Cultivian Sandbox gives investor perspective on animal agtech innovation
Ahead of the Animal AgTech Innovation Summit in Amsterdam next week, Animal Pharm analyst Sian Lazell caught up with Kevin Zussman, vice president of food and agri-tech investment firm Cultivian Sandbox Ventures, to get his view on the animal health technology space.
Sian Lazell: There have been a lot of digital solutions emerge in the animal health industry over the last few years. What do you think are currently the most exciting technologies being developed and which will be the most valuable over the next 5-10 years?
Kevin Zussman: I believe the most exciting technologies in the animal health industry are the solutions that have the highest potential to challenge the status quo. These may include rapid on-farm diagnostics, feed additives as alternatives or complements to antibiotics, and integrated solutions that combine software and biology.
For example, rapid, on-farm diagnostics have the potential to re-shape the animal health industry like precision agriculture tools are beginning to transform the crop protection industry. In the crop protection space, Blue River Technology is developing 'See & Spray' machines that use computer vision and machine learning for precision weed control. The company, which was acquired by John Deere for over $300 million in 2017, claims its technology can reduce the amount of chemicals used in agriculture by up to 90%.
In animal health, Advanced Animal Diagnostics has developed rapid, on-farm diagnostics to provide livestock producers with information they need to make informed management and treatment decisions. Through accurate, on-site disease detection, producers can provide more precise animal care while significantly reducing antibiotics.
SL: In your opinion, what makes a strong agtech company in the animal health space and how can they be attractive to investors?
KZ: In order to stand out in this space, companies must be able to deliver compelling return on investments by providing differentiated solutions with novel modes of action, that do not require significant behavior changes by the end user. I believe these types of solutions will generate the highest value to producers, consumers and investors alike.
Kevin Zussman: "A specific trend that makes me excited as an investor in the space is the ability to leverage R&D investment in tools that were originally developed for other sectors."
SL: What are some of the obstacles faced by firms in the animal health agtech space?
KZ: Generally speaking, a major obstacle faced by animal health/agtech start-ups – and start-ups in general – is the 'go-to-market' process. Because of the scale and scope of the agriculture industry, it can be difficult for young companies to introduce new products into the market, especially if they try to sell directly to the end user – though it will be lucrative for those who pull it off.
However, this also creates an exciting opportunity for collaboration, as the core competencies of large companies (access to capital and resources, market and geographic knowledge, extensive distribution networks, etc.) are highly synergistic with the core competencies of start-ups (flexibility, agility, no stake in the status quo, etc.).
SL: Where do you think most innovation in the agtech space is coming from at the moment? Is it from academia, big established firms or any particular geographic region?
KZ: One of the most exciting things about agtech innovation is that it comes from all over the place – big companies, small companies, universities, research institutions and garages all over the world.
As technology has become more democratized, the pace of innovation has significantly increased. A specific trend that makes me excited as an investor in the space is the ability to leverage R&D investment in tools that were originally developed for other sectors, such as human health, crop protection and energy, that are applicable in the animal health space. This can present an attractive risk/reward profile since the technology may be de-risked to a certain extent and new capital will be used to scale up in a new market.
Kevin Zussman joined Cultivian Sandbox Ventures in 2014. Prior to joining the Chicago-based firm, he was an investment banking analyst at Baird. Mr Zussman holds a degree majoring in finance and accounting, with a minor in environmental science, from the Ross School of Business at the University of Michigan.
He is a speaker at the Animal AgTech Innovation Summit, which will be held October 1-2, 2019, in Amsterdam. The event will feature a total of 40 agtech start-ups, with 13 presenting their technologies to potential partners and investors. The event will also play host to various panel discussions regarding the agtech space and delegate networking opportunities.