Informed Investment Decisions to Propel the Growth of AgTech
Gregory Oberholtzer, CIO and Senior Managing Partner, WP Global Partners
With abundant experience of 30 years in broad investment advisory, Gregory Oberholtzer, the CIO and Senior Managing Partner at WP Global Partners, is focused on alternative asset management and financial product structuring for institutional clients. He brings to the table his vast expertise in small and middle-market buyouts and co-investments. He has also served as the president of two private financial services companies previously. He is currently a board member of BrightFarms, Celanova Biosciences, Illumitex, Monogram Foods, Seno Medical Instruments, and VolAgri, among other portfolio companies.
With his exposure to the agricultural sector, Oberholtzer rightfully observes that the industry has significantly developed with the implementation of innovative digital technologies, biotechnological solutions, and robotics. The major technological innovations in the agricultural space have been around areas of indoor vertical farming, automation and robotics, modern greenhouse practices, precision agriculture, and AI and blockchain technology. This advancement in the agricultural space has encouraged several venture capitalists to invest in it, which is evident from the large investment of $6.7 million in the last five years. He further states how AgTech has evolved from the days of applying mechanization and reducing labor costs to become more cognitive in nature to ultimately manufacture better quality food.
WP Global Partner’s Legacy
Our team has been together since 1997, and we have been investors in all stages of several companies, whether it be startups or later-stage buyouts. We have traditionally been more opportunistic in our investment approach. Our key focus is to build a diversified portfolio in lower to mid-market investments. Our clientele includes sovereign governments and large institutional investors. About a third of our four billion assets under management are either direct or co-investments. Apart from investing in funds, we also make direct investments in both early and later-stage companies. After our first investment in AgTech companies, we came up with a program that included a range of agriculture and technology sectors to get better insights into food production and manufacturing. Therefore, we have invested about $200 million into later-stage companies dealing with AgTech and production-related technologies, including hydroponic greenhouses and LED companies alike.
Leading Trends within the Agricultural Sector
The growing adoption of technology has enabled farmers to explore new frontiers in the realm of genomics. Farmers are gradually turning towards greenhouse applications and opting for lighting solutions to control the quality, size, color, and flavor of the food. The time taken for the hybridization of crops has also significantly reduced with the new methods of farming. This greatly helps in preventing diseases in crops and increases the variety of food being produced. The advent of technology into farming, even though a blessing, can nevertheless create a burden for the farmers.
"We are looking to apply the digital revolution to the agricultural arena to yield a high variety of crops and deliver intelligence in the form of insightful information and data that will further increase the quality and quantity of produce"
Seasonality was a big shortcoming for farmers as they had to wait for the harvest to discern their income and expenditure. The seasonal growth of crops would also determine their investment for the next year’s farming. Nonetheless, with the advent of newer technologies such as AI, robotics, and digitization, farmers no longer have to stick to their seasonal harvest and easily produce crops all year round. This increases their profits and provides adequate cash flow to invest in newer farming methods. AI and Big Data have become significant as they also provide farmers with insightful databases that can guide their next produce without relying on the traditional farming practices handed down to them from several generations.
The Vision as an Investor in AgTech
As an investor in AgTech, it can be tricky to accurately carry out valuations of startups and their solutions and understand the market (farmers’) perception of the AgTech solutions that these startups bring to the table. Another area of concern is making people comfortable about genetically produced crops. Nonetheless, vertical farming is one of the major areas that will gain a boost in the coming years as it will allow people to produce food efficiently, even in less arable areas utilizing indoor farming methods. The use of shelves mounted vertically reduces the space needed to grow plants. Vertical farms are also unique because most of the plants do not require soil to grow; they are either hydroponic or aeroponic in nature. These farms use up to 70 percent less water than traditional farming methods and utilize artificial grow lights instead of natural sunlight. Labor is also greatly reduced as it relies mostly on robots to handle the harvesting, planting, and logistics, thus eliminating the current labor shortage in the agriculture industry. The other possible area would be the changing consumer demands and likes. Based on the changing lifestyle and habits of people, there is a growing need for investing in produce that is more likely to be in demand than others. Farmers also need to consider the nutritional value of the crops they grow as the human population is increasingly becoming health conscious and aware of their eating habits.
A Visionary Endeavor by the WP Global Partners Team
We have a team of industry experts who are always looking for ways to make better investments in companies that have innovative technologies to assist the agricultural scenario at large. One of my team members improved the technology of lighting and brought to perspective the importance of crop management. We own a vertical farming facility where we have focused on installing cameras to monitor plants’ growth. We have also put in sensors to collect data, with the help of AI. This is an important initiative to assist an indoor farmer in managing the square inches and square footage of their farm and monitoring the plants effectively. For this purpose, we have also included infrared technology to enable efficient monitoring of plants. This method of tracking and monitoring plants using imaging has now shifted from high-value crops such as cannabis to other areas of horticulture. With this, we have eliminated the labor costs and have taken the human error element out of agriculture.
Ultimately, we are looking to apply the digital revolution to the agricultural arena to yield a high variety of crops and deliver intelligence in the form of insightful information and data that will further increase the quality and quantity of produce. The critical piece that was missing earlier was the output data. With the use of cameras, we can help farmers collect data almost instantaneously and connect it with the input and process data to know the exact condition of any given plant, at any given time. We can also apply generations’ worth of intelligence to that data and make recommendations to improve the growth and quality of the produce, thus increasing profitability for the farmers. This is the ultimate vision that we are continually delivering on.
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