Zoetis’ acquisition of Performance Livestock Analytics is major milestone for livestock tech space

Monsanto’s acquisition of The Climate Corporation in 2013 marked a major turning point for the then-nascent agri-foodtech space. Since then, investment has flooded into startups innovating for food and farming from row crop production to traceability to food safety to grocery stores. Apart from Merck’s record-breaking $2.4 billion acquisition of livestock tech digital health platform Antelliq in 2018, the livestock segment has somewhat lagged behind in terms of startups and investment. 

But, speaking in the aftermath of the acquisition of his precision livestock startup Performance Livestock Analytics (PLA), one of Climate’s former employees feels a sea change is about to happen. The world’s largest animal health company Zoetis recently acquired PLA for an undisclosed price; AFN understands the valuation was around $140 million.

“I think this has the same meaning as when Monsanto bought Climate,” Dane Kuper, founder and CEO of PLA told AFN. “That drove a lot of additional investment and really drove growth. Livestock tech is definitely gaining momentum.” 

After spending five years with Climate Corp as regional sales manager after Monsanto acquired the startup, Kuper set his sights on the livestock industry. He saw firsthand how the row crop production underwent a digital revolution after big data swept the industry.

PLA’s Performance Beef tool is a cloud-based platform that aims to help producers optimize key aspects of their operations including nutrition and animal health, by monitoring the measurement, analysis, and reporting of financial and operational data to achieve better feed management. Feed is one of the most expensive inputs in a beef cattle operation, making most producers eager to see whether they’re spending more than they need to, or whether their feed of choice is giving them the gains they’re seeking.

Today, there are 1,700 producers using the platform and the team is onboarding roughly 20 new users each week, Kuper says.

“The addition of Performance Livestock Analytics is an important part of our strategy to bring precision livestock farming to our customers to help improve the health of their animals and the sustainability of their operations,” said Mike McFarland, executive vice president and group president of accelerated growth businesses for Zoetis in a statement announcing the deal. “The team at Performance Livestock Analytics has successfully applied Silicon Valley technology learnings to the needs of livestock producers, and we are thrilled to have them join us at Zoetis to continue leading the way in digital and data analytics for livestock.”

Competitive process

The startup was being courted by another company as well as Zoetis, which led to a competitive bidding process. Few other livestock tech startups have found themselves in a similar situation. What ultimately led PLA to Zoetis’ arms was the company’s clear understanding of the future of livestock farming and precision data. 

“Zoetis has a new business unit launched in December 2019 that is an accelerated business unit for precision livestock farming. They see that as the next big step within the continuum of care for livestock. A connected ecosystem making recommendations for higher outcomes,” he says. “You don’t necessarily see that as a business unit at other animal health companies. Maybe it’s an initiative or something they’re interested in, but its not a dedicated business unit.”

This isn’t the first time PLA has attracted some big-name partners. In 2019, the company raised an undisclosed round from ag retailer and feed supplier Wilbur-Ellis’ venture capital arm Cavallo Ventures. Wilbur-Ellis is using the Iowa-based startup’s Performance Beef analytics tool and other technologies to help optimize production. Builders VC also participated in the round. It also partnered with Elanco to help customers use products like vaccinations in more precise ways to achieve better outcomes. The platform can make suggestions on different vaccination protocols and help the user understand each protocols’ vaccination window.

Covid-19 fall-out should accelerate tech adoption

While time will tell whether the acquisition will be the much-needed accelerant behind livestock tech’s growth, the current pandemic is adding fuel to the fire. News reports are plastered with headlines about plant closures, sick plant workers, and “depopulating” herds and flocks due to processing bottlenecks. Meanwhile, the CEO of Tyson said a few days ago that the food supply chain is breaking.

All of these factors are falling on a market that was already suffering from historic price lows and rampant suspicion regarding packers’ alleged collusion and price-fixing antics. The latter has even sparked a new probe into whether Smithfield, Tyson, JBS USA, and Cargill are up to no good.

Entrepreneurs are ever-optimistic, however, and Kuper is no exception.

“Supply chain management is an issue. The packers are trying to figure out how to harvest the heaviest animals first and it’s an antiquated offline process. Automation within the supply chain and within processing itself will be driven because of this. The inefficiencies and risks are being exposed and with that, you will see some good changes.”

And when it comes to livestock producers’ tech wish list, the demand is pretty simple in Kuper’s experience. Most are looking for some way to make better decisions and to identify opportunities before they expire. Livestock tech startups seem to be grasping on to this request. CattleEye recently came out of stealth with a camera-based system for monitoring animal health that doesn’t require tedious wearable devices while Sentinel is helping hog producers get an accurate headcount for their herds. SwineTech is digitizing the process of identifying when a sow is about to give birth or having trouble while SomaDetect is expediting the process for on-farm mastitis detection.

Although the range of livestock technologies is increasing, it’s not easy to convince farmers to spend money on innovation when they are already so cash strapped. But sometimes financial stress is the very impetus that sends them to PLA’s doorstep, Kuper adds.

“When times are good, we get comfortable. We don’t need to look at the numbers so much. If there’s $30/animal inefficiency, it’s okay. But if you look at times like now, producers who have missed opportunities, don’t know their numbers, and who are missing opportunities, we are often part of the solution towards moving forward and executing in a better way.”