Monsanto Sells Precision Planting to John Deere, HelloFresh Files IPO, African Ag Investing, more

November 5, 2015

Welcome to another weekly news roundup with AgFunderNews. One of this week’s biggest stories is machinery giant John Deere’s purchase of Precision Planting from Monsanto.

Precision Planting, which offers both hardware and software products for farmers to help make agronomics easier to manage, was first bought by Monsanto in 2012 for $210 million. This was before the agribusiness giant’s 2013 $1 billion acquisition of the Climate Corporation, which was responsible for creating hype for agtech in the venture capital community.

Precision Planting was then rolled into the new Climate Corp department in Monsanto. After the sale, which is expected to close in 30 to 90 days, Climate Corp will retain Precision Planting’s digital agriculture portfolio, namely its FieldView platform. The company will also enter into a partnership with Deere, which has agreed to connect its machinery with the FieldView platform in the industry’s “first and only near real-time in-cab wireless connection to John Deere equipment by a third party”, according to a press release.

This is the third farm equipment partnership for Climate Corp, which already has agreements with CNH Industrial and Agco Corp to integrate FieldView with their machinery.

So why did Monsanto sell Precision Planting? A spokesperson was unavailable to speak before AgFunderNews went to press but John Raines, senior VP at Climate Corp, told Bloomberg that “we’re doubling down on our focus on the digital ag space”, and that the collaboration with Deere was expanding the platform’s reach further into tractor cabs. The transaction’s financial details were not disclosed.

This is the latest acquisition for John Deere, which recently formed a joint venture — Sage Insights — with DN2K, the owner of the MyAgCentral software platform.

Deere is facing a third straight year of falling revenue and earnings per share in the fiscal year that started this month as sales of farm equipment such as combines and tractors continue to drop around the globe because of lower crop prices. Further complicating the problem is farmers growing tendency to opt for equipment leases over purchases, leading to a glut of used machinery on the market.

While nearly every farmer will agree that farm machinery is one of the biggest capital inputs for the business, the hundreds of thousands of dollars needed to acquire even the basic farm machinery necessities can thwart many startup farmers. To help ease the many struggles facing young farmers—defined as anyone farming for less than 10 years—the USDA has made $5.6 billion worth of commitments over the next two years to help build up the next generation of farmers and ranchers. The initiative also includes the launch of a new website designed to provide feedback for new and beginning farmers around the country, who cited unfamiliarity with programs and resources as a challenge to starting and expanding their operations.  

Food e-commerce continues to hit headlines this week. Indian startup Twigly raised $200,000 from a group of angel investors. The company emphasizes on-demand fresh food delivery, hoping to replicate the success that San Francisco’s Sprig has found.

But the space may be reaching its zenith, with reports indicating that a number of companies are stalling their expansion efforts and failing to make new markets work. Another Indian food tech startup TinyOwl reported over 100 employee layoffs this week, citing restructuring and cost cutting as the motive behind the downsizing. The company laid off twice as many employees back in September, primarily consisting of sales and delivery team members. The recent round of layoffs will primarily target the company’s Delhi, Hyderabad, Chennai, and Pune locations. 

As the heat continues to crank up in the food e-commerce kitchen, players in the space are keeping a keen eye on German-based HelloFresh’s recently filed IPO. If the offering tanks, investors may be less willing to doll out the dough and companies already feeling the squeeze may have to rethink their business plans. If the IPO is deemed a success, the food e-commerce bubble may buy itself more time—and more capital. 

Either way, there will be winners and losers once the food e-commerce craze hits a steady pace. Some companies are already attempting to take a unique angle on the space to help them standout among the many computer-to-table providers on the market.  

Purple Carrot, perhaps the first plant-based meal kit delivery service, has recently added former New York Times op-ED columnist and best-selling author Mark Bittman to its executive team. In a statement released this week, Bittman said, “I’ve been writing about the benefits of part-time veganism for years, and my work at Purple Carrot will help more and more people see and participate in the benefits of this way of eating. Really, it’s the New American Diet.” Now covering roughly 70 percent of the nation, the company is launching a subscription service. To date, Purple Carrot has raised $1 million from angel investors and is currently closing out a $3 million seed round. With plans in the works for a Series A financing early in 2016, the food e-commerce outlier must be doing something right. 

Moving to another emerging space, cannabis B2B ecosystem company Tradiv completed a $1 million seed round with Anslinger CapitalCanopyBoulder, and Poseidon Asset Management. Serving as a digital wholesale marketplace, Tradiv hopes to connect cultivators, marijuana infused product sellers (MIPS), and dispensaries through online sales.  

Africa received a lot of investor attention this week, with Land O’Lakes, a Minnesota-based Fortune 500 member-owned company, acquiring a 52.5 percent stake in Villa Crop Protection, a Western Cape company focusing on the development and registration of unique commodity crop protection products. The deal marks the first African commercial investment for Land O’Lakes, which hopes the buy will help it tailor its own products and sales strategies to compete in African markets. 

Meanwhile, Luxembourg-based private equity firm Bamboo Finance and major global ag conglomerate Louis Dreyfus Holdings have partnered to launch a $50 million agribusiness investment fund targeting sub-Saharan Africa. Dubbed NISABA, the fund will aim to foster development and promote additional private investment in Africa’s food sector. 

West African company Agricare Limited also received a boost of capital to help promote the production of poultry feed and concentrate, as the government focuses on revamping the poultry sector. The funding and technical support came as part of a partnership deal struck with Injaro Agricultural Venture Capital. Agricare’s daily feed production currently totals 250 metric tons, which could serve over 2 million mature birds per day. 

Last Friday, leaders from around the country gathered in Nevada as DuPont opened what it cites as the world’s largest cellulosic ethanol plant, which uses corncobs, husks, and stalks to eventually produce 30 million gallons of ethanol each year. During speeches at the event, US Senator Chuck Grassey, (R-IA) said, “The facility is a game-changer. You [DuPont] have achieved what Congress had hoped. We envisioned biofuels from new technologies that were cleaner, greener, and more efficient.” Grassley continued by stating that the way to achieve additional investment in advanced biofuels is through ensuring that the EPA and Congress refrain from undermining successful programs’ efforts. The US Environmental Protection Agency is expected to finalize its reduced Renewable Fuel Standard levels next month. 

With the holiday season almost upon us, consumers can expect to see the image of reindeers adorn shop windows soon. But, did you know that deer are becoming a popular choice for ranchers due to their high adaptability and the growing demand among consumers for local alternatives to factory farmed meats? Federal legislators in North Carolina are even working on a bill to expand deer farming in the state. And while horses are no strangers to the ag scene, some farmers are starting to opt for draft animals over machinery to handle some of the heavy lifting, with a group of breeders in Iowa spearheading the practice. If it catches on, we may soon see a growing niche market for draft animal rentals. Enthusiasts will be happy to know that you can already order a herd of grazing goats to clean up your hard via Amazon.

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