Investing in any business is a risk that investors take when the potential ROI is evident in the new product or idea, and AgTech investors are no different. They want to make sound investments and so there are certain key aspects they’re going to look for in any AgTech startup to ensure the company has a chance of success and their capital is secure. However, in a highly technical field like AgTech, there are some unique aspects of early stage development that are key to building a successful plan and raising capital. If you are part of an AgTech startup or are an investor considering the industry, here are some important things to consider as you build your startup or weigh your potential investment.
No matter the size of the startup, investors want to see that the company has the expertise it needs to accomplish its goals. Having founders or team members who are familiar with the industry and have the skills to develop the proposed solution is key. As the company grows, founders also want to see team members with management experience and sales abilities. A stable team is particularly important in a technical field like Agtech, where you may need to prove that you have an expert in agriculture as your CTO, an engineer as your COO, and a veteran entrepreneur as your CEO.
Rules & Regulations
Depending on the location of the startup and its product, it’s likely subject to a number of different rules and regulations. Agtech investors are looking to see that the startup has a clear understanding of the rules and any processes they need to undergo in order for their products to be approved for use in agriculture.
In a highly technical field like Agtech, it is easy to remain exclusively focused on product development and technical details. Even at the early stages, AgTech startups should focus on talking to farmers or other end consumers to get validation of their idea, and on building a community of early adaptors once the regulatory and technical challenges are overcome. Will it really help a large enough number of customers to make it a business? How much are those customers willing to pay? These questions should be answered initially through on-the-ground market research, and revisited periodically to ensure the startup is on the right track.
While your company may initially start out focused on smaller co-ops or recreational farms, you need to have a vision for how your business will grow. There are a number of different routes to do this within AgTech. While focusing on a niche is a great way to get initial adoption, having a clear path for the future is a great way to get investors.
Just as farmers want plants to stand up to hot sun or disease, investors want to put their capital in startups that will roll with whatever comes their way and keep going. Some investors look at serial successful founders for this trait, others like to see it demonstrated from the beginning through creative problem solving.
AgTech is a growing industry as more and more technology is developed or adapted for this major and important market. Investors are savvy enough to know that it takes more than just a knowledge of farming or technical expertise to succeed in the marketplace. That’s why having the right team and the right plan matters so much. Don’t make the mistake of leaving marketing out of your initial business strategy and waiting until your product is almost at market to figure out how to actually market it. At StepUp our focus is exclusively on helping B2B manufacturing companies, particularly in the fields of AgTech, MedTech and CleanTech, build smart marketing systems that save time and increase leads. If you want to learn more about marketing automation and strategy for AgTech companies, contact us today for a free B2B marketing strategy review.