I’ve done extensive research into investment opportunities in agtech, or agritech, as some call it. The major problem with investing in agricultural technology innovation is that the best opportunities are private companies and VC investments. There are options if you’re ok with limited liquidity. Check out Agfunder, for example.
I, however, am not. Liquidity is one of my major investment must-haves. I mean super liquid.
Another problem with investing in Agtech is that many of the public investments in this field, and there really are relatively few, are “old tech.” This is seed biotech and agricultural chemicals technology. Fertilizers, fungicides, that kind of stuff.
The ag technologies that excite most investors and futurists are “cool” things like drones, precision agriculture, vertical farming and advanced hydroponics, to name a few. These are technologies that tend to deal with demographic and climate challenges by incorporating IOT and “smart” innovations.
However, we should not underestimate the value of continuing to improve seed technology. There is PLENTY of room to improve seed tech, especially in the pulses that work to feed the malnourished in emerging markets such as Africa and South East Asia.
A final challenge facing investors of late is the disruption happening in the industry right now via mergers and acquisitions.
Just a bit of personal experience here, but I put together tons of research into Monsanto and was watching $MON for a good investment entry point when the merger with Bayer was declared. At that point I had no idea what to do… do I invest in Monsanto, Bayer, or just wait it out and see what happens?
The three big mergers facing the chemicals / agribusiness industry as of this writing are:
- ChemChina and Syngenta
- Dow Chemical and DuPont
- Monsanto and Bayer
The three companies created through these mergers would own 80% of the market share of the U.S. corn seed sales and 70% of the global pesticide market. That’s a BIG deal, and farmers are worried… However, the company formed from the Dow-DuPont merger will be split into three totally separate companies in the end.
Diana Moss, president of the American Antitrust Institute, said the mergers will have “potentially adverse effects that could reduce innovation, increase seed costs and raise consumer food prices.” She said the Dow-DuPont and Monsanto-Bayer mergers could be particularly devastating. “They will eliminate head-to-head competition in markets for certain crop seed and chemicals,” said Moss.
OK… I know that sounds bad. But remember… disruption always hurts. As Fourth Industrial Revolution investors, our goal is to find ways to capitalize on the disruption. To make money from change. And as one of the four pillars of #4IR innovation, investing in Agtech is unavoidable.
I’ve determined that investing in Bayer is my choice for Agtech innovator. I believe the new Bayer will be more diversified that other new companies, and I like the Life Sciences element of the Bayer portfolio since Medtech is yet another pillar of #4IR innovation.
On the agtech side I like Monsanto’s VC investing activity and I’m interested in seeing what Bayer can do with Climate Corp.
Thanks for reading! I hope you enjoyed!
Join me next time as I explore the new Bayer.