Yamaha Motor Ventures’ Nolan Paul tells AFN the biggest challenges for robotics and why he thinks Advanced Farm Technologies will go all the way.
Yamaha Motor Ventures & Laboratory Silicon Valley (YMVSV), the venture arm of Yamaha Motor Co, led the $7.5 million Series A funding round for Advanced Farm Technologies (AFT), which develops robotic farming equipment like the T-6 robotic strawberry harvester, which uses multiple robotic arms with custom end effectors (i.e. grippers) to harvest strawberries grown in soil. Other investors in the round include Kubota Corporation, Catapult Ventures, and Impact Venture Capital.
“We invested in AFT for two reasons, most importantly the team. Robotics and hardware, in general in agriculture, have longer development cycles and this is a team that has a track record of taking a previous company from a prototype to a commercial exit. They are grounded, very pragmatic, they listen to growers, and they move very, very fast,” Nolan Paul, a partner at YMVSV, told AFN. “The second reason has to do with the crop they’re targeting — strawberries — which is harvested 70 times each season, at least on the West Coast, so you get lots of turns as opposed to single-harvest crops.”
Paul, who formerly served as head of technology at major fresh berry grower and distributor Driscoll’s, is focused on identifying global agtech investment opportunities. YMVSV is currently making seed and Series A investments out of its $100 million Yamaha Motor Exploratory Fund, which looks at both plant and animal-related technologies. The firm finds harvest to be a particularly ripe investment opportunity considering that it’s the Super Bowl of farming in most instances: it poses the most costs, demands the most labor, and can make or break their profit margins for the year.
AFT offers robotics-as-a-service to farmers in Oxnard, Santa Maria, and the Salinas-Watsonville regions where specialty crop production and berries in particular predominate. The new funds will be used to help the company take its robotic strawberry harvesting prototype to the commercial stage.
Under today's unique circumstances, AgFunder is re-opening Fund III for a limited time to enable investors to join our mission and invest alongside us as LPs in a second close. Learn more here.
Route-to-market is always a persnickety decision for startups with countless possibilities including everything from direct-to-farmer sales to corporate partnerships. Considering the high cost of ag robotics and the category’s need to still prove its value proposition, however, the service model makes the most sense to Paul.
“It de-risks the investment for farmers. You don’t have to spend a lot of capital upfront for something that may not work perfectly, particularly for specialty crops. It’s something farmers are used to with a piece-rate model. You also have to consider that these crops are harvested multiple times a year. The equipment can be moved up and down the coast 52 weeks out of the year. With some other crops, the equipment may only be used once a year for a short period of time,” Paul explains.
Sentiments regarding whether robotics will one day permeate the agricultural production world range, but stakeholders can’t deny that investment in the space is growing. Between 2017 and 2018, robotics and equipment technologies saw a 53% increase in funding across 83 deals including logistics-focused startups like Nuro, Starship Tech, and Kodiak as well as processing and packaging startups like RightHand Robotics and Soft Robotics, according to AgFunder data. There are weed-pulling robots and food safety-focused bots, and there’s even a startup in Japan that’s created a robot that serves hot octopus balls.
But no startup in the space has achieved what may be the holy grail for ag robotics: scale.
Scale is the holy grail
“To me, the biggest challenge is going from prototype to commercial product and we haven’t seen anybody in specialty crops do that yet. Blue River was getting there, but it was acquired by John Deere and things changed for them a bit,” explains Paul. “It’s tough for a startup on its own to manufacture, and that’s something Yamaha has skill sets in. I hope that’s a place where we can provide value to these startups, particularly AFT.”
The saving grace for robotics’ scale-related challenges, however, lies in its most powerful ally. Growers are plagued by labor shortages and searching for solutions that they can deploy today, not a few years down the road, says Paul. The situation is on par with an existential crisis, according to what he’s seen, which means a startup only has to get a proven piece of technology to a place where it is commercially viable for scale to follow suit.
“To me, the biggest challenge in robotics is going from prototype to commercial product and we really haven’t seen anybody in specialty crops do that yet. But over the last two years, I have seen a lot of teams pop up. I have a lot of respect for the startups that started 5-7 years ago, but I would say this new crop of robotics startups all around the world is really exciting. They have the right combination of good technical know-how, business, listening to the grower, and they move a lot faster.”
YMVSV is looking into more than just robotics in the agrifood tech universe and seems to take a technology-agnostic approach to assessing opportunities. It doesn’t just want a company that’s found a way to disrupt one player in the value chain, it wants to back companies that can flip the whole hay bale upside down. A few other areas of focus for the CVC include controlled environment agriculture and seafood. Livestock-related innovations may also soon be on the menu as well as a downstream play or digital play to balance out its heavy hardware focus.
“Ninety-five percent of what we are seeing in ag is a technology that is incremental – which is important, don’t get me wrong – but its harder for those companies to become the type or size that is necessary to become unicorns of ag, which we really need,” Paul explains. “If you can solve a problem and you can scale that to best in class while disrupting the larger ag companies instead of getting acquired by them, that gets me really excited.”
Find out more about YMVSV’s strategy in our earlier interview with Paul here.
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