AgTech — the wave of emerging technologies such as robotics, artificial intelligence, machine learning and biotechnology coming to food and agriculture — is increasingly creating opportunity for investors, entrepreneurs, farmers and consumers.
With the potential to both benefit Australia’s agricultural sector and create direct economic benefits through commercialisation of new technology, a strong AgTech specialisation would be of substantial benefit to Australia. A goal to lift AgTech’s share of venture capital (VC) in Australia from 1 per cent in 2018 to 20 per cent by 2030 would see AgTech take its place as a national priority and position Australia as a global leader.
Analysing the relationship between American start-up ecosystems and venture capital investment, and in particular looking at the impact that specialisation can have in building successful ecosystems, such as in St Louis, Missouri, offers insight as to how Australia can catalyse the development of the local sector.
Key observations about the distribution of AgTech start-ups and venture capital funding in the United States include:
- The large majority of AgTech start-ups in the United States are concentrated in California, New York and Massachusetts. This concentration follows the general concentration of venture capital in these states, in the extremely mature start-up ecosystems of Silicon Valley, New York and Boston. These ecosystems far outweigh Australia’s leading start-up ecosystems for scale and resources.
- Sub-sector specialisation can enable small ecosystems to outperform larger ecosystems by measure of start-ups created or investment dollars in those specialised sub-sectors. St Louis, Missouri has utilised endowments of strong research institutions, universities and large corporations to develop innovation infrastructure spanning government, academia, science, industry and investors, resulting in an AgTech specialisation. BioSTL, a not-for-profit coalition organisation, plays a pivotal role in the St Louis AgTech ecosystem.
St Louis, as an example of AgTech sub-sector specialisation, provides useful insights for Australia in driving specialisation in its start-up ecosystems, particularly in catalysing the growth of AgTech.