Student Guest Blogger: Tomer Poran (MBA ’16 & Associate, DraperNexus)

Our MBA students continue to embody Haas’ Defining Principles.  Second-year MBA Tomer Poran co-wrote this piece and posted on LinkedIn with the simple message: “would love to hear your feedback and discuss with you if you’re interested, especially if you disagree”.  Way to Challenge The Status Quo!

Love at first sight

We were drawn to agriculture technology by the promise that it was the next frontier for information technology innovation.

Providing services to a trillion dollar, stable (food is not a fad), and inefficient industry is appealing for startups and investors alike. So we decided to dive deeper to look at the risks involved, the market dynamics and the technologies being applied. The bottom line is: unless you believe some fundamental changes will occur in agribusiness, you shouldn’t invest in agtech. But we do, so we are.

A sober look

The first challenge is the underlying market need. We hear this often in food and ag circles: “By 2050 the world will have 10 billion people in it, and we will need 75 percent more food. We’ll have to do this with much less land, water, and other resources.” This is problematic because most of the increase in demand will come from China and India; most of developed world population growth is stagnant. If they can marginally improve their agricultural productivity, then there would be enough food to meet the increased demand. In addition, while other asset classes require a 35-year outlook, venture capital requires solving urgent problems that persist in large markets, enabling rapid growth that will realize outsized returns. A slowly creeping food demand problem, primarily in markets with low buying power, is not going to drive venture-funded businesses’ success.

read more by clicking the link below