JANUARY 24th 2018 Thomas van den Boezem
Everyone from Bill Gates to Leonardo di Caprio and from academics to techies are getting involved in food & agtech startups. The sector is booming, as founders and investors hope to benefit from the countless opportunities in an industry poised to become more sustainable, more healthy and more digital.
If you’re a first-time founder – or experienced entrepreneur coming into food & agtech for the first time – this post aims to make clear just what it takes to build a winning team for your food & agtech startup.
Building a winning startup team is the first and most crucial step towards global impact for any technology startup, regardless of how ingenious your idea might be.
Research from Noah Wasserman, as detailed in his excellent book on startup teams The Founder’s Dilemmas, shows that 65% of the failures of promising technology and life sciences startups are caused by people problems. By the startup team.
Food & agtech are no exception – and investors consistently rank the team strength as the number 1 indicator of a startup’s chance of success.
We’ve determined key success factors for startup teams in food & agtech, and made clear what investors are looking for when you’re trying to get funded. To that end, we’ve interviewed over 30 startups, scaleups and investors in food & agtech, analyzed close to 200 startups connected to StartLife, and reviewed existing literature on startup teams.
Why focus on Food & AgTech in particular? Does industry matter?
Well, yes and no.
Besides the countless opportunities, food & agtech also faces a myriad of specific technology and market challenges that require an all-star team to overcome.
First, cultured meat, sensor-heavy drones and other technologies in this space require serious capital, high-tech facilities and specialized expertise. Those are not always easy to attract. Although investors once shied away from food & agtech, there’s now an abundance of early-stage capital available to entrepreneurs. However, the number of early-stage deals in food & agtech – especially in Europe – is still lagging far behind so attracting the capital available remains challenging.
Second, food & agtech startups have to be able to face - and often work with - large and dominant players in the industry. The structures of large food companies are difficult to navigate, and their cultures often not accommodating of startups. This in contrast to many software and high-tech giants that still have a culture of entrepreneurship. What’s more:
”Large companies invested heavily in established processes, so food value chains are complex, closed and bound by long-term contracts. Disrupting those value chains as a startup requires time - and grit ” - Gitte Schober, StartLife
Third, consumer groups and regulatory bodies scrutinize new food products, ingredients and other food technologies. Navigating this constantly evolving landscape requires a certain skillset - and network. The recent bankruptcy of Insect Europe – predominantly due to friction with the food safety authorities – proved once more that growing a food business is more delicate than writing lines of code.
Now, do these factors differ from other industries?
In fact, they’re often quite similar to the dynamics in other ‘Hard Tech’ industries, such as medical tech, automotive and life sciences. Sam Altman, president of Y Combinator – the prestigious startup accelerator in Silicon Valley – explains Hard Tech Startups indeed do require a particular approach.
In conclusion, some of the decisions explained in this post will be widely applicable, and some require particular attention when entering the food & agtech domain.
Who are the experts?
Before we get into the details of building your food & agtech startup team, here’s a selection of interviewees whom we’ll reference throughout this post.
- Maarten Goossens
Co-founder & principal at Anterra Capital, based in Amsterdam, The Netherlands. Anterra Capital is the largest European venture capital fund for fast-growing food & agtech startups.
- Ron Shigeta
Co-founder of IndieBio, the San Francisco-based accelerator for early-stage synthetic biology startups; Chief Science Officer at SOSventures, a venture capital fund active in industries ranging from software to food, and from robotics to green energy.
- Tijl Hoefnagels
Managing director of Future Food Fund, a government-backed Dutch venture capital fund for early-stage food, agtech and horticulture startups.
- Joey Veurink
Investment manager Life Sciences & Health at OostNL Capital, an investment agency for startups based in Gelderland, The Netherlands.
- Jordan Moncharmont
Co-founder & CTO of Kuli Kuli, a San Francisco-based food startup that sources moringa from female farmers in Africa and South America to produce a moringa-based beverage. Kuli Kuli raised over €4 mln in a Series A round led by The Kellogg Company’s fund.
- Willem Sodderland
Founder of Seamore, a Dutch startup developing food products, such as pasta and bacon, from seaweed. Raised seed capital.
- Sasan Amini
Co-founder & CEO of ClearLabs, based California, that helps food companies improve molecular food quality and raised a total of €25 million from GoogleVentures and others.
- Yasir Khokhar
Founder & CEO of Connecterra, an Amsterdam-based agtech startup using machine learning to help ag companies better use their resources. Raised a €1.8 million seed round.
Other key sources (and recommended reading material) include:
- The Founder’s Dilemmas, Noah Wasserman, 2013.
- A Book About Innocent, Dan Germain and Richard Reed, 2009.
- Scaling Up (Mastering the Rockefeller Habits 2.0), Verne Harnish, 2014.
- Publications on Hampton Creek, Protix and other leading food & agtech companies.
No recipe for success (but a step in the right direction)
Of course, no canvas or framework is a guarantee for success. Each Food & AgTech startup has a unique proposition, serves particular customer segments and operates in a different competitive landscape. Put differently:
“Even if the total score of a team adds up, there’s always an element of surprise” - Joey Veurink, OostNL Capital
This makes sense, as 3 out of 4 startups that managed to secure venture capital still fail, despite investors’ best efforts in the selection, assessment and support of those startups.
That being said, think of this post more as a guideline of what to keep in mind as you assemble, develop and grow your team from the very start.
How to build a winning team – the Team Canvas
In going through the various elements that make up a winning team, and to which investors pay close attention, we’ll use the Team Canvas for Food & AgTech as a framework. The canvas bundles the three key takeaways of our research:
- Winning teams have a team strategy in which they seriously consider both the ‘hard’ and ‘soft’ factors;
- Winning teams involve people with complementary skills and expertise – making sure that the team has true experts on all core functions;
- Winning teams apply tactics that make sure the startup continues to grow – focusing both on internal factors and external factors.
We’ll go through the twelve specific factors across these three categories and explain how to use them to your advantage as you build your food & agtech startup team.
Of course, factors can influence each other. A very clearly defined team strategy helps in identifying the right people. Vice versa, the right people will be better able to develop a strong team strategy.