A Different Approach to Selling an AgTech Company
Special Edition - April 19th, 2023
Opening Thoughts:
The last two weeks I’ve been hinting at something bigger I wanted to let everyone know about. Well, now is the time to opening it up to everyone. I’m helping sell a newer small AgTech company called DitchDrift.
Before I get into the whole thing and what they do, I want to talk a little about why they and myself are going about it this way and why it may help others shift their process in doing the same.
To start off, everyone is usually for sale. That’s capitalism folks. Heck, I’ve been involved in trying to sell my families company Satshot countless times. Came close a few times, but sometimes it doesn’t pan out for many different reasons. So I know how the whole process can and shouldn’t work.
Typically though it seems most don’t just open themselves to being bought openly in this way with how I’m doing it with the Ditch Drift team. This process isn’t for everyone also. Why I think this may help others rethink how they go about it and why this is different is that the owners have really just looked at all the options with some help from myself and came to the most logical conclusion. I’ll repeat that again in caps, LOGICAL CONCLUSION!
Sometimes or many times it seams in AgTech there are way too many trying to do too much and raising too much money all while trying to solve way too big of problems. The whole Save and Feed the World montra is proof of this. Many have just taken an idea and said, “Well I bet people will buy this!” without thinking through all the different pieces and logistics.
It is really hard to build and sell anything in Ag. Those that have get this, but some also go too far and then it becomes a spiraling ship where nobody at all gained anything. I know of a few AgTech groups this has happened to and here is basically how it goes in these steps below:
You think of a cool idea for an app to solve something in Ag.
You do some research, but just build a business plan and get some rich people or take your own money to invest into it as a seed round.
One markets it at all these startup incubators and pitch events with investors to get more money before you really built much beyond a small MVP app at best.
You sell the vision to large Agribusinesses to get LOIs (Letter of Intent) to say this “X will buy our product at this potential scale” probably, though its non binding.
Get money from VC because of LOIs and hire a lot of people for too much money
Rebuild initial product and try to actually sell new version after 2 years of development to everyone you can think of.
Find out it’s really hard to build to the point in people wanting to actually use it, let alone pay for it.
Create some sales and marketing ploys to give part of it away for free to get more users so you can upsell them and gain clout while it looks good to investors.
Find out even the free users don’t use it much and most don’t want to pay for upgrades.
Admit this to investors and get forced to fire most employees and rethink the vision.
Run on a skeleton crew while still hoping for the “Big Deal” or “Big Buyout”
Get no interest from anyone on number 11 except for low ball offers or purchase for same amount as current sales.
Running out of options and needing to pay debt/bills off you sell, but only the Class A shares get money if there is any and your current team basically get jobs and main founder(s) get clout that they sold their business for a lot which they didn’t.
Most of the remaining employees quit within the year and the original founder is pushed into the back office while the bigger Ag business that bought it got it for pennies on the dollar.
Original founder becomes extinct to the AgTech world and the solution that was bought turns into something completely different or just gets canned as they just wanted the brand name and to boost their value/shares.
There are variances to these steps, but it’s a general common outtake I’d say. So looking at it, this is what DitchDrift want’s to avoid. This is what every AgTech startup wants to avoid. This is where I want to help them and others in these conditions to rethink how to go about getting where you want to go before going too deep and having a hard time.
There are probably 50-100 small AgTech startups right now worldwide minimum that could fall into this trap if they don’t rethink when and how to sell their company in the realms of logic and common sense. Also, you have to do it before you relevance dissipates too much.
It’s relatively easy to do steps 1-4 while staying optimistic and positive. The “Trap” can happen at step 5. It naturally doesn’t all the time, but it gets progressively harder after that point when you have big investors always in the back of your head. That itself can destroy the vision of the initial idea really fast and take the fun out it. Fun should exist somewhere.
With all that said, if you fall into this category of needing to decide where to go next and if that is to sell it earlier than thought, keep reading. If you are also interested in buying this company (DitchDrift) that I’m helping, then keep reading and also let me know who you are by filling this form at this button below.
Who the Heck is DitchDrift?
On the whole, a 2 year old young AgTech company based out of Minnesota that is trying to help growers and Ag Businesses with the tracking of issues with chemical drift and initially for Dicamba tolerant Soybeans.
It doesn’t have to be just for that specific cause, but due to the issues from the recent years with Dicamba drift for use on Xtend and other similar Soybean traits it caused the founders to create just this. There are many other chemicals that can cause drift due to different reasons like temp, wind, humidity, and beyond but rest assured it is important.
In the owners own words, here is what they have to say who they are and why they built it.
Todd Golly, Founder and Farmer, “I’m worried for the future of herbicides and traits. Growers need all the tools they can use to fight weeds these days. I’m concerned that misuse and over regulation will limit my future options. I was spending too much time talking with neighbors, creating paper maps and checking weather apps to apply my herbicides in an efficient and safe way. Time was being wasted doing this, all while application deadlines were approaching. I felt there had to be an easier way to organize all the information it takes to apply herbicides properly. That was the day the drift app was born. I wanted to save our traits!”Jen McCarty, Founder and Manager, “With over a decade of sales and marketing experience in the AgTech and Digital Advertising space I knew there was more to accomplish. This is why I partnered with Todd. As a 5th generation corn and soybean farmer, he has the personal and economic reasons to start and adopt a platform like Drift. But above those reasons, what compelled us most to work on this project together was the notion of impacting the agriculture industry for the greater good of growers and subsequently, consumers. We wanted to bridge the gap between the grower and the consumer, and demonstrate to regulatory bodies and consumers alike that growers are doing the right thing in proactively spraying their fields, while also making their operations more efficient for years to come.”What is Ditch Drift?
Simply put, go to the website or look at these simple pictures from there website. We will go into more detail once we’ve gone through all the interested buyers, but here is a good enough start to give you want you need.
Who should buy it?
I’ll keep this as simple as I can with this list below. If you fit here you should take an honest look. Also, this is naturally not for everyone.
Ag Retailers with Application Services - Risk, you have a fleet of sprayers and fertilizer applicators and need a simple app where you and other farmers can see what you did where so to mitigate future legal issues with drift damage and beyond. More or less, this app can give you simple and easy transparency and will save you easily the money you spend on it with claims.
Input Suppliers - Similar to Ag Retailers, but as you might have one of these chemicals that can drift why not have an app that can help you mitigate those issues. Some sort of have that now, but some do not. Risk is still a big thing here and this app could be big for you with all of your Ag Retail and Farmer customers.
Larger Farm Management Information Systems - You support the two above, if you want to further support them and don’t want to spend likely way too much to build it yourself than sometimes buying a turn key makes sense.
Successful AgTech Startups - Similar to the above but beyond, you just might need that extra thing to increase your solutions to reach more customers. You also might need it to boost your value towards your customers and even your investors.
Early Stage AgTech Startups - More or less, they have a base geospatial system that maps attributes by the field. If you haven’t built that yet and know you want to this could be the thing for you while building beyond cheaper than planned.
Crop Insurance AIPs (Approved Insurance Providers) - An odd ball you might think yet these groups have to deal with a lot of claims dealing with drift lately. They also deal with other claim issues and while they have systems to deal with that they might need something a little different. I think there is something for this group to look into it, but working within this group before it’s hard to say.
Machinery - If you sell sprayers or sprayer tech I think there could be a case here. Think of every time you sell a sprayer the Service Provider or Farmer get’s this sweet free app! Something like that. I could go on and on.
Why does Ditch Drift want to sell their business?
This one is always the tough thing to explain to most, but a big reason is to avoid what I wrote about in my first section. They really just don’t want to go through all the typical AgTech big investment cycle. Of course that is only a part of it. Sometimes other things come into play that many either don’t understand or maybe they just don’t agree with. Regardless, the owners of DitchDrift are human beings with human needs that require human attention.
The Biggest Reason: Family
It’s really all I should have to say, but I know some don’t think this way. Others might work themselves to the bone or put off making a family. It seems many in the startup world are single and don’t have kids. That’s fine and all, but that is also a reason why someone that does have a startup wants to sell their company at times.
The other part here is that family can go beyond your significant other and/or kids, but also can mean your parents, grandparents, and even friends. While I won’t share exactly the case for the owners, I can say it is a big reason they want to sell they company and tech.
They know it has a lot of potential and is worth more than they put into it. Sometimes living life in a way that you want is doing your best to enjoy it while supporting your family. That may make one to need to take a step back. I think most in this world need to think of that more and make it more important than just money and success I guess.
The Other Reason(s): Not going through the BS
I’ve experienced myself and heard so many stories good and bad or weird over the last 20+ years in dealing with just keeping an AgTech company alive let alone getting investment or trying to sell one. It is just complex as Ag is a big juggernaut. I naturally write about this all the time.
There always can be a breaking point and it’s the reason they want to sell. Before one speculates why they are, I’ll break it down into a few key parts in why.
They don’t want to deal with other investors anymore
They are a really new group and are still trying to figure out the best business model, but know a different group likely can push it better anyway.
They are a really small and passionate team and just don’t have the bandwidth to do what they know is needed without pushing further beyond their comfort level.
As noted above, family and personal changes.
The system is at a good malleable stage to turn into many things either continued in the current ways or something else.
It’s owned by a few individuals and it doesn’t have to be a super complicated situation to transfer it over to someone else.
It’s early enough where the sales of the product really doesn’t matter as it’s so early. One can turn it into what one needs or wants. Legacy issues are not a thing.
What is it worth?
Oh the big question. The simple answer is what someone is willing to pay for it. The real answer is it’ll cost someone else more than what this has been built for at the very least. Also, it’d absolutely cost more for a larger corporate Ag Business to build this same thing without a doubt and likely by a decent factor. Into the millions for sure.
What does that mean? It means it is worth something of value and value isn’t just about what the system does or how much money was put into it to build. The real value to this is time. It’s working and does the basics it states to do. It is a turnkey system.
If you are thinking of creating anything that does some of these items you are still behind what this is. You might have no interest in the Drifting part of it either, but it is a geospatial mapping solution that one can attribute field information toward. Basically, it can be a starting point to something bigger without having to build the initial geospatial database. That is valuable, especially if you want to save time as time is money.
In the end, it is valuable and worth a fair amount and there are interested groups already.
I’m interested, how can I proceed?
Simple put at this point, GO TO THIS LINK AND FILL OUT THIS FORM. Right now we are just trying to find interested parties where we can then review and inform them of further details.
It could come down to a bidding process. It could come down to something else or a mix of things. Overall, we want to find the right fit for the owners and certain (direct and indirect) staff that would like to potentially continue on to the next adventure.
As a Note: Currently only interested parties based out of the US and Canada are being entertained. There could be exceptions to the rule though. If you and your business are located in other countries we’d still like you to fill the form out. Sometimes it can be an outside group that wants to come to the US and buying a group here for the right amount makes the most sense. Also, some fairly large AgTech groups are not based in the US or Canada yet and arrangements can be made.
All in all, contacting us through the form link above and/or directly through myself is what is recommended at this time. The owners at this point want myself to direct this process so I will mention that going directly to them will result in going through my anyway so best to just do that.
Final Note: We will be accepting interested groups via the form till the end of April 2023 and will reply to interested parties that are deemed appropriate. We will let all groups know how Ditch Drift wants to proceed or not in early May 2023.
In Closing:
Myself and the owners of Ditch Drift are not sure if letting people know of all of this in this way is the best way to go about it. There is good and bad to everything. Of course I don’t think anyone in AgTech in any realm if not Ag in general has done it like this before.
If I was just some newb in the industry I would say it would be a poor decision. Luckily I am not and if you are reading this you hopefully have signed on to my newsletter and connected with me on my social sites because you know I understand this industry.
Rest assured while I have my joking moments of the industry, I truly fight for it. This is a new way in which I feel I can do my part. Helping a group of good people that built a cool AgTech software find a different place for it to someone who has the potential and vision to take it further and give the value to the owners that they deserve.
Mainly, I wouldn’t do this and help Ditch Drift if I didn’t think this group had something good and had potential regardless of what this all brings. I observed and it was my “Easy Observation” that I could help this group and someone on the other end of the spectrum.
Finally, once again GO TO THIS LINK IF YOU ARE SERIOUSLY INTERESTED IN BUYING DITCH DRIFT.
Thanks!
