LA’s Burgeoning Agtech Industry Sees Green Acres Ahead

LA’s Burgeoning Agtech Industry Sees Green Acres Ahead
Farm Dog execs Alon Shmueli

While plenty of tech companies are interested in filling up consumers’ feeds, some are more interested in feeding consumers.

And Los Angeles, with its rich pool of tech talent and its extensive legacy of agriculture — L.A. County ranked as the nation’s top farm county from 1909 to 1949 — has become a rising hub for these agricultural technology companies.

“One of the very exciting things is that … we are very close in proximity to our stakeholders along the food value chain,” said Milena Bogdanova Bursztyn, a Venice-based investor at Germin8 Ventures, a venture capital firm that specializes in foodtech and agtech investment.

In addition to farmers and growers, L.A. is home to food processing companies like El Segundo-based Beyond Meat Inc., traditional grocers such as Monrovia-based Trader Joe’s Co. and ecommerce food marketers including Marina del Rey-based Thrive Market Inc. 

And in late August, in a blurring of the lines between online and in-person food shopping, Inc. opened its first Amazon Fresh grocery store in Woodland Hills.

One local agtech business, Sensei Ag Holdings Inc., launched in Santa Monica in July. The company was founded by Oracle Corp. founder Larry Ellison and David Agus, founding director of USC’s Lawrence J. Ellison Institute for Transformative Medicine. “(L.A.) makes a lot of sense as a headquarters location,” said Sensei Ag Chief Executive Sonia Lo. “There’s a great talent pool. There’s terrific weather, which helps with the talent pool. It’s very close to David’s research capabilities … and Los Angeles (is near to) a number of major airports.”
With aloha

Sensei Ag runs six greenhouses on the Hawaiian island of Lāna’i, which Ellison purchased for a reported $300 million in 2012. 

The company says the greenhouses use 90% less water to produce nourishing foods than traditional farming. 

Sensei Ag was launched along with a sister company called Sensei following the bifurcation of the wellness company Sensei Holdings Inc., which Ellison and Agus cofounded in 2017. 

While Sensei Ag takes over the farming tech division of the original holding company, Sensei runs a leisure travel business with a branded hotel near Sensei Ag’s farm on Lāna’i. Sensei Ag currently supplies produce to the hotel as well as local restaurants and retailers.

According to Lo, Sensei Ag is leveraging Agus’ scientific research and data to improve farming techniques.

The company has developed its own proprietary sensors that are capable of examining things like yellowing, aging and pester pathogen pressure. Sensei Ag’s crop management system is designed to shorten the cycle time for every task on the farm, Lo said.

The company is also building consumer-facing technologies to help guide its farming, Lo said. That includes a wearable tech device designed to give consumers feedback as soon as they eat, say, a tomato, on how long it takes for blood sugar to rise.

The company’s ambition is to have its Lāna’i farming prototype extended to other regions in the state and around the globe. 

“Sensei Ag is looking to solve time to market. It’s also looking to solve the agility of growers to be able to respond to market changes,” Lo said. 

To Lo, ideal locations for Sensei Ag’s farms would be in suburban or semi-rural areas where produce can be sent to large populations within less than a 24-hour drive. She added that the company is in talks to buy several farming locations on the West Coast.

One of Sensi Ag’s major competitors, Plenty Unlimited Inc., a SoftBank-backed vertical farming startup reportedly valued near $1 billion, announced in October that it will open a second vertical farm, a 95,000-square-foot facility, in Compton.

Lo noted that the agtech sector is likely to be a winning industry on several fronts because the production capability of a single company simply can’t meet the huge demand for food consumption. 

“I think it’s going to be an industry where there are probably a top 10 who do very well,” she said.

Agtech is a rapidly growing sector with lots of opportunities, said Germin8 Ventures’ Bursztyn, who added that companies should pay more attention to farmers and come up with ways to make farms’ operations more efficient.

“I think staying close to that end user of the technology in the platform is really, really critical,” Bursztyn said.
Working with farmers

Santa Monica-based FD AgroTechnologies Corp., doing business as Farm Dog, is one of the startups that caters to farmers’ needs. 

The company initially developed an analog-to-digital note-taking platform for farmers. The platform, available on web, mobile and tablet apps, evolved into one that visualizes and analyzes historic data to help users make decisions about proactive measures for pest and disease treatment. 

The data comes from information users have input on their digital records, combined with aerial imagery, weather information, soil databases, equipment telematics and other types of data obtained by the company, according to Farm Dog founder and Chief Executive Liron Brish.

“(It’s) really just giving them that data feedback loop, and saying, ‘Hey, last time, when you saw X and you did Y, this is what happened,’” Brish said.

Users can see visualizations of past disease outbreaks in their fields, based on their previous digital records, allowing them to plan ahead for future developments. They can also look at which treatments worked the best in the past, Brish added.

The company was founded in 2015 in Israel. It relocated 
to Los Angeles in 2018 because most of its customers are based in the United States, Brish said.

Farmers can use the Farm Dog platform to take digital notes for free. The company charges a $45 monthly subscription fee per user for access to features including weekly satellite imagery, professional branding and data insights.

Brish declined to disclose the number of paid subscribers but said the platform covers 2 million acres of fields in more than 25 states as well as Canada and Mexico.
Farming fintech

Downtown-based Produce Pay Inc. helps farmers in a different way.

The fintech company invests in produce ahead of delivery and sets itself up as a middleman between distributors, growers and grocers.

ProducePay is an underwriter of produce, said Chief Executive Pablo Borquez Schwarzbeck. 

The company makes an investment in a farm and helps farmers find buyers. ProducePay earns a 1% to 2% commission on the crops it invests in, according to Borquez Schwarzbeck.

“We underwrite not just the farming risk, but ultimately the trading risk, which involves weather, logistics and the trustworthiness of the counterparties — both the farming side and the buyers’ side. … We keep both parties accountable,” Borquez Schwarzbeck said.

He founded the company on the East Coast in 2014 while he was in business school and moved the business to L.A. in 2015. 

ProducePay has invested in more than 400 farms, 75% of which are located outside of the United States, primarily in Mexico. All the produce the company funds is destined to enter the U.S. consumption market, Borquez Schwarzbeck said.

He acknowledged that investment in produce carries risks and that not every investment is paid back.
The company considers a list of 142 criteria, such as farming capabilities, logistics and location before deciding which farms to invest in.

ProducePay has developed an interactive online platform that tracks the market prices of 211 commodities and sub-commodities, which has gained traction with farmers, Borquez Schwarzbeck said.

Benjamin Belldegrun, managing partner of Pontifax Global Food and Agriculture Technology Fund said investors, consumers, regulators, politicians and the general public are only now starting to understand the critical importance of agtech in driving climate change. 

“Agtech companies are focused on trying to drive not just profitability but also sustainability of our food system,” he said.

Pontifax AgTech is a growth capital investor in the food and agriculture technology sector with $430 million in assets under management. 

Two of the 11 companies in the fund’s portfolio are based in L.A.: Provivi Inc., a Santa Monica-based nonchemical crop protection company focused on pheromone synthesis technology, and Bouqs Co., a Marina del Rey-based ecommerce platform for direct grower-to-consumer floral distribution.

“L.A. is quickly becoming an emerging and vibrant hub for life sciences, with a significant growth in biotech, and that has fueled a wave of foodtech and agtech as well,” Belldegrun said.

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