Q&A: Venture Capital Investment & Aerial Imagery with Finistere Venture’s Amara Kukutai
Being our resident all-things-imagery geek here at PrecisionAg.com, I figured with the release of last week’s Finistere Ventures 2018 Ag Tech Investment Review – along with its handy Ag Tech Market Map posted at the top of this page – I figured now, what with our upcoming coverage of the aerial imagery market in January’s PrecisionAg Professional – it was the perfect time to discuss the state of VC-funded aerial imagery startups with someone over at the Palo Alto, CA-based firm.
For that purpose, I was connected via email to Amara Kukutai, current managing partner with Finistere Ventures and a board member with Crop Pro Insurance Services, Taranis, as well as serving as the chair of the CropX board. According to his LinkedIn profile, Kukutai has participated in several VC investment rounds and has over 100+ professional endorsements for his Venture Capital expertise.
Q: As we look at the Ag Tech Market Map released recently by Finistere Ventures, we see that, funding-wise, the drone companies have dominated overall (funding) in this space for some time. Do you expect that trend to continue in the next 3-5 years?
Amara Kukutai, Finistere Ventures: “There’s been quite a bit of activity in the imagery space — 19 deals in 2018 alone. However, imagery analytics (e.g., AI-enabled agronomic prescriptions) and imagery quality/resolution technologies span a much wider range of solutions than drones. It’s important to include satellite and aircraft in the mix. The drone companies have largely been hardware or services providers. The hardware business is more capital intensive, so the rounds are understandably larger. We don’t anticipate this trend will continue as drone services are commoditizing.
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“We see companies like DJI offering low-cost alternatives, though specialist players may still carve out a niche if bundling with services. Services like Drone Deploy and Deveron are also interesting participants, providing fleet services upon which to deploy ag-specific sensors and tools. We’re seeing increasing recognition by companies in the imagery space that the agricultural industry can be serviced by image-acquisition hardware (drones, satellites, planes) developed for other industries, and that image analysis, processing and collection are the unique pieces to businesses within this vertical. Providers appear to be getting greater traction around their economic impact and differentiation of technology. There is definitely a place for ag-specific drones to be developed, but we don’t think it’s within the imagery space.”
Q: Which imagery outfits do you feel currently are in best position to capitalize on their VC investments and mature into an established player in Midwest, large scale row crop ag?
Kukutai: “Taranis and Ceres Imaging appear to stand out as leading imaging/analytics players, but there is quite a bit of both crop/regional areas of emphasis across a crowded space. In the coming years, we expect to see consolidation within the drone hardware and services space. Companies that have scalable, software- or sensor-based platforms that will provide value to existing agronomist networks will continue to flourish. Despite the high level of interest in imagery plays over the last five years, few companies have emerged with truly useful, actionable analytics/value-added systems for agriculture.
“We expect a lot of shake out to occur as companies get consolidated and technology/value differences become clearer to farmers. There is also a significant impact from channel partnerships to enable delivery of services to customers such as Bayer, FBN, Nutrien, Syngenta, Wilbur-Ellis and others launching or enhancing their agronomic advisory platforms.”
Q: Do you feel there is strong correlation to how much VC funding a company receives and how viable a business these companies actually are?
Kukutai: “As companies mature and prove out their models, it’s easier to draw a correlation between total capital raised and business model viability. Within agtech, later-stage financings actually take up most of the capital invested, so yes, there definitely is at least a small correlation between capital raised and sustainability of the business model. However, this doesn’t necessarily hold true for sectors that have a ton of external (non-agtech) investor interest.
“In short, (it’s correlated) only to a point. Picking a high-burn or capex business model doesn’t guarantee success. That said, there is a minimum viable organization to fund and maintain while you build a customer base and strong technical product, as well as industry partnerships. The market map does not imply that the biggest fund raise is the best company but rather provides a factual representation of who has raised how much – we expect there will be some correlation to who survives and thrives.”