Agriculture Archives - Artemis Water Strategy

Jun 01 2017

Is Agriculture IoT a Ripe Target for Softbank’s Next Big Windfall?

In his career finale, a pioneering investor aims to lead a massive shift in communications.

Last week, Japanese investment giant SoftBank announced that it had closed $93 billion in committed capital for its massive Vision Fund, putting it within striking distance of the $100 billion target it announced last year. The Vision Fund dwarfs even the world’s biggest private equity vehicles, including the $22.5B mega fund that Apollo Global Management announced last month set to have been the largest in recent history. The Vision Fund would exceed the size of the five biggest private equity funds combined, according to investment research firm Pitchbook.

ARM acquisition provides a launchpad into IoT

Since the Internet boom of the late ‘90s, Softbank has set the pace for tech investing, betting huge sums to chase the rapid growth of the Internet, then retail distribution via online portals. It has made tens of billions in returns from investments in companies from Alibaba, to Yahoo and Supercell Oy. The first closing of the Vision Fund comes just three months after Softbank’s founder, Chairman and CEO Masayoshi Son made the biggest bet of his career with the $32 billion acquisition of chipmaker ARM Holdings Plc. ARM provides technology for 95% of all smartphones and seems poised to play a central role in the emerging “Internet of Things” (IoT) market that will network devices, vehicles, and buildings via remote sensors and processors. “ARM will be the center of the Internet of Things, in which everything will be connected,” he told reporters. “IoT is going to be the biggest paradigm shift in human history (and) we have always invested at the beginning of every paradigm shift.”

Ambitious vision set to shake up the investment community

Softbank’s Vision Fund is rumbling the investment community because of its size, but also because of its ambitions. It is the cornerstone for Softbank’s founder, Chairman and CEO Masayoshi Son’s final mission for Softbank to bring Japan’s third largest company to a new level of global leadership. Last year, Son decided to postpone his retirement to “work on a few more crazy ideas.” “I feel my work is not done,” he stated. Mr. Son said. “This will require me to be C.E.O. for at least another five to 10 years.” According to Bloomberg, Son has laid out a 300-year plan to make the company the most valuable in the world.

Historically, SoftBank invests in a range of businesses, from established players to tiny start-ups. Recent examples include a $130 million in the biotech startup Zymergen, $5 billion to Chinese Uber competitor Didi Chuxing as well as big bets on co-working space provider WeWork and India’s Paytm, a mobile payments company.

Venture capital vehicles, known for making the types of tech investments the Vision Fund is targeting, are typically even smaller than the giant private equity funds. For example, Technology Crossover Ventures’ 2007 fund VII was one of the biggest in history at only $3 billion. Only a small group of the hundreds of venture funds have established vehicles that total more than $1 billion.

Which markets will bloom with Vision Fund investment?

Industry observers wonder whether a behemoth investor of this size with considerable technology synergies will hit the ecosystem of venture investment like an asteroid landing on a desert island. According to analyst Kyle Stanford, the specter of price inflation for early-stage investments is already haunting the investment meetings at venture firms. “The fear is all rooted in the 2014, 2015 investment environment, where there were tourist investors and valuations were getting out of control, and when valuations get too high it limits exit opportunities,” Stanford explains. “When you see a fund of $100 billion coming in already making big headliner deals, I think that fear is going to come back.”

Those headliner deals depend on a healthy crop of well-financed growth stage deals, which have been on the decline even as overall investment activity has picked up, with first financing activity falling for seven consecutive quarters.

First financing activity has fallen for seventh consecutive quarters

Source: Pitchbook

The

Source: Pitchbook

Over the short term, competition for top tier deals will heat up startup valuations, but the Vision Fund is also bound to have a profound impact on the kinds of technologies that get to market and their pace of development. $100 B in ambitious capital will drive investors to expand their investment activity to new technologies and markets.

Riding, and driving the food tech wave

Telecom giants like Softbank are diversifying beyond their core industries through acquisitions in areas that lead to synergies. BT launched a sports TV channels venture and Norway’s Telenor opened an e-bank. From its base in Japan and with domain expertise in telecommunications and hardware, Softbank will be looking for technologies that are riding dramatic market trends.

One candidate is precision ag. With its ambition, its vision and it’s unique perspective as a Japanese company, Softbank seems set to play in the next chapter of the telecommunications revolution– beyond the internet, beyond urban networks to address the big challenge of feeding a population of 9 billion.

By 2050, 14 of the world’s 20 biggest metropolises will be in Asia and Africa, including Jakarta, Manila, Karachi, Kinshasa and Lagos as well as Tokyo, Shanghai. and Mumbai, according to a projection by Demographia. It takes about 1 acre to feed the average U.S. consumer. China only has about 0.2 acres of arable land per citizen, and an estimated 20% of that land is contaminated with toxic pollution. As a result, Chinese have been investing aggressively outside of China to produce food for their home market. High profile purchases include Australia’s biggest dairy operation and US-based Smithfield Foods.

Precision agriculture is a “must win” market for IoT leadership

As the world’s population grows, outright purchase of existing food production facilities will not suffice. Technology will be essential to feed burgeoning populations. Precision agriculture will be more than enabling technology, it will be essential for survival; to feed an increasingly crowded planet. This will be a “must win” flagship market for major technology and communications companies, from Intel and Softbank’s ARM to communications companies like Softbank’s Sprint, Verizon, BT and Telstra.

Jun 17 2015

Which solutions can respond in time?

Courtesy of National Oceanic and Atmospheric Administration

As California counts its water reserves in months, which “shovel ready” solutions can help it respond?

More than $320M of California’s emergency drought relief funds were left unspent a year after they were approved, according to reports from the California State Finance Department released last week. As the State starts a grim countdown to the limits of its reservoirs, the timeframes on the California water crisis has suddenly shifted from years to months, California’s water system has been built with 25 year capital plans, where even the fast-track water projects take 2 to 6 years to complete.

“We need to get the money out the door now for shovel-ready projects and existing water programs that only need funding to get started. No delay. No red tape.” California Senate President pro Tempore Kevin de León (D-Los Angeles) stated back in March.

While the State scrambles to keep water running, water tech innovations that are both “shovel ready” but also built for plug and play installation are gaining attention. Laura Shenkar from Artemis joined Frances Spivy-Weber, Vice-Chair of the State Water Resources Control Board, Lance Donny, founder and CEO of OnFarm, Mike Lord, vice president of engineering for Effluent Free Desalination Corp (EFD) and Robin Gilthorpe, CEO of WaterSmart on June 5 to discuss some examples on public radio, the KQED Forum.

Oct 22 2014

In California, water is not for the faint of heart

Facebook COO Cheryl Sandberg, former Treasury Secretary Robert Rubin and California Governor Jerry Brown made a unique appearance on Monday at Stanford University.

“The answer is not to go back to a presumed utopia, we’ve got to manage what we have. In a state of 38 million people, we’ve got a management challenge that will take all of the innovation, collaboration and magic of the marketplace.”

California is a “canary in the coal mine” for the world as the state faces an unprecedented drought, combined with new reductions on its critical water supply from the Colorado river. Water scarcity is devastating the economies of the Western US: California agriculture lost $2.2 billion in 2014 alone Texas has lost $25 billion since 2011 because of drought, and Las Vegas is spending $1 billion for a third pipe and a lower level into Lake Mead to tap into its dwindling waters.

There is a fundamental mismatch between the US water infrastructure and the water services requirements for the next decade. As water supplies dry up, water pollution will become more concentrated. In order to tap into the estimated 5.2 to 7.1 million acre-feet of water supply from storm water and reclaimed sewage, California will need to build a second water utility system– onsite and community water systems. The state will need to move fast to set policy and monitoring for these remote systems.

If he wins in November, Brown promised to “put water up front and center.” With over a century of brutal politics around water, California water policy is not for the faint of heart. In what many expect to be Brown’s last term in office, changing the face of California water would set a promient place Brown in the history books.

Oct 01 2014

A new breed of environmental entrepreneurs -Technology for Africa, from Africa

Melesse Temescan is one example of the new breed of entrepreneurs emerging with promising water technologies out of the places that have been contending with water scarcity for decades. Temescan’s company, Aybar LLC was among the first awarded the US/Swedish/Dutch Securing Water for Food (SWFF) grant to rapidly build his business for wide scale impact.

Aybar has designed a innovative plow to help Ethiopian farmers reduce water logging during the rainy seasons and conserve water in the dry season. In Ethiopia, water logging, or flooding, prevents cultivation of over 5 million hectares of land during the rainy season. The Aybar BBM allows the livestock used for farming to build deeper, more effective ridges to drain excess water. This plow costs $16.48 as compared with $2000 for Chinese manufactured tractors.

A career researcher for the Government of Ethiopia, Temescan was frustrated to see that his innovation was not getting onto the farms to that needed it. The story of Aybar is a story of entrepreneurship as much as it is a story of innovation. In three years, Temescan has sold 45,000, and has been struggling to manufacture units to keep up with demand. Only an entrepreneur from Ethiopia like Temescan could produce this kind of innovation based on existing practices and build a distribution channel so quickly. With SWFF funding, Temescan expects to sell 60,000 in the next year.

The SWFF program is a pioneering effort focusing upon individual businesses and technologies, rather than large-scale programs. Temescan, and the other 16 SWFF awardees provide a glimpse of how entrepreneurs might drive the velocity of change in the face of water scarcity.

Sep 12 2014

The Future of Farming– A View from Corn Country

The Ag Innovation Showcase brought together leading crop science companies, investors and promising start-ups earlier this week in St. Louis. I spoke on the “Future of Farming” with Philippe Herve of Bayer CropScience, Brook Porter from Kleiner Perkins, and John Sorenson of Vestaron.

The highlighted leading edge innovations that are bringing big data, microbial pesticides, and advanced sensors to growers in the US.

–Vestaron is one of the rising stars in a new class of biological pest control products. Working with peptides from spider venom, the company has developed pesticides that are innocuous to mammals and break down easily after being applied. It just received USEPA approval and closed a $10 M investment round.

-Big Data: Fresno-based OnFarm integrates field data, weather and imaging data on a cloud-based dashboard for farmers that they can use from their iPhones in the field. It provides field specific analytics, forecasts, and recommendations to plan, manage, and control their field operations. http://www.onfarm.com

A vibrant group of start-ups are developing tools to track critical factors. Adapt-N is a tool uses a well-calibrated computer model, high resolution precipitation and temperature data, and soil, crop and management information to generate nitrogen application recommendations for crops. Hydrobio is developing sophisticated satellite image-driven analytics to manage water and increase crop yields– from scheduling sprinkler watering systems to optimizing sun penetration through the corn plant canopy.

Most important, start-ups and agribusiness leaders were outnumbered by investors. A diverse international crowd of private equity and early-stage investors, from New Zealand, Australia and Israel and throughout the US were a strong indicator that advances in biotech, bio manufacturing and big data are going to reshape farming.