Geoff Kneen is the R&D Licensing and new ventures manager, North America of Bayer’s Crop Science division and has been responsible for building the chemical company’s agtech investment strategy over the past two years. Unlike other some large agribusinesses — namely Monsanto and Syngenta — Bayer decided not to launch a dedicated venturing arm but instead to invest in external commercial agtech funds and initiatives to gain access to ag innovation.
On the back of a report from BCG Consulting and AgFunder last week, which detailed a feeling of unpreparedness by some agribusinesses, we caught up with Kneen to find out more about the reasons for this strategy and how it has developed.
Your strategy for investing in agtech innovation appears to be investing in funds as opposed to running your own venture fund. Why was that decision made and is it likely to change?
We knew we wanted to have a better understanding of the innovation and technology developments taking place outside our company and instead of setting up a new organization such as a venture arm, why not take advantage of the knowledge and experience that exists outside our company with dedicated agtech VCs? When we started looking around a couple of years ago, there were only a few VCs concentrating on agtech and Finistere and
Flagship were two of them that had had a track record of success in agtech and life science investing. They both represented great opportunities for us to really focus on understanding what’s going on in the agtech world.
AgFunder Co-Investment Fund III is now open for investment. Closing June 15, Spots are limited.
We recognized that investing in these collaborations would enable us to keep a close eye on the most innovative and cutting edge technologies. With that close eye on the market, we feed our idea pipeline, if you will, of startup collaborations, licensing and acquisition opportunities.
I have recorded Bayer as invested in Finistere Fund II, Radicle, Trendlines, AgTech Accelerator and Flagship Ventures since the beginning of 2015. Have I missed any?
We also have a collaboration with Anterra Capital, a VC fund that scouts new technologies in the food and agricultural sectors that might be of interest to us. Anterra is based in Amsterdam but has recently opened an office in Boston, MA.
There are a lot of accelerators and other startup resources available for agtech startups today. Radicle and AgTech Accelerator operate what look more like fund or incubator models than other accelerator programs, which have fixed-term programs usually culminating in a pitch day. What was appealing about them and how do they compare with each other?
We refer to incubating as the technology development that leads to a technical proof of concept, which usually takes between one and two years. We look at acceleration as the creation of a startup business around a proven technology; the acceleration of a technology to “startup status.” This is usually in the order of 12 months. But these terms are very often used interchangeably!
One thing that attracted us to the AgTech Accelerator initiative with Alexandria, was its tie to Research Triangle Park (RTP). Alexandria has a strong presence in RTP and RTP is home to Bayer’s US Crop Science headquarters and is recognized globally as a hub for agtech, research and development. And Radicle made sense because of the connection to Finistere and the opportunity this provides for follow-on Series A funding if the start-up is successful.
To compare, AgTech Accelerator is a more traditional set up which will provide a physical facility and office space for its startups, along with funding and management direction. Radicle is a more virtual model, which enables funding and management support to be provided regardless of proximity to facilities.
Who knows, maybe one day we’ll even find an opportunity to house some of these technology startups within a Bayer facility, which is another option we’re thinking about.
Are you looking to make any more fund investments and if so, what gaps are you trying to fill with these investments?
I hope so, as the agtech space is absolutely exploding with opportunity. But we are excited about the investments we’ve already made and are keenly focused on the successes that can come from those.
We feel we now have a well-rounded portfolio of investments that fits well with our goals to innovate: the accelerators give us a window to focus on really early stage agtech, the incubator with Trendlines allows us to see how companies develop and prove their concepts in Israel, and the VCs take us beyond Series A. An enormous amount of energy went into growing our portfolio and now we are excited to see what can come of it and how it will enable the further delivery of what growers need to be more productive on the farm. At the same time, we remain open-minded and continue to make sure we stay aware of what is up and coming.
How are you going to measure the success of these investments between now and when the funds expire?
It is important to recognize that success is often a long-term process and since technology is changing so quickly, the target is constantly moving; it’s an exciting challenge, especially with funds. Ultimately, we will measure success based on the funds’ performance over about 10 years but will look for shorter-term wins as well. In the meantime, we will remain open-minded to new technologies that would fit into our portfolio and could offer new business opportunities for us. We will also measure success by the number of collaborations, license agreements or acquisitions we continue to make.
Are there any technologies across the agtech ecosystem that are not of interest?
We are looking at technology across the whole spectrum of our business and want to be open-minded. We are a 153-year-old company rooted in innovation and continuously bringing new products to market and highly innovative technology in life sciences. While we are always investing in our in-house R&D, we recognize that there are technologies and innovations coming to life outside of Bayer as well. Those present enormous opportunity to advance the business and the industry. So, we remain open minded to a wide range of technologies.
Big data was highlighted as an investment priority for most agribusinesses in BCG and AgFunder’s recent survey. Why is big data so exciting to agribusinesses like Bayer?
The technology itself can offer means by which crops can be grown more efficiently in ways we have not been able to do before. If you’ve got a crop in a field and you can send a drone over that crop with a highly sensitive camera on that drone specially designed to measure certain aspects of crops developments, you can get in real time information to allow farmers to treat a problem they didn’t know was there. That in itself creates opportunities for increased efficiency and yield.
The other side of this is that there are no regulatory hurdles associated with digital tech such as sensors or data handling — unlike with crop chemicals and traits — so it’s much easier to bring to market and get an immediate return on investment.
It’s also exciting to see technologies that were never designed with agriculture in mind finding application in agriculture. Many were developed for the military, for example.
Are you concerned that entrepreneurs and teams might not have the deep agricultural knowledge needed to make an agtech startup succeed?
They are learning very quickly about agriculture and adapting their technology as they learn. In all things, ultimately given the number of startups in the digital agtech space, there will be a shake-out at some point, and the commercial situation will determine the success or failure of those applications. If no-one buys them or uses them, they won’t make money.
Do you have any visibility on what would happen to Monsanto Growth Ventures after the acquisition? Would it remain a separate entity?
It’s too early to speculate what might happen under a proposed combined company, but I can say that this acquisition is all about driving innovation and R&D.