Many new ag innovations are coming to market all the time, despite a down market and more limited funding options. For ag technology companies looking to obtain capital or get acquired, they need to stand out. If a startup is looking for a venture capital investment, building a solid business plan for ag innovations is essential, especially in the current market environment.
When preparing for investment or acquisition, experts recommend focusing on the details. In the current environment the competition is fierce and capital investors are selective. How can companies develop a business plan that stands out?
Importance of Strategy
“At AgriThority® we believe a brilliant innovation needs equally brilliant strategies,” says Jerry Duff, AgriThority® Founder and President. “But, most importantly, high impact execution produces extraordinary results. Follow-through with strategically disciplined and scientifically sound development plans is paramount.”
Venture Associate for Fulcrum Global Capital Bonnie Brayton agrees, “Sometimes an academic founder or an R&D-focused founder struggles to consider the commercial realities. As a scientist myself, thinking about the efficacy or novelty of a technology is the fun and exciting part. You may believe you have the next unicorn that will blast off to the moon. But without a solid commercialization plan, that technology can fall out of the sky quickly.” Brayton acknowledges that guidance from an experienced group like AgriThority® can make a difference in the business planning as well as the product development, regulatory and market access strategies.
“The business plan and detailed financial models are an absolute,” says Jim Schultz, Founder and Managing Partner of Open Prairie and AgriThority Board of Advisors member. “Too often, we find entrepreneurs and founders worried about execution of a non-disclosure agreement before we even understand the nature of the business and opportunity – this is generally seen as a red-flag if one is more focused on legal process versus the marketing opportunity of the business seeking to raise funding.”
Developing a Business Plan
A business plan goes beyond the basic framework of a company. It’s the strategic roadmap for the structure, operations and growth plan. It can show the current and future value of your business for any potential funders. Unfortunately, there’s no failproof template for an excellent business plan. But one thing is certain: it must be done from the beginning.
“Planning from the early stages of a new agricultural innovation is essential to understand and extract the maximum potential of a new product idea,” says Horacio Buscaglia, AgriThority Global Head of Business Development. “From the beginning, it’s important to shift from a product/idea-centric mindset and widen the scope to look at the potential End-to-End (E2E) business. Then you can integrate the final objective from scoping and guide each stage of development to extract the maximum potential and reach the market in the fastest and most efficient way.”
The most standard sections included in a business plan are:
- Executive summary
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
- Appendix
As part of the business plan, the commercialization plan should be clearly defined, including the path to get there. Having all the information isn’t enough, there must be insights and wisdom to be able to know which options to choose. E.O. Wilson, author of Consilience: The Unity of Knowledge said something that’s so true in the agriculture industry. “We are drowning in information, while starving for wisdom.” Wisdom and insights are the key to finding the path forward.
Bringing It Together for a Successful Pitch
Even with a solid business and commercialization plan, the pitch to potential investors must show the ability of the company to execute on the plans.
“Three main things are often missing from the pitches I hear,” Schultz says. “The ability of the management team to execute on the plan presented along with details on additional personnel required to achieve the milestones. Detailed channel strategy for achieving distribution and market penetration. And finally financial strategy that provides clear path to creating a future liquidity event or exit.”
Execution is the critical component of a successful business plan. Innovators and companies shouldn’t be afraid to lean on external partners to achieve the desired results. The execution doesn’t have to be done only by the internal team.
“A company with outside partners is typically not seen as optional,” Schultz says. “It is a validation and provides market credibility to a technology or service being offered. Market channels in agriculture are unique and complicated to navigate; thus, a company must rely on trusted partners to provide access to farmers and ranchers to achieve market presence. Finding external partners is critical to the success of most business models.”
When your Research is ready for Development, turn to AgriThority® for strategic and scientific business, market, and product development expertise. As an independent global resource, we focus on exploring potential, expanding market access, and evolving production for greater food security and sustainability. Forward-thinking agriculture experts with deep experience are the core of AgriThority®.