The pandemic brought the vulnerability of the agricultural supply chain into the spotlight. SproutX is a Melbourne-based accelerator supporting a $130m portfolio of agtech start-ups.
This article was featured in Issue 10 of Forbes Australia. Tap here to secure your copy.
Image: Supplied
When it comes to innovation, agriculture – the world’s oldest industry – is typically not the first sector that comes to mind. People are more likely to think of technology companies or industries that are often in the headlines for developing and using AI.
“They think of finance, SAAS or health,” says Maxie Juang, the program director at SproutX.
Based in Melbourne, SproutX is an accelerator specifically focused on agriculture.
“We take the supply chain for granted,” says Juang. “It took the pandemic for us to realise the full impact agriculture has on our daily lives. The availability and price of food and clothing are agricultural issues”.
The mission of SproutX is to strengthen Australia’s global profile in agriculture and food technology and to find solutions to food security and distribution.
The goal: $100 billion by 2030
An Australian federal government report in 2020 defined potential pathways to develop a $100 billion agriculture sector by 2030. Solutions proposed included adopting new technologies, developing a national biosecurity strategy, improving export prospects for Australian producers, and attracting young people to agricultural careers.
SproutX has 20 portfolio companies that have created 173 full-time jobs, generated $37 million in revenue, and raised $25 million in venture capital. It has 1,576 members in Victoria and works with interstate incubators and accelerators to develop a community of agtech founders nationally.
The company offers two pathways for founders. The 10-week free online pre-accelerator program is run with the University of Melbourne and the Victorian Farmers Federation. Juang says 99% of the funding for the pre-accelerator comes from LaunchVic. The funds that the Victorian government start-up initiative contribute to SproutX enable 154 agtech entrepreneurs to attend the two-year pre-accelerator program.
There is also a 6-month in-person accelerator program for start-ups, where founders receive 6-months of mentorship and services valued at around $100,000. Mentorship is provided by successful agtech start-up founders such as Olympia Yarger from insect-driven waste management company Goterra.
To participate in the accelerator, start-up founders give SproutX 2% sweat equity in their companies.
Juang says many start-ups that have gone through SproutX are solving problems in the grains, dairy, cattle, and horticulture sectors. Recently, she has seen an increase in the number of start-ups focused on the circular economy, specifically waste management. She says optimising supply chains – such as addressing shelf life and using machine learning to tackle inventory management – are fundamental to solving the waste management problem.
Juang points to electric weed management company Azaneo and protein extraction firm Leaf Protein Co as success stories from the accelerator program. Both of those start-ups have gone on to become SproutX portfolio companies.
The SproutX accelerator program aims to take the ideas that candidates come in with and refine them into feasible solutions that can be built into viable, scalable businesses.
“Why doesn’t that make sense? Why is that not a viable go-to-market strategy? What is the core problem you are solving?” says Juang.
Once start-ups have been through the accelerator program, SproutX works to connect them with funding sources. It recently launched a 26-person angel syndicate platform called AgImpact, hosted by Aussie Angels, to facilitate pre-seed raises.
LaunchVic
Funding for agtech companies can also be applied for through LaunchVic. The Victorian state initiative invests directly in agtech start-ups to cover operating costs and push them to the next growth stage. LaunchVic funding comes from Agriculture Victoria.
“Five of our alumni have received $50,000 grants from LaunchVic,” says Juang.
Image: Supplied
LaunchVic also has two sidecar funds. The Hugh Victor McKay Fund awards up to $200,000 to promising Victorian agtech companies, and the $10 million Alice Anderson Fund, which co-invests with private-sector investors.
“There is a diverse set of players,” says Juang. “The Grain Research Development Corporation want to see more innovation in grains. They come to us because they need training in that space. Corporates come to us too, because SproutX can be a source for developing technology that suits them.”
THE PROBLEMS SPROUTX IS ADDRESSING
- Supply chain vulnerability.
- Food security.
- Unsustainable farming methods.
- Climate change affecting traditional agricultural practices.
THE SPROUTX SOLUTION
- SproutX is investing in companies to strengthen Australia’s global profile
in agriculture and food technology.
- It offers accelerator programs.
- It looks for agtech start-ups that have the potential to scale fast and solve problems globally.
- Currently investing in 38 portfolio companies that are pioneering innovation and reshaping agtech.
Look back on the week that was with hand-picked articles from Australia and around the world. Sign up to the Forbes Australia newsletter here or become a member here.
