From farm to fork, software is eating the food supply chain

Cloud-enabled sensors are transforming industrial business models, allowing companies to lock in software contracts and reconstruct revenue streams around SaaS licensing

I HAD THE PLEASURE recently of dining with Eric Olsen, the CEO of Aliaxis. Based in Belgium, Aliaxis is a global leader in smart piping systems for water and energy that increase efficiency, cut costs, reduce waste, and drive sustainability across multiple industries.

Eric and I discussed an emerging trend whereby hardware companies are increasingly adding software to their products to collect and analyze data, creating a new business model that is transforming agricultural machinery providers into software-based SaaS companies.

The business implications are immense. By incorporating sensors to collect data, with cloud-enabled systems to manage and analyze it, and customer-centric dashboards that allow users to implement cost savings and other efficiencies informed by that data, traditional manufacturers of plant, pipes and machinery can transform their revenue models from a single sale to years of annual recurring revenue.

Nowhere is this happening faster than in agriculture, where data is eating the entire food supply chain, from farm to fork.

Eric was visiting Israel to check in on his investments via Aliaxis Ventures, which focuses on emerging technology startups in smart water management. Aliaxis has invested in Kando, which gathers data from wastewater systems to track waste and disease and cut costs, and in CropX, which provides farmers with sensors that collect data on the soil beneath their crops so they can target the use of water and fertilizer to cut costs and increase yields.

CropX fits neatly into the vision of Aliaxis’ new Water for Food division, Eric says.

“With this division, we focus on growth beyond our core business and want to create a next generation of solutions with real societal impact. Partnering with CropX is fully in line with this ambition, as their unique approach allows farmers to monitor both below and above ground crop data, and to significantly increase crop efficiency,” he says.??

Kando and CropX are both OurCrowd portfolio companies based in Israel, where military intelligence has supercharged the development of smart sensors, together with the collection, storage and analysis of the big data sets they produce.

Sensors can be airborne in a drone or a satellite, planted in the ground, inserted in a pipe, or held in the hand and used up close.?

Data of the Soil or DOTS, a startup nurtured at OurCrowd’s Labs/02 incubator in Jerusalem, is developing an electro-optical sensor and information system to give farmers continuous monitoring of nitrate levels in soil to cut down on fertilizer use. Taranis uses above-ground sensors on drones to track infestations of insects, invasions by weeds, nutrient deficiencies and other issues in crops.

BlueCircle (formerly Trellis), is an AI-powered food system intelligence platform that enables food growers, producers, distributors and supply-chain operators to plan and manage risks in the global food chain. It was recently selected for the AI For Good Accelerator Program run by Microsoft for Startups Israel. BlueCircle uses provides critical information along the entire food supply chain by predicting the impact of extreme weather events, inventory levels, missed revenues and other factors.

It is hard for legacy industrial companies to develop digital technologies in house. But through investment and acquisitions, they can introduce these new platforms into their businesses, creating partnership and exit opportunities for startups, and new SaaS-based revenue streams for the larger companies.

CropX technology, for example, is now integrated into mechanized irrigation pivots distributed by Reinke Manufacturing, and agricultural machinery giant operating in more than 50 countries. CropX has a similar API integration with Talgil, a global producer of irrigation control systems with customers in over 80 countries.?

SCiO, the portable near infra-red micro spectrometer developed by Consumer Physics, is a hand-held analyzer that gives lab-grade analysis of grain and foodstuffs including dry matter like silage feed for animals. Driscoll’s, the largest fresh berry distributor in the US, uses the SCiO cup in its quality measurement process to test the Brix, or sweetness, of its fruit. But perhaps the most exciting development is the decision by HarvestMaster to integrate SCiO technology into its GrainGage systems mounted on combine harvesters. The new systems are designed to provide accurate moisture, protein, and oil predictions at the time of harvest, so producers no longer have to bag samples and ship them to external testing facilities to gather the data.

As these cloud-enabled sensors allow companies to lock in software contracts, we will see large companies reconstruct their business model around SaaS licensing instead of just selling hardware.

The cloud that collects and analyzes the data also enables the software to be upgraded and updated at minimal cost to the supplier.

As large companies integrate these software-based systems into their products, they will also collect vast amounts of data, providing yet more possibilities of expanding their business models.

Once AI gets hold of that data, expect a huge feast as it consumes the entire supply chain.

About ‘Investors on the Frontlines’

I’m the CEO and Founder of?OurCrowd, the global equity investment platform that gives individual accredited investors access to private market startup deals alongside top-tier VCs. If you are an investor, private family office or financial advisor, subscribe?here?for my biweekly commentary or follow me on?Twitter. I welcome your comments in the response section below.