Burro
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Q&A: Why Toyota Ventures invested in Burro’s farm robots

October 11, 2021

At the tail-end of last month, US-based startup Burro, which makes farm robots that aid human workers, announced a $10.9 million series A round of funding co-led by VC firm S2G Ventures and Toyota Ventures.

For the latter, ag tech is new territory when it comes to investing — though one we’ll likely see the company contribute more dollars to in the future. 

“We look at big broken markets that are open to disruption, and agriculture is a big broken market that I think is getting more and more open to disruption,” Jim Adler, the founding managing director at Toyota Ventures, tells AFN. “When we met the Burro team, we really resonated with this idea that this is a simple, straightforward task that probably everybody in the agricultural industry has.”

Burro, founded in 2017 as Augean Robotics, makes farm robots that can follow workers around and automate certain tasks for specialty crops. The bots use artificial intelligence and machine learning to navigate autonomously to where they are needed on the farm. For now, their biggest job is to help carry harvested fruit like table grapes, berries, and nursery crops,

Adler chatted with AFN recently to explain why simplicity makes for a compelling tech on the farm and where Toyota might look next in terms of ag-focused investment. 

AFN: This is your first ag tech investment. How did Burro come across Toyota Ventures’ radar?

Jim Adler: We have a pretty broad remit in two areas. One is “frontier technology,” which is things like AI, data, cloud, mobility, robotics, and now we’ve expanded to smart cities and digital health, fintech, and materials. The other bucket is  the Climate Fund that we’re managing on behalf of Toyota Motor Corp., which is carbon capture and storage and renewable energy and of course hydrogen.

We look at big broken markets that are open to disruption, and agriculture is a big broken market that I think is getting more and more open to disruption. I think, 10 years ago agriculture was less open to disruption. I think automotive 15 years ago was less open to disruption, and I think these markets change, and they’re definitely big. I mean on Maslow’s pyramid hierarchy it’s air, water, food. We were thinking that frontier technologies will affect agriculture. So to circle back to your question of why Burro, why now, we’ve been looking at agriculture for about a year, or even more than a year, maybe 18 months or so. And we’ve seen a lot of robotics technologies, AI technologies, applied autonomy technologies, but we haven’t really seen the uptake. We always look at products and markets like most venture capital funds and we say, “Well the products are there but is the market really there?” You know enterprise companies often wake up in the morning and think, How can technology solve my problem?” I don’t know farmers do that yet. They have much more pressing issues. But I think that’s changing a little bit.

Twenty years ago, no one woke up and thought, “How is the cloud going to solve my problem?” Then Amazon Web Services came on the scene with disk discs in the cloud, storage of data in the cloud, S3. And we’re like, “Wow, that’s kind of cool because this discs often crash, and you lose your data and you got to back it up and boy, it’d be great to have it up there and then they worry about it.” It was a very tedious problem that everybody had, and Amazon got everybody to start to think about the cloud and solving a problem that is very important but very simple to understand.

When we met the Burro team, we really resonated with this idea that this is a simple, straightforward task that probably everybody in the agricultural industry has. It’s not the sexiest, it’s not the coolest, it doesn’t have these articulating robot arms for picking crops but it’s just a platform that just makes farm workers more efficient and more productive. We were like, “Wow, that’s kind of like the S3 for agriculture.”

When we got to know Charlie and the Burro team, we felt there’s sort of this similar parallel where the agricultural community can start to think about these kinds of technologies in a way that they might wake up in the morning and say, “How can Burro solve this problem now?” We got really excited about that.

Would you say that simplicity is true of a lot of the ag tech solutions that stand to make the most impact?

JA: Yeah, I think that that’s the case with most adoption — that it happens on the edge of your knowledge. If you try to take too big of a step, people are naturally going to be resistant to that. But if it’s seemingly incremental yet ultimately disruptive, I think that’s the best of both worlds. If you try to be disruptive before you’re incremental, you can end up being too early and trying to change hearts and minds before they’re ready to. But if if you take a disruptive technology and package it as an incremental offering, I think that gets people’s hearts and minds to say, “Hey, this just works, it’s helping me be more productive for growers and farmers.” It becomes an approachable service to it to adopt. Then the knowledge expands, and then there’s another incremental offering. And I think that’s most of the successful go-to markets and I think Burro is taking that approach, which could prove to be quite attractive.

Are there other areas of ag tech that you’re seeing maybe also showing potential in terms of this idea of being disruptive, but being simple at the same time?

Fields are more difficult, greenhouses are more straightforward, so we’ve been looking at greenhouses for a while. We try to be humble in our understanding of the markets. That’s why we do this with S2G ventures, this is their thing, and we lean on them a lot for understanding the markets and where the what the state of the customer really is. We can have a bunch of great theories but, to pivot off of Mike Tyson’s famous quote, everyone has a fight plan until they get punched in the mouth. We have a thesis until the end customer “punches in the mouth” with a realization that we did not consider.

But we do understand the technology pretty well, and we know what it can and cannot do. And we know that one of the failure modes is over estimating the capabilities of the technology. We know to dial it back and deliver something that the customer ultimately will find productive, and then over time, that productivity ramp grows.

Agriculture is a big market, but a lot of it is not profitable. So you have to deliver technology that really improves profitability, improves gross margins and those kinds of things, essentially makes workers more productive. If the technology delivers those things, then I think you’ll see broad adoption. I think the failure mode is getting too far out over your skis getting to falling too much in love with the technology, and then disappointing customers and then the market retrenches And then, you know growers kind of step back and say, “Yeah, we tried that that didn’t deliver.” And then now you’re in a hole and it’s not hard for one company that over promises to kind of disillusion the market for a while, and so we tried to find companies that can really over deliver. In a growing market, it’s important not to disappoint.

Talk a little more about Toyota’s focus on early-stage investments.

Early-stage venture capital is a telescope into the future. The later stage you go, the more short-term your vision is. So a growth-stage fund is looking maybe a few years into the future, a public company you’re looking a few quarters into. But early stage you are really taking this expansive multi-year or even decades-long view of where the markets are going. I think from from Toyota’s perspective, that’s what we want, we want to understand where the world is going. And of course help shape it. Many of us on the team are entrepreneurs by experience and training and we resonate well with founders that want to change the world, as corny as that may sound. I think it’s an important mission that many startups have delivered on over the past 50, 60 years in all kinds of markets. Those principles will translate to agriculture.

Will Toyota do more agrifoodtexh investments in the future?

I think so. It’s one of those areas that is I think ripe for this kind of adoption, assuming that the productivity can be demonstrated to increase. And I think there has been some technology adoption in certain areas — the dairy, part of the business has adopted technology. Big Ag has adopted quite a bit of technology, but the SMB side of the business has not and I think that’s a great opportunity for technology to enter the market and and and give smaller farmers the heft and the productivity advances that the bigger producers have, and also empower [more] local growing. Local food production, that’s one of our areas of focus. Is there a future for local food, local energy, and how can technology accelerate that?

There is definitely a push right now from some corners for smaller farms and more local production and a lot of concerns over ‘Big Ag’ and some of its consequences.

Food production that is sustainable and can empower smaller growers and farmers is really critical to our future. That’s where the variety and texture of the industry comes from. That’s where you really get a sense for the local specialization of crops and and really wonderful foods. And so, technology should just not be the be the purview of the big players in the market. There’s a great opportunity in this long tail. That’s why startups will often be the ones that deliver the solution because they’re the ones that are going to pivot quickly, they’re going to fit themselves to their customer base the most efficiently. I expect that local are going to be quite demanding, and they should be, and startups can be really responsive to those kinds of demands. If those demands are common across a market segment that’s going to mean that companies like Burro are going to be able to serve many more customers and then become that much more of a market player, and everybody wins. So that’s, that’s kind of the thesis, and we’ve seen that play out in in other markets. If it’s done right, it’s done respectfully and if it serves a customer well, it usually works out.

One important question that often gets asked is [whether] the technology is here to replace workers. I think this is somewhat unknown about Toyota. We have this vision that machines will continue to amplify the human experience. We don’t think robots are gonna replace humans. I think people often need to augment these machines. We could get into sort of the rungs of AI, but AI is really pretty simple and often disappoints in most of our daily experiences. They’re improving which is good. But what we’ve what we’ve found is that they actually do help people be more productive, they’re good tools, just like any tool is can help amplify the human experience and kind of tweak it.

When you hit the gas in a Toyota Supra or a Lexus LC 500, you feel accelerated, you feel amplified, and that has been driven into the Toyota DNA for 80-plus years. I didn’t really appreciate this until I got here and started to do these investments that we resonate toward companies that amplify workforces, amplify people. I think with shortages in the agricultural industry, amplifying people and amplifying their productivity can really be helpful. What we always do in our analysis is say, Where’s the pain? Where can the technology really relieve the pain? And what we keep coming back to when we validated this through the Burro investment is one of the biggest pains is finding workers, enough of them during periods of harvest. If you could make the workforce that much more productive, like the Burro platform does, it’s a very simple idea but it’s incredibly powerful.

I think [Burro’s technology] is going to increase productivity and the harvests can be done more quickly, which often is important for yields and it just kind of just snowballs into this cascade of productivity improvements. Ultimately if we get more money in the pockets of those that are producing our food, I think that’s ultimately a good thing.

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