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Why Brookfield MD Reid Carter Invested in Crop Sensor Startup Semios

May 11, 2016

Last month, crop sensor and pest management startup Semios BioTechnologies raised $8 million in seed funding from a group of individual investors and the Canadian government. Leading the investor syndicate was Reid Carter, who is managing partner at Brookfield Asset Management where he’s worked for over 13 years.

Brookfield is a global alternative investment house with over $225 billion under management, including several timberland and farmland investment funds. Carter works more closely on the timberland side, but his investment in Semios was completely unrelated to Brookfield.

AgFunderNews caught up with him to find out more about his interest in agtech.

Reid Carter
Reid Carter

How did you come across Semios and how does it relate to your day job at Brookfield?

I am a professional forester by background and much of my experience over the last 25 years has been in private timberland investing, but I also did my graduate studies in agriculture as well as forestry. I became aware of Semios through my brother who has a large apple orchard and was one of the early adopters of Semios’s platform. When he came across Semios he was particularly impressed and suggested I take a look at it.

The back story is that, as well as managing the apple orchard, my brother also built a very successful ag biotech company called Okanagan Speciality Fruits, which was responsible for developing the non-browning apple. I invested into this business over the 18 years he developed it, and last year we sold it to Intrexon, although my brother continues to lead this business. So Semios is not my first agtech investment.

This investment was 100% personal to me and was not related to my role with Brookfield, where I have led the development of six private equity timberland funds over the last 13 years. Brookfield does, however, have agriculture funds and I have contributed to decision-making around its farmland investment thesis and additional private equity funds in the past.

What impressed you about Semios?

Semios has an amazing product that offers the potential to help farmers discontinue their use of insecticides through the use of precision-delivered pheromones, saving a tremendous amount of money per acre and creating a much greener farming operation. After looking at the business plan over a couple of months, I realized it was a unique, powerful technology platform that was very well implemented, but that needed funding to support the scale up of operations to get more acres under management.

In addition to Semios’s insect monitoring and control capabilities, the platform collects data about soil moisture, the temperature at different elevations, solar radiation and leaf wetness every 10 minutes on every acre, allowing for the development of exceptionally powerful decision-making tools. For instance, the platform can do an amazing job of predicting frost with tremendous spatial precision within minutes. Growers can save thousands of dollars a night by ensuring they only run fans on those areas that are actually at risk for the time they are at risk.

Semios is also making it easy for farmers to get on board, by using the Software-as-a-Service model.  Farmers don’t actually buy the equipment; they pay monthly for the services that they use, which can vary from one solution, like pheromone deployment for pest management, to a complete solution that also pulls live data and combines it with historical analysis for disease, frost, and irrigation management.  Once the wireless network is installed, it’s quick and easy to turn on modules.  This approach is less costly to farmers and enables them to realize the ROI quickly without big upfront costs.  Another small, but significant data point, is that Semios is the only company we’ve come across that has a reliable wireless network for orchards. This technology was developed, and patented to get around the interference that is created by leaves moving in the breeze.

What are the main challenges ahead for Semios?

A big shift takes place when a company moves from being extremely frugal in business development and R&D, to then making the switch to the spending requirements of marketing, selling and operationalizing their strategy. This is a critical stage for almost all start-ups and many stumble, either due to capital constraints or by underestimating the changes to human resources required for success. At Semios, we are targeting going from 10,000 acres under management today to 18,000 by the end of this year to perhaps 60,000 acres by the end of next year. This brings all kinds of operational challenges, and you can’t afford to stumble as your new customers need to have a very positive experience if your business is to continue to grow. This is where experienced investors can really help. Not just with cash, but with the mindset. I’ve been through this expansion stage with a lot of businesses to provide both guidance and support.

Who are the other investors?

They are effectively all local business associates, and many were involved in my brother’s company.

Are you looking for more agtech investments?

It’s a space I’d love to see more of,and we are getting lots of outreach from investors interested in this space. I think that precision agriculture is going to be extremely important in the future. Big data can help you manage the decision-making process around your inputs, and how to optimize the use of water, fertilizers, insecticides and so on. And while this will bring down the cost of operations, the cost of implementing these technologies will also come down.

Do you think that the precision agriculture space might be a little overcrowded?

We are watching that very carefully, as there are quite a few smaller companies that are very good at developing some of the parts of our platform and others. Longer-term we think they will likely be accumulated into large precision agriculture firms. And, in the end, the massive agribusinesses, like the Syngenta’s, BASF’s, and Monsanto’s of the world, will bring their own technology and low-cost structures to the sector.

Have news or tips? Email [email protected]

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