Lean and nimble companies within the startup ecosystem are increasingly providing a new pathway to grains industry innovation. Startups relevant to agriculture, however, have struggled more than most to attract venture capital.

Starting in 2019, GRDC partnered with Artesian Venture Partners (Artesian) to form the GrainInnovate venture capital fund. Its aim is to invest in startups solving problems pertinent to the grains industry.

Between 2019 and 2023, GRDC directly invested $16.4 million (current to June 2024). Overall, the partnership has invested around $32 million.

A cost-benefit analysis has now found that GRDC’s investment on behalf of grain growers has generated an estimated $6.70 of benefits overall for every $1 invested.

The challenge

Agricultural technology (agtech) is experiencing a phase of rapid expansion. This is largely driven by maturing capabilities within computational, robotics and high-throughput analytical technology.

On the ground, this wave of innovation is especially relevant to sustainable and resilient yield gains. It is helping ensure ongoing farm productivity and planet-wide food security.

However, securing funding remains a significant challenge for agtech startups.

Key barriers include:

• high R&D cost associated with testing agricultural technologies
• longer timeframes to market
• regulatory complexities
• integrating new technology within established farming systems.

Australia can be a tough environment in which to raise venture capital and global economic downturns further adversely affect startups.

Having held front row seats to the talent present in the pool of Australian agtech innovators, GRDC opted to nurture this talent by directly investing in the startup delivery pathway.

Overall, the GrainInnovate investment portfolio was found  to have a profound impact on  the Australian grains industry. These investments have facilitated the deployment of novel technologies, improved the likelihood of successful commercialisation and accelerated the adoption of innovations. Photo: DataFarming

The response

In 2019, GRDC established GrainInnovate, an early stage venture capital fund, which is managed by Artesian, one of Australia’s largest and most active early stage venture capital firms.

GrainInnovate’s investment mandate allows it to invest in startups that are developing unique solutions to industry challenges or opportunities. Startups might be drawing on novel software, hardware, biologicals and genetic technology or new business models relevant to grain growers.

This mandate is aligned with grain industry trends and grower priorities identified through GRDC’s Research, Development and Extension Plan 2019–23 and the current 2023–28 plan.

By June 2024, GrainInnovate had invested $32 million into 22 startup companies across six broad categories, as listed in Table 1.

The outcome

As of 2024, 50 per cent of businesses that received GrainInnovate investment had proceeded to commercial deployment. A further 25 per cent had proceeded to pilot testing, while six per cent were still in the prototype stage.

The deployed technologies are, for the most part, equally relevant across all three cropping regions across the country.

In 2024, GRDC commissioned independent economic consultants Marsden Jacob to analyse GrainInnovate’s impact.

This included estimating the on-farm value of the investment in agtech innovations. This was estimated at $4.80 of on-farm value for every $1 invested.

There is also a return in the form of yield equity in the startup business. These can be realised in the future. When this expected financial return is included, the total incremental net benefits from GrainInnovate to GRDC is estimated at $6.70 of total value for every $1 invested.

The analysis found that GrainInnovate investments have the potential to generate returns in additional ways, including:

• increased likelihood of success of the startup
• bringing forward the timing of the technology to market
• enabling other technological change on-farm
• encouraging other investors to invest in the startup space
• nurturing and supporting the agtech startup ecosystem.

With regards to supporting the ‘startup ecosystem’, establishing GrainInnovate has improved access to other sources of capital for a number of the startups. When this effect was quantified, GrainInnovate investments have amplified funds from other sources at a rate of some $24 per $1 of direct GRDC investment.

This impact has helped to bring forward technology deployment in the industry.

Several investments have also extended their impact globally, benefiting growers and industries beyond Australia. In turn, the fund helps attract internationally based startups to consider opportunities in the Australian grains sector. Overall, these are forces that can improve access to agtech for the Australian grains industry.

Marsden Jacob also observed opportunities for market expansion as new technologies find applications in sectors beyond grains – such as cotton, livestock, horticulture and forestry. Included are industries outside agriculture, such as mining and medicine.

Overall, the GrainInnovate investment portfolio was found to have a profound impact on the Australian grains industry. These investments have facilitated the deployment of novel technologies, improved the likelihood of successful commercialisation and accelerated the adoption of innovations.

Table 1: List of GrainInnovate investments in agtech startups between 2019 and 2024.

Source: Marsden Jacob

DataFarming’s Tim Neale, a recipient of GrainInnovate venture capital, spoke at the recent GRDC Grains Research Updates.

More information: Delivering impact case studies.

Resources:

• GroundCover™ Supplement (July 2023): GrainInnovate,
• GroundCover (2021): Hope springs from GrainInnovate pipeline,
• GroundCover (2022): Capital fund at the forefront of industry advancement,
• GroundCover (2024): Early support essential for ‘light bulb’ moments

Read more: Digital Agronomist helps unlock data.