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An Ag Tech Solution to Drought and Climate Change


Dear Boardroom Reader,

 

One of the Boardroom’s early investments was an ag tech company with macro ambition to solve the agricultural side of water usage in a changing climate. 

GroGuru is all about strategic irrigation management for commercial farmers, to use water in a more sustainable way. Their differentiating technology is a wireless underground system, instead of the wired monitoring system that has to be installed annually, which isn’t scalable. 

But other significant intangible benefits to farmers to have a permanent monitoring system include year-round monitoring and less guesswork as to water-strategy year over year. 

Imagine a 10-20% increase in crop yield while also using 10-20% less water, because the farmer installed GroGuru sensors. Decreasing costs as water becomes more expensive, and at the same time increasing profits is the dream of every business!

 

GroGuru is ideal for the typical commercial farm of 5k to 20k acre farms that use pivot irrigation systems. When you fly over the midwest, you’ll notice all of the circular fields below – that’s indicative of pivot irrigation. 

As California adjusted to a new water reality, people were “encouraged” to reduce their water usage to 10% of normal, agriculture still needed to keep vineyards, orchards, and field crops alive to feed the demands of the rest of the country. 

What isn’t as well known, is that the western side of the midwest was also going through the extreme adjustment to available water in the Ogallala Aquifer, which runs from Western North Dakota, down thru South Dakota, Eastern Colorado, Nebraska, Oklahoma, and Texas


The crisis with this water supply is so serious that in 2010, when the aquifer had been drawn down more than 300 feet, and more demands for fresh water and irrigation were pulling from the water supply, the North Plains Groundwater Conservation District began offering grants to farmers who would change their methods for watering farms. [source: Wikipedia]

 

GroGuru isn’t just about managing scarce water resources but also flooding, and weather issues that create problems with getting the right amount of water to optimize crops. Water management is not just a US problem, but there is plenty of acreage for GroGuru to expand its operation, so that has been their focus since the last funds were raised. They intended to raise $4 million during that raise but fell significantly short, which forced them to be more tactical and careful in their spending. Currently, they’re looking at a venture round with accredited investors to meet the growing funding needs. They’re not doing any equity crowdfunding this time. 

 

Early in 2021, GroGuru founder Patrick Henry projected their acreage footprint to grow. Now they have over 1000 sensing sites and over 100,000 acres under management, but their existing customers represent over a million acres. Counting the acreage influenced by their dealer network, they probably have over 5 million deployable acres under management, with another 10 million acres influenced by advocates that will probably be under their dealer network over the next 12-18 months and partners taking that to over 100 million acres.

 

Asked about scalability, with existing manufacturers, they can go 5 to 10x, but they have relationships with other manufacturers who can support greater volume; definitely a business that can scale quickly. 

 

This is Patrick Henry’s 4th tech startup. He loves this team – the most cohesive, focused, a passionate team that he’s ever worked with. There are new products coming out of R&D to further support farmers. Funding would support R&D, as well as sales and marketing. 

 

The march toward an exit could look like a merger or a strategic acquisition in the next 3 to 5 years. He points out that a likely scenario might be an irrigation equipment company, farm equipment company, or big data company would be important. Crop insurance, yield predictions, farm loans all would benefit from the metadata coming out of the collective use of GroGuru – especially as the network of sensors deployed expands from 100,000 acres toward a million acres and more.