Ag Startup Engine: Mentorship, financing impact
Initiative gives ag entrepreneurs a chance to get up and running
AMES — An initiative has been developed to give agricultural entrepreneurs a fighting chance to get their business up and running.
The Ag Startup Engine, located at Iowa State University Research Park in Ames, was created to foster agricultural entrepreneurs, business startups, innovations and technology transfer.
According to information provided by the Ag Startup Engine, the initiative will provide mentoring services as well as an infrastructure for developing prototypes and products, plus training in how to finance a business.
Joel Harris, co-director of the Ag Startup Engine, said the idea came through Professor Kevin Kimle, director of the Agricultural Entrepreneurship Initiative in Iowa State University’s College of Agriculture and Life Sciences.
Harris said the Agricultural Entrepreneurship Initiative assisted in the creation and development of the Ag Startup Engine.
“He (Kimle) saw this gap where he had students that would do his entrepreneur business plan competition and have these students that are really bright and about to graduate, and they are left with this choice between getting the internship or an entry-level job at a big ag company, or pursuing a passion project of company of their own,” Harris said. “There really wasn’t a financial instrument for early state startup companies that he saw, so that was kind of the beginning of it; to put together a group of people to do early seed investment into some of these ag-tech related start ups.”
The Ag Startup Engine is a private investor-owned entity and is governed by a small number of investors, including Summit Agricultural Group; Next Level Ventures; Peoples Company; Renew Rural Iowa; Ag Leader Technology; Ag Ventures Alliance; Peterson Genetics, Inc.; Hertz Farm Management, and Veridian Credit Union.
“Our goal was to get 10 investors by July of last year and we have nine,” Harris said. “We do technically have a spot open, but I think we are going to cap it at 10.”
He added companies come to the Ag Startup Engine and pitch their ideas in a mini “Shark Tank” presentation.
“This is a good time for our investors to network and get a first peek under the hood of some of the innovation that is coming out of Iowa State,” he said, adding they will help a company with everything from connecting them to potential customers or just mentoring them through the Ag Startup Engine’s network or the investor’s network.
“This ranges from weekly interactions, to once a quarter, every few months, somebody checks in,” he said. “It’s the support that really helps these young entrepreneurs and motivating them to keep going. Especially when a commercialized product is months away or years away.”
Harris said that is one of the challenges in agricultural technology in general.
“You have one growing season, or you have volatility in the market,” he said. “It’s a lot slower than some of the other industries. It’s a slower market.”
Once a company qualifies for the program, they are offered some subsidized office and work space.
The initial investment of $25,000 is a convertible note, Harris said.
“It’s an early seed initial investment and then, after six months, if they meet some milestones, they are eligible for another $25,000,” he said. “That’s up to the investor’s discretion.”
Harris added they also get support from LWBJ, a leading CPA, business advisory and merger and acquisition firm in the Midwest, as well as assistance from LS2group from Des Moines with public relations and marketing.
“These are all things that go into starting your own business,” he said.
They are also considering adding administrative services to help those companies utilizing the Ag Startup Engine.
“In general, what we are really trying to do is to continue to foster,” he said. “There is such a strong agricultural entrepreneur eco-system coming out of Ames, and our hope is we can provide some guidance and prop those companies up, so when they are ready to go to that next growth stage, or go to venture capitalists, or some of the other big investing institutions — either in the state or out of the state — they are ready for that.”
Currently, Harris said the Ag Startup Engine has five portfolio companies including SmartAg, an autonomous tractor company; Gross-Wen Technologies, Inc., a wastewater filtration system using algae; Terva, which he said is like a Zillow for selling farmland; Nebullam, an aeroponic and machine-learning technology company for crop producers, and Performance Livestock Analytics, a cloud-based software service platform for ranchers.
“I am amazed with how well all five of them are doing,” said Harris.
Martin Gross, founder and chief executive officer of Gross-Wen Technology (GWT), said the Ag Startup Engine has connected his company with investors, as well as technical partners, to help accelerate his business.
“One of their biggest strengths is how well they are connected with mentors and partners in the ag space,” he said. “A major role they have played for us is as facilitator to help rapidly advance our business.”
Gross said the experience and achievements of the management team is what attracted him to applying for assistance through the Ag Startup Engine.
“The people running Ag Startup Engine have all had successful startup companies in the past,” he said. “Also, the connections with investment organizations affiliated with the Engine is also a big plus.”
Gross said the corporate objective of GWT is to use its patent pending, algae-based wastewater treatment system to affordably and sustainably treat wastewater.
GWT offers three products/services:
1. Sale of algal-based treatment systems to remove pollutants from municipal wastewater
2. Operation and maintenance contracts with RAB system customers
3. Sale of algae-based fertilizer
Harris said they have a goal to get 10 more portfolio companies to join the Ag Startup Engine within the next two years.
“We are constantly looking at other startups or seeing what cohorts come out of Iowa State’s Ag Startup Factor or other connections through our investor members,” he said.
Randy Hertz, chief executive officer and chairman of Hertz Farm Management and Hertz Associated, LTD., joined forces with the Ag Startup Engine last June.
“We wanted to help the effort of the Ag Startup Engine to help foster young Iowa entrepreneurs build on their ideas and inventions,” said Hertz. “The Ag Startup Engine is a unique effort to combine education, mentoring and financing resources to entrepreneurs.”
Hertz said they have made a three-year pledge to the Ag Startup Engine of financial resources, plus active participation with the members of the initiative in order to help the entrepreneurs be successful.
“The camaraderie of the entrepreneurs working together and the organized approach of the Startup Engine are a powerful combination,” he added.
He is very impressed with the program.
“It is a combination of selecting young people with the right blend of attitude, ideas, willingness to learn and drive to make their dream a reality that creates value,” he said. “These young entrepreneurs are making a difference in the world.”