Venture Capital is Shifting the Ag Tech Sector

Sep 25, 2018

Agriculture employs more people in the world than any other industry. It has the greatest impact on socioeconomic status and the economy. Not only is it the biggest industry in the world, but agriculture is statistically the most under-invested.

What can we do to increase investor interest in the agricultural industry? All roads point to venture capital.

The venture capital space is gaining momentum in agriculture. It’s an interesting time with the rise of corporate acquisitions, the popularity of precision ag and consumers’ attentiveness to sustainability. In response to these emerging and expanding trends, the agricultural venture capital space is investing more in precision ag technology, animal health and nutrition, and sustainability.

Venture capital firms are always a few steps ahead, taking startups and helping them grow into healthy companies. The Yield Lab is good at working with startups and large strategic businesses to figure out how they might be able to work together. A large company never says, "We don't see enough deal flow." We at The Yield Lab have really refined our ability to help our clients pitch how their emerging technology could impact their strategic advantage or bottom line.

One example is AgVoice, a hands-free technology for agriculture professionals. As farmers are in the field or agronomists are determining what prescription for a field annually, they can immediately upload and then inquire what the best route would be for themselves or clients.

Additionally, this has an immense opportunity in the developing world where oral learning traditions are strong and verbal communication is the most effective. AgVoice empowers farmers both in the U.S. and in the developing world.

Venture capital is beneficial to the startup, the venture capital firm, and when speaking of agriculture, the farmer. Here’s why:

Venture capital has a responsibility to maximize shareholder value. We make all decisions in their best interest.
For the startup, they get access to capital and a network of resources they otherwise likely did not have access to.
For farmers, we are helping to fund or trim the development pipeline of technologies. Often new tech is so early in development or too undifferentiated. We pave an opportunity for a higher ROI for the farmer.
Farmers can invest directly into venture capital funds and commonly do with co-ops. Farmers invest money to help identify some technologies that are beneficial to their co-op. This way, they find direct value from their financial investment.
When grain originators, food processors and seed and fertilizer companies invest in innovative technologies, the cost of products farmers use often decreases, and the quality of those products also increases.

Venture capital funds need to be matched with human talent. Right now, we are experiencing a massive lack of skilled people in IT. This is a great opportunity for Science, Technology, Engineering, and Mathematics (STEM) education to promote agriculture as a viable avenue. Many IT skills are transferable — there isn't a whole lot of additional training if you move between agriculture, biotech, software, etc. Increased interest in STEM from people with ag backgrounds will be extremely beneficial to the industry. The number of people with agricultural experience will be the next generation of leaders who have the knowledge to make strong investments in the agricultural industry.

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Video: Spring 2026 weather outlook for Wisconsin; What an early-arriving El Niño could mean

Northeast Wisconsin is a small corner of the world, but our weather is still affected by what happens across the globe.

That includes in the equatorial Pacific, where changes between El Niño and La Niña play a role in the weather here -- and boy, have there been some abrupt changes as of late.

El Niño and La Niña are the two phases of what is collectively known as the El Niño Southern Oscillation, or ENSO for short. These are the swings back and forth from unusually warm to unusually cold sea surface temperatures in the Pacific Ocean along the equator.

Since this past September, we have been in a weak La Niña, which means water temperatures near the Eastern Pacific equator have been cooler than usual. That's where we're at right now.

Even last fall, the long-term outlook suggested a return to neutral conditions by spring and potentially El Niño conditions by summer.

But there are some signs this may be happening faster than usual, which could accelerate the onset of El Niño.

Over the last few weeks, unusually strong bursts of westerly winds farther west in the Pacific -- where sea surface temperatures are warmer than average -- have been observed. There is a chance that this could accelerate the warming of those eastern Pacific waters and potentially push us into El Niño sooner than usual.

If we do enter El Nino by spring -- which we'll define as the period of March, April and May -- there are some long-term correlations with our weather here in Northeast Wisconsin.

Looking at a map of anomalously warm weather, most of the upper Great Lakes doesn't show a strong correlation, but in general, the northern tiers of the United States do tend to lean to that direction.

The stronger correlation is with precipitation. El Niño conditions in spring have historically come with a higher risk of very dry weather over that time frame, so this will definitely be a transition we'll have to watch closely as we move out of winter.