Agriculture fertile ground for venture capitalists

Posted by Warren Bergen on Thursday, September 26, 2013 Under: Business

 In a hundred coffee shops right now, there are highly intelligent engineers talking about the next thing in mobile, or if there is still time to get in on big data. They love this stuff, but a lot of them are trying to find a wave of venture capital interest instead of seeking to create real value or even pursue a passion.

Creating a start-up by trying to catch a wave of en vogue financing is almost always a sure way to fail. There is a new wave coming, but it is driven by need and not by what’s cool, and it will take the collective effort of engineers, scientists and lot of other people with significant drive to meet the need.

Estimates are that our population will expand to nine billion people by 2045, and on a global scale, agricultural production accounts for 70 per cent per cent of fresh water usage. With the growth of the population, we will need more land to grow the crops to feed the people; however, arable land is decreasing, not increasing. Since 1965, arable land has diminished by 44 per cent per cent per capita and, even if enough land were available, there isn’t sufficient water to put the land into production.

In the U.S. alone, half of the 2 billion acres are utilized as agricultural land. Every minute, two acres are taken out of production. Each year globally, 12-19 million acres of 3.7 billion total acres fall fallow due to deteriorating quality, according to AgriCapital Corporation.

Without substantial innovation, we will face a global crisis. The money is starting to move. First, private equity has already made huge investments in agricultural land in a not-so-speculative move. Agricultural land has increased strongly in price, and it will likely continue. Second, mergers and acquisition activity has been occurring quite briskly in agricultural markets as corporate behemoths are in shopping mode.

It is now time for our brightest and best to turn their collective attention to agriculture. It seems apparent that in 10 years we will be talking about agricultural companies much more intently as investments than we ever did about dot com companies. The potential for loss of our most basic physiological needs — food and water — will sharpen our collective attention. Greater production will be required, but it needs to be completed with much more efficiency and those production need to occur with less water.

Entrepreneurs have an opportunity to mobilize and bring their innovation to the agricultural market. The venture capital community has an opportunity to contribute by financing those teams that seek to solve these global issues. Population growth isn’t new, but exponential population growth is very new. Global population has roughly doubled since the late 1960’s and in 1800 there were fewer than one billion people on earth. Go back a little more than 2,000 years and population growth had been negligible for many thousands of years prior to that time. The issue is simply our lack of capacity to support the continued growth and our population growth chart has hit an inflection point of unsustainable proportions.

Throughout history, crisis has always created opportunity for those who could see past the noise and the tumult. This hunger wave is big enough to create a hundred Mark Zuckerbergs.

This article originally appeared Jun 1, 2013/ Troy Media/

In : Business 

Tags: entrepreneur venture capital angel investing 
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