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GCA Agtech Roundtable Discussion

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GCA Agtech Roundtable Discussion GCA AgTech Roundtable Discussion March 17, 2016 GCA / 1 Participants Emerging Companies Dan Meagher, CEO, Agrivida Giora Giladi, International Business Manager, Aqua4D Marcus Meadows-Smith, CEO, Bioconsortia Pat Christie, CEO, Co nservis Damien Lepoutre, President, Geosys Sid Gorham, Co-Founder & CEO, Granular Gottfried Pessl, CEO, Metos Tom Laurita, CEO, New Leaf Symbiotics Lance Donny, CEO, OnFarm Large Companies Kiersten Stead, Venture Principal, Monsanto Growth Ventures Matt Rushing, Vice President, Product Line, ATS, AGCO To m Blair, S VP, Perfo rmance Analytics, Iteris Neal Gutterson, Vice President Agriculture Biotechnology, Pioneer Marco Ferroni, Executive Director, Syngenta Foundation Investors Andy Zio lko w ski, Managing Directo r, Cultivian S andbo x Ventures Claude Vachet, Managing Partner, Cycle Capital Lila Preston, Partner, Generation IM Brook Porter, Partner, KPCB Andy Freeman, Partner, Paine & Partners Mark Cupta, Vice President, Prelude Ventures Mohan Tavorath, Strategic Advisor, International Farming Corp. GCA / 2 AgTech and Food Sector Themes > Total 2015 funding (VC, PE and corporates) to the AgTech and smart food sector was estimated at over $4bn in 2015 (~165% y-o-y growth),(1) with agriculture-focused investment funds raising more than $3.9bn(2) > Emerging segments include: – Software Analytics, Farm Data Management, Platforms – Irrigation and Water Technologies – Crop Developers and Life Science/performance improvement innovations related to crop yield – Innovative Equipment (drones, geospatial analytics, remote sensing) Sector – Urban Farming and Alternative Transportation as new up-and-coming subsectors Themes > Innovative technologies are expected to transform the Ag industry – Some industry growth expectations may be “heroic”: e.g. the agricultural drones and robotics market is expected to grow to $16.3bn by 2020(3) – Important to distinguish between different markets (geographic, farm type, production methods, etc.) > However, the traditional, incumbent large seed/crop producers and institutional farms continue to be dominant: most emerging AgTech companies remain very small – Some level of business development, “reliance” on company model and practices emerging companies are looking to replace (1) Rabobank, AgFunder. (2) Data supplied by Preqin. Nine funds focused on farmland, agribusiness and agtech assets raised $3.86bn in FY2015, with TIAA-CREF’s Global Agriculture II, a U.S., Brazil and Australia-focused farmland fund, raising $3bn in July, and Equilibrium Capital’s ACM Permanent Crops Fund closing $250mm in January. Others include Southern Pastures New Zealand Dairy Fund I, Homestead Capital’s USA Farmland Fund I and Cultivian Ventures’ Sandbox Food & Agriculture Fund II. (3) Bank of America Merrill Lynch Global Research. GCA / 3 AgTech and Food Sector Themes (cont’d) > 2015 equity capital raises – Food/eCommerce, Irrigation/Water and Drones/Robotics verticals combined represented over 59% of all AgTech funding, but median deal sizes were less than $3mm, reflecting the early stage and also relative capital efficiency of many models Capital – Precision Ag companies raised $661mm in 2015, an increase of roughly 140% Raising compared to 2014, highlighted by Planet Labs $123mm Series C raise – Soil and Crop Tech companies raised $168mm, highlighted by AgBiome’s $34.5mm Series B raise > Many subsectors are still in early stages: 73% of all fundraising deals were seed or Series A rounds > Increasing number of private M&A deals, 86 deals accounted for in 2015 (most deals are private with limited deal terms available) > Wave of M&A expected over the next 2-3 years as: – Emerging models get fully proven M&A – Large incumbents focus on their “AgTech growth strategy” – Point, niche solutions are seen to fit better into “platform” plays > Monsanto/ Climate Corp (Oct. 2013, $930mm) is perhaps the standout M&A transaction in the sector to date which has provided a useful case study for investors as they consider future strategic exits for their companies GCA / 4 AgTech Landscape(1) Emerging Business Equipment Water Management Software Crop / Life Science Models Drones Consumer Products / Urban Farming Marketplaces / Other Technology / Infrastructure Representative Global Multi-segment Leaders Source: GCA analysis. GCA / 5 (1) Representative companies only. AgTech Deal Volume & Activity In 2015, 525 deals involving 672 unique investors raised $4.6bn for AgTech startups, which nearly doubled 2014’s $2.4bn total and outpaced growth in the broader venture capital market Deal Volume & Activity by Quarter in 2014-2015 153 132 $1,257 Financing ($mm) $1,129 # Deals $1,254 112 $969 $933 129 78 67 55 $509 64 $467 $416 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2015 Number of Deals by Investors 548 81 22 9 7 2 3 1 1 x1 x2 x3 x4 x5 x6 x7 x10 x11 Source: AgTech Funding Report 2015. GCA / 6 AgTech Deal Volume & Activity Food Ecommerce and Irrigation/Water Management companies received more than half of all AgTech investment, while Drone/Unmanned Surveyor companies took in more than $380mm 2015 Deal Volume & Activity by Subsector 2015 AgTech Investment Subsector Breakdown % of Total Investment Dollars Food Ecommerce $1,653 137 Irrigation & Water $673 22 Drones & Robotics $383 42 Bioenergy $305 19 The Food e-commerce and Irrigation & Water Technology subsectors were Decision Support Technology $295 46 both outliers in 2015, raising a Food Ecommerce 2% collective $2.3bn across 159 deals 12% Irrigation & Water Biomaterials & Biochemicals $190 23 2% Drones & Robotics Soil & Crop Technology $168 35 4% 36% Bioenergy Sustainable Protein $160 7 4% Decision Support Technology Foodtech $110 24 4% Biomaterials & Biochemicals Soil & Crop Technology Food Safety & Traceability $95 19 6% Sustainable Protein Waste Tech $91 19 7% Foodtech Indoor Agriculture $77 19 Food Safety & Traceability 8% 15% Other Farm to Consumer $70 20 Cannabis $68 35 Animal Nutrition & Health $50 12 Smart Equipment & Hardware $26 22 Financing ($mm) Miscellaneous $159 25 # Deals Source: AgTech Funding Report 2015. GCA / 7 Discussion Topics > Trends in AgTech: What are the major opportunities and drivers of growth? – Bioscience innovations – yield enhancement, pest control, other? 1 Trends – Smart, Connected Farms – analytics, big data, ERP? – Urban Farming – implications for supply chains and logistics? – Automation and Connectivity - will farms be a real test bed for driverless vehicles? > Data management, analytics, other new “at farm/in field” technologies Impact of – Industry trends – are new technologies necessary for farms/food production companies 2 New to be able to compete? Technologies – What are the drivers behind client decisions to invest in new technologies? > How do you view the impact of compliance/regulation in the Ag industry? 3 Regulation / Compliance – Does it stifle innovation for or provide an opportunity? > The future of AgTech: Where will growth come from? Future of 4 – How will partnerships, M&A and investments shape the industry? AgTech – Can AgTech companies get to scale standalone or do they depend on large platforms? > Global Outlook: How has macro and geopolitical uncertainty affected your business? – Have current energy/commodity prices created new dynamics for your business? 5 Outlook – How are you prioritizing investment in growth markets? – Is slowing growth in China, Brazil and Eastern Europe affecting your outlook for 2016/2017? GCA / 8 Appendix GCA / 9 Top 20 U.S. & International Venture Deals Top 20 International Venture Deals (Excluding U.S.) Top 20 U.S. Venture Deals ($mm) ($mm) Womai $200.0 Blue Apron $135.0 HelloFresh $126.0 Impossible Foods $108.0 Grofers $120.0 Planet Labs $93.0 HelloFresh $85.0 HelloFresh $85.0 Jiuxian.com $80.0 Munchery $85.0 DJI $75.0 3D Robotics $64.0 Beequick $70.0 Premise $50.0 Three food delivery Fruitday $70.0 Ginkgo Bioworks $45.0 Food e-commerce led companies in China raised venture deals in the U.S., Bigbasket.com $50.0 particularly large rounds: Sprig $45.0 with meal kit delivery Womai – $200mm, Green Biologics $42.0 Zymergen $44.0 company Blue Apron - Jiuxian.com $80mm and $135mm and HelloFresh – Parrot $35.2 Fruitday –$70mm Ehang $42.0 $126mm Grofers $35.0 Joule Unlimited $40.0 Benlai Life $30.0 Plated $35.0 FAASOS $30.0 AgBiome $34.5 RedMart $26.7 Fulcurm Bioenergy $30.0 Mathem $25.1 NatureBox $30.0 Clearpath Robotics $23.5 ThriveMarket $30.0 Vayyar $22.0 Rheonix $28.6 Beequick $20.0 Innit $25.0 Undisclosed $17.7 Agrivida $23.0 Commentary: > U.S. AgTech startups raised $2.2 billion in 2015, nearly half of all global AgTech capital raised > Asian AgTech startups outpaced other international competitors in raising capital in 2015 > U.S. companies accounted for 58% of 2015’s total deal flow by deal count compared to 90% in 2014, reflecting the impact of more active international AgTech investors Source: AgTech Funding Report 2015. GCA / 10 Top 5 Deals by Subsector Company Funding Date Raised Stage Investors Bioenergy Capricorn Venture Partners, Convergence Holdings, Morningside Technology Partners, Oxford Capital 1/21/2015 $42M Series C Partners, Sofinnova Partners, Swire Pacific 1/21/2015 $16M Series C Angeleno Group,Draper Fisher Jurvetson (DFJ), Flint Hills Resources, I2BF Global Ventures 1/13/2015 $12M Series F Illinois Ventures, Wood Creek Capital Management 1/22/2015 $10M Series B AquaSpark, Walden Riverwood Ventures 1/23/2015 $4M Series B Undisclosed Biomaterials & Biochemicals 5 Prime Ventures, AME Cloud Ventures, Data Collective, Draper Fisher Jurvetson
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