173. The tools are coming!

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I attended the FIRA USA 2024 in Woodland, California this year (though only for a couple of hours). For those of you who don’t know, FIRA is a premier agriculture robotics show. Given the significant labor challenges within the specialty crop segment, many of the agriculture robotics companies are targeting use cases in the specialty crop sector

The number of crop robotics companies has increased by 40% from 2022 (250 companies) to 2024 (330 companies) based on the 2024 Crop Robotics Landscape published by The Mixing Bowl during FIRA 2024 in Woodland, California.

Funding for crop robotics companies has remained relatively stable in 2024 (H1 $ 399 million), compared to 2022 ($ 709 million) and 2023 ($ 751 million). Adoption has been slow but steady with rising labor costs, and the difficulty in finding skilled labor acting as tailwinds for the sector.

During my visit to FIRA USA 2025 in Woodland, California (albeit for a few hours only), I noticed some other signals which point to the relative strength of the agriculture robotics sector. My signals are related to companies providing tools and capabilities to other robotic companies to bring their solutions to market faster and at a lower cost.

Solinftec robot at FIRA 2024 in Woodland, CA (photo by Rhishi Pethe)

This week’s edition will talk about what those signals are, and what they mean.

But, let me first begin with my views on Carbon Robotics’ recent $ 70 million funding round.

Is there a risk of Carbon Robotics crowding out potential acquirers?

Carbon Robotics announced a $ 70 M raise to expand its laser weeding robot business at the beginning of the week at FIRA, with NVentures from NVIDIA re-upping their commitment from the last round. Laser application on weeds is a new mode of action, compared to using chemicals more efficiently or using mechanical weeding. As Walt Duflock concluded in his LinkedIn post, (highlights by me)

All of this is great news for Carbon Robotics – they continue to get investors attention and checkbooks by combining a strong leadership narrative in a hot space (AgTech automation) while delivering the results. It is also good news for other startups in the space, helping to prove the thesis that hardware appliances that do one thing really well are teeing up downstream revenue streams by leveraging all of the data to do that one function to help the grower do other things, some of which will create annual recurring revenue. And it is great news for the space if Carbon gets to an exit.

Agtonomy founder and CEO, Tim Bucher, talked about the importance of partnerships with OEMs for ag robotics startups. (highlights be me)

For autonomy to bring value to agriculture today, we must think about tractors and farm tools like farmers do. But we must do so collaboratively with the brands farmers already know and trust. This is how the entire industry can move together, faster, at the pace farmers need.

Speaking on behalf of farmers, we want on-farm robotics now. Speaking on behalf of startups, we can’t — and shouldn’t — go it alone.

It means one of the only ways for a robotics startup to exit is to get acquired by another larger OEM. (assuming an IPO is challenging in the next few years). A startup has to strike a fine balance between providing a use case with favorable economics for the customer, different partners, and you as a business, and how attractive does it make the startup to a potential acquirer.

You need to be able to find other use cases, and your technology needs to transfer easily to those new use cases. Otherwise, you will be limited in terms of how much you can grow your revenue to. 

If Carbon Robotics is able to deliver on its growth, its valuation will continue to go up and it will be more and more difficult for an existing OEM to acquire them.

If you raise a ton of capital, an acquisition becomes challenging because the check size might get too big for an existing OEM. For example, Carbon Robotics' valuation is rumored to be around $ 300 million. You need to raise enough money to help you get to the next growth phase, but not so much that you become a difficult acquisition target for existing incumbents. This is especially true in agriculture, where there are only a handful of incumbents who can pull off hundreds of millions of dollars or a billion dollar acquisition. 

If you look at the acquisition exits done by robotics companies over the last few years, there are only a handful of acquisitions which are north of a billion dollars.

In the year prior to our 2022 Landscape there were a number of M&A deals in the sector with John Deere buying Bear Flag Robotics and Case New Holland spending $2.1 billion for Raven Industries. Since that time AGCO and Trimble closed on their joint venture, PTx Trimble, that focuses on precision ag hardware and software and Kubota North America acquired Bloomfield Robotics for their AI-driven plant imaging technology targeting specialty crops.

Another consideration for an OEM is whether they should acquire a company doing chemical based (or mechanical) precision applications or look at a laser weeding company like Carbon Robotics. Will the acquisition bring in new customers, and new capabilities? 

They will have to look for synergies for their manufacturing and supply chains, when it comes to the bill of materials for the said robotics company. Can they leverage their existing supply chains and manufacturing capabilities to do it efficiently and economically? A laser weeding robot might not fit very well with their existing manufacturing capacity and supply chains.

We are seeing this in the EV category for cars. EV supply chains are very different than ICE gas-powered vehicle supply chains. It is one of the reasons why European car manufacturers are struggling, given their supply chains are optimized for gas-powered cars, with supplier relationships which go back generations.

It will require a big effort on the distribution and service side in terms of training for sales and support staff, parts availability, and scaling of operations. An OEM will consider all of these questions, before they decide to sign a check worth hundreds of millions of dollars or more.

I am absolutely enthused about many of the crop robotics companies getting new funding and customer traction, because the farmers and growers, and the service providers need these technologies at an economically viable price.

Having said that, it is not clear if there is a danger of some of these companies becoming too big to be acquired due to the unique nature of the agriculture OEM market. What do you think?

The tools are coming

Discussion topic: What does the presence of “tools” companies means for the maturity of the crop robotics market?

The Mixing Bowl released their 2024 Crop Robotics landscape report titled “The Expanding 2024 Crop Robotics Landscape, Navigating To Commercialization”