controlled-environment agriculture and cellular agriculture, both scalable ways to grow food with substantially fewer resources.
How does it compare with the other industries you’ve worked in – as an entrepreneur and as an investor? What are some of the core challenges facing agri-foodtech entrepreneurs?
I have mostly worked in software companies, and one lesson I’ve already learned is that atoms don’t scale like bits. Digital goods like software or media can be created once and duplicated endlessly for almost no cost. In food and agriculture, supply chains are crucial, and distribution is not free. Margins and growth rates are often less, as a consequence. This means that many of my instincts don’t apply, and I need to be much more thoughtful about evaluating opportunities and giving advice. For example, software companies rarely worry about sourcing crucial ingredients at scale, or manufacturing consistency, or shelf life, but food and ag companies have to worry about these things all the time.
That said, many of the lessons of building companies don’t change: all companies need to raise capital, hire great people, develop a product, and build a brand. And in my experience, most important is the ability to tell a story, clearly and consistently, to investors, employees, customers, and press.
How does VC/startup land today compare to when you started out?
So different! There’s an Internet, for example. Much of the knowledge we take for granted about startups and VC funding was a black art back in the mid-90s. I’m very excited by the democratization of entrepreneurship and VC that has happened over the last 25 years, and optimistic that it enables even more resources to be focused on solving humanity’s biggest problems.
What advice would you give to agri-foodtech entrepreneurs as they approach VCs – and possibly AgFunder — for funding?
A few ideas beyond the usual “team, product, market” focus areas:
Do your homework and be prepared. You may not know all the answers, but there’s no excuse these days for not knowing what questions you might get asked.
Be clear on your differentiation. That could be team, timing, technology, or something else, but investors know that being too early or too late to invest is almost the same as being wrong. Why is now the time for this product in this market, and why are you the team to create and capture that value?
Learn from everyone, especially investors. Nobody likes to deliver bad news, so many investors will give generic reasons for passing. Ask for real feedback, and give them permission to tell you why they really passed – it may surprise you.
Are there any whitespace areas you’ve noticed in agri-foodtech that entrepreneurs should jump on?
This may be a bit naive or futuristic, since I’m relatively new to the space, but I think as novel methods of creating foods continue to emerge – from vertical farming to bio-reactors to 3D printing – I’m interested to see them become more and more personal and customizable, so everyone can have food tailored to their individual tastes and nutritional needs.