Drone Technology in Ag: Round 2

As investors in Ag Technology we have seen a swarm of companies developed to sell drones and drone services to farmers.  The bird’s eye view from a drone has revealed new details about fields that have been farmed for many years.  At best, this information generates new questions for a farmer to ask.  At worst, it provides a really interesting view of the farm.  The problem is that an interesting view of the farm doesn’t always provide a great return on investment in new equipment or the time spent to learn how to use the new drone equipment.

Each time we see a new drone startup the first questions we ask are:

  • Is this information useful?
  • What is the ROI for the Grower?
  • Is there a competitive advantage over the rest of the swarm of drone startups?
  • What is the user experience?

To date: the answers usually fall somewhere between NO and NOT SURE.  However, I have a very positive outlook on the industry due to the bumps and bruises the first generation of drone companies have taken to learn how to be valuable in the ag market.

The first generation of drone startups has largely been focused on imaging.  Companies are sending drones with cameras over fields to try to identify areas of the field that can be improved.  In a sense, it is a way to scout a field faster than walking and with more detail than driving by on the highway. There is no doubt that this technology is improving every day, and when implemented effectively can improve the quality of scouting.  I believe the companies that learn how to make the grower experience painless, and provide higher quality information than I can get driving past my field on the highway will come out on top.  The difficult part about investing is with so many companies in this field I can’t tell who will be a winner.

The second generation of drone technology is what I am more excited about as an AgTech investor.  This batch of companies is replacing operations that represent a larger portion of operational expense and can have a competitive advantage built in through intellectual property.  A couple of the very early, but exciting technologies we have seen are a company that is using a drone to measure the nutrients in soil with greater efficiency and greater precision than a human with a probe can take soil samples.  Another startup has developed spraying technology that increases spray coverage so substantially that much smaller payloads are required, and it may be enough to enable drone spraying on a commercial scale.

The future is very exciting, and it is a great time to be involved in agriculture.  Despite the challenge that growers face with very low grain prices, they are still innovating and solving very large problems.  It is truly inspiring to be immersed in new technologies every day.

Written by Spencer Stensrude, Business Analyst

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