The AUD10M Gamble: Can This Startup Model Fix Australia’s Drought Crisis?

Australia’s agricultural industry urgently needs solutions that respond to the challenge of climate change, and Beanstalk Agtech is pushing hard to deliver them.

Beanstalk, which describes itself as a “food and agriculture innovation advisory and venture builder,” uses the venture studio model to foster a new wave of agtech startups that they believe can achieve more rapid success.

Cal Archibald, director at Beanstalk, says that the venture studio model has some fundamental differences from the more traditional incubator model, which has been used to foster early-stage companies.

“A venture studio is uniquely different from the typical accelerator where the assumption is that you’re taking a new company through the creation process,” says Archibald.

“The other models assume there’s an existing startup with a chief executive in place that may have a beta version of their solution and have raised early seed funding. The venture studio model is new, and it matches venture builders with customers who are at the table already, perhaps along with early investors as well.”

This approach is designed to focus the startups on developing solutions for which there are ready customers and make the process less risky for investors.

It matches a specialist team of venture builders and successful innovators with experienced co-founders to aid in commercialization and launch. The aim is to get the IP holders, the customers, the supply chain, and the investors all heading in the same direction and at the same time. 

Higher success rates

Beanstalk’s Drought Venture Studio has been created with AUD10 million in backing from the Australian Government’s Future Drought Fund to take eight startups to market and deliver hands-on commercialization support to around 100 others over two years.

According to Archibald, venture studios — around 600 globally — have higher success rates than incubators, with companies twice as likely to advance to Series A funding and get there twice as fast.

Another benefit is resource efficiency, as the startups benefit from shared resources, including capital, talent and infrastructure.

“The problem has been that there are a lot of solutions looking for a problem to solve.”

Venture studio advocates also say they de-risk innovation by allowing for rapid testing and iteration, while the launch of multiple startups in parallel scales up a diversified portfolio of solutions. 

“So a venture studio can go out to five or six corporate partners, and they are all saying, ‘hey, we’ve got this problem that we want to solve,’” says Archibald.

“The studio can even begin with no IP, but it’s based on the market opportunity and those relationships, and then when you have the idea, you bring in a chief executive and wrap a commercial strategy and a go-to-market team around it.”

In the agricultural sector, Archibald says, “There are a lot of solutions looking for a problem to solve.”

“There’s probably been a few jaded farmers who have wanted to be technology forward and proactive around engaging with startups but have been burned because even though they are created by really smart people, they just haven’t been practical enough,” he says.

“We think that by engaging with co-partners who are interested in guiding the solutions, our model can have some success in finding solutions that have a more immediate use and purpose.”

Double down

Beanstalk has a view that there is already some significant IP “sitting on the shelves” of universities in Australia, which is yet to be commercialized but could find a home and develop in the venture studio environment.

The plan is to connect to that science and innovation and create eight startups over two years, all with solutions with a “drought resilience angle.”

Beanstalk itself will not take equity in any of the startups.

More than 80 applications were received in the first one-year phase, and from there, the top 24 will be selected. Beanstalk will work with them in a “90-day commercial sprint” to create a plan and business model. Four will be chosen, and the studio will “really double down” on the top four.

“We’ve recently brought on board a dedicated team of ten venture builders who are all ex-founders and started and scaled up at least one and maybe two startups before,” says Archibald.

“This group is responsible for taking the initial 24 and then the four we are doubling down on and providing the strategy and the initial operational capability to take those solutions out to the market, bed down the commercialization plan and execute on that.”

A range of corporate partners has not yet been announced, but Archibald said they comprise investors and large Australian food-producing agribusinesses.

These will provide feedback and guidance on solutions they would use as early customers or fund as early investors.

“The role of the studio is to get that pathway to market as soon as possible and the engagement with customers and investors early in the process,” said Archibald.

He acknowledges that, like working with any startup business, the studio is “high risk” but believes that the venture studio model has removed some risks through its approach and methodology.

“We’re not saying that everyone who comes through the studio will be the next big thing, but all of the ventures that come through will have experience of the 90-day commercialization work, and that will be useful, and we hope that some of those might go off on their journeys and become successful,” says Archibald. 

Image credit: iStockphoto/piyaset