In our conversation with Connie Bowen, founder of Farmhand Ventures, we explore her path into agrifood tech investment and the philosophy behind her company. Bowen highlights the critical challenges within agriculture and potential strategies for overcoming them, drawing on her experiences from working directly on farms to her involvement in venture capital. Farmhand Ventures is her way of supporting startups that have the potential to make meaningful improvements in agriculture, focusing on sustainability, tackling labor challenges, and encouraging technological adoption. Bowen’s approach is informed by her empathy for farmworkers, a thorough understanding of the industry, and a commitment to investing with purpose. Her goal is not only to advance the agricultural sector but also the livelihoods of those who form its backbone.

To begin, could you share the origins and inspiration behind establishing Farmhand Ventures?

Farmhand Ventures is a venture firm that builds and backs startups shaping the future of work and agriculture. I founded Farmhand two years ago because I felt the timing was right to start intervening with scalable technology and capitalistically efficient solutions to improve work in agriculture for those who do it.

Farmhand Ventures’ focus on the future of work is a product of the different opportunities I’ve had within the agrifood tech industry throughout my career.. I had the opportunity to be a founding staff member at The Yield Lab, which I helped to grow into an international family of agri-food tech VC funds. Through that experience, I got to play a role in the very early days of agri-food tech investment and be part of the year-over-year increases in  agri-food tech VC investment. At the same time, I noticed that on farm technology adoption rates were not increasing at the same rate. For me, there was a need to learn more about farm operations to better understand the “ag” side of ag tech

I went to work in Willamette Valley, Oregon with a boutique farmland investment fund that was spinning out a vertically integrated consumer packaged goods (CPG) brand. I was brought on to run that company and learned a ton about farm management operations, as well as the startup co-founder and co-creation side of things. One of the core lessons I learned there was that labor is the most significant problem in agriculture. There’s really nothing like digging an eight-foot hole to fix a broken irrigation system after a day of managing a blueberry harvest before you get online to try to build your online store to sell your value-added products to help you realize that certain irrigation tech startups that look good on computer screens might not pan out in real life.  

Working alongside farm workers, who are often referred to as “unskilled,”  but who are, in my experience, far from that, really shifted the way I look at tech solutions for agriculture. Farm work is brutally difficult, dangerous, and pays poorly, and attracting and retaining reliable talent is high on the list of things keeping farm owners at night. Labor is an area ripe for disruption and improvement. .

So, Farmhand exists to make a dent in the labor problem and to make the future of work in agriculture one that folks want to participate in. We do that through building companies in our collaboration with the VINE, as well as through investing up to $250k in pre-seed startups. We prefer to think about resourcing solutions and aligning shareholders instead of hunting for  unicorn-type ($1B+ valuation) venture capital startups. Currently, we deploy two types of risk capital: equity and redeemable equity. As the firm grows, I intend to add to the risk capital stack again to better resource solutions for agriculture.

In what ways does Farmhand distinguish itself from other tech investors? Given the abundance of companies in this sector, what is Farmhand’s unique purpose or reason for being?

There aren’t many other VCs who have actually spent time working in agriculture as I have. I’ve dug holes, planted hazelnut orchards, harvested and processed hemp, and managed large crews of workers during blueberry harvest. That stuff is all way harder than most of the things I do day-to-day as a VC.

Also, I never intended to be in venture capital. I’m not invested in being an investor for its own sake. What I care most about is driving impact, and I see agriculture as a tremendous opportunity for impact. We must reduce agricultural emissions if we hope to minimize or mitigate climate change, and we must produce food that is affordable and accessible to everyone, considering all the other pressures on the food system. Striking a balance between these two goals is very hard and requires a degree of expertise and nuance to invest intelligently in this space and to add value to startups..

I think that the scalability of agtech is often limited, which is not something you typically hear from VCs. Agriculture is fragmented. There’s a significant difference even between fields in the same county growing the same crop. So, I believe there will be humans working in fields agriculture for a very long time to come.

There are specific use cases where we might see fully autonomous systems, but very few. And also, I think there’s a tremendous opportunity for tech and autonomy to play a role in making the future of work in agriculture better and more appealing. Right now, we have an issue where farmers and farm workers are aging, and we don’t have enough people working in this space, which is a tremendous problem.

So, I started Farmhand partly because we’re beginning to see a lot more dollars flow toward it. It’s obvious when you talk to a farmer that labor is their biggest problem, especially in the context of California specialty crops. It makes sense and is appropriate that we’ve started to see a lot more venture dollars flow towards autonomy solutions, whether that’s weeding solutions, harvest solutions, or transport solutions.

I also really understand the backend fund mechanics of how a venture fund is expected to work, how dilution affects that fund, and what the expectations are on the LP or fund investor side. I see some misalignment and misunderstanding between the capital allocation community and the agricultural solutions provider community, and I’m concerned about that.

For example, in the ’90s with climate cleantech, a lot of money flowed in from venture capital. It didn’t return in the 5 to 7 years at the multiples that venture expected. Then venture capital said, “Oh, we can’t invest in this space anymore,” leading to a drought. Now, we’re in round two of climate tech, but when investors invest in a space without fully understanding it, like we’re seeing in cultivated meat and vertical farming or controlled environment agriculture, they make bad investments.

Part of venture is a risk game, so losses are ok, but you need some wins to continue investing in that space. I want to help direct capital towards realistic, proper solutions in agriculture and stretch folks’ minds a bit in terms of what types of risk capital we can provide. When I say risk capital, there’s a lot of good literature on this, such as the book “Adventure Finance” by Aunnie Patton Power and the Innovative Finance Playbook.  We need to think about how we’re resourcing solutions in agriculture for agriculture.

And I don’t think that is the core mission of the vast majority of venture capital funds, nor should it be. Venture capital funds exist to deliver massive returns and take huge bets. I think that we need more capital allocators with the mindset that being a multimillionaire is sufficient; there’s no need to aim for billionaire status.

How does Farmhand identify potential agri-food tech innovations? What criteria do you use to evaluate the potential success of these ventures?

We try to manage risk. First, we minimize market risk by maintaining direct relationships with many growers and consulting with farmers and farm workers before investing. Typically, the companies I’ve invested in had major farmers as investors already. I need to know there’s a market for the product if it works. Second, we minimize technical risk by leveraging our team’s engineering expertise and broader network of specialists advisors expertise. 

One channel that we leverage for sourcing and evaluating opportunities is our collaboration with the VINE, running a series of workshops in the first half of the year.  Our team will visit campuses this spring to source early-stage startups and theses from researchers. We’ll filter these through a five-step process we’ve developed on the studio side, discarding ideas along the way—which is part of the process. It’s fine to abandon great ideas once you realize the economics don’t work out. 

For example, we recognize the need for weeding solutions. If a solution’s development cost exceeds the actual market size, perhaps it’s not worth pursuing further investment. Instead, we might decide to revisit it if we can address a few critical issues. This approach applies to the very early stages, while Farmhand, on the fund side, selectively invests in these studio companies. We also try to leverage non-dilutive capital.

Additionally, unlike most venture capital firms that seek billion-dollar opportunities, I don’t. The average exit valuation between 2018-2022  was $111 million, as reported by Kyle Wellborn in Crop Life. With exit valuations more likely to be around $100 million, I still aim for significant multiples. Thus, I seek adequate ownership in capital-efficient companies, assisting them in leveraging non-dilutive capital through SBIR, NSF, and USDA programs, and prioritizing companies that can generate revenues quickly.

I have a soft spot for “stupid tech,” simple yet effective technologies that address a need, are easily adopted in the field, and can form the basis for additional features and data-driven value streams. This approach fosters capital efficiency by achieving break-even or profit early on, allowing for incremental development and customer interaction. My perspective on liquidity expectations and outcomes is pragmatic, aiming for venture multiples on a more realistic scale.

From your perspective, what are the most pressing challenges currently facing the agri-food tech industry?

The biggest problem, without a doubt, is labor. It’s the most pressing issue in the agri-food industry. Currently, it’s virtually impossible to secure enough workers for the fields, leading to significant crop loss. This contributes to inefficiencies resulting  in higher emissions from agriculture than necessary. Looking back through history, solutions to labor solutions have often come at the expense of humans who do the work. Fortunately, we now have an opportunity to leverage technology to alter this path, ensuring that technology serves those who work in agriculture.

The labor issue is profound. Macroeconomic trends indicate no forthcoming relief for the labor crisis. The use of H-2A visas is continuing to rise sharply, and wages are increasing in a sector where profits for farmers are stagnant. This economic squeeze is forcing farms out of business and has led to the U.S. increasing its imports of specialty crops while exports decline for two consecutive years—a trend that poses a domestic security risk, in my view, with no viable solutions currently in place.

Regrettably, I don’t foresee any policy changes on the horizon that could mitigate this issue, such as reforms in worker status or immigration. This problem isn’t unique to the United States; it’s a global issue. Many countries rely on workers with limited rights to support their agricultural sectors. Conversations with these workers and their children reveal a stark reality: agriculture is often seen as the least desirable employment option. The aspiration is to move into sectors like construction, with the ultimate goal for their children to pursue education and leave agriculture behind. This perception is a significant challenge that the industry must confront.

Yes, technology plays a role in addressing this issue, but it cannot be the sole solution. The industry must employ a multifaceted approach to truly make a difference.

Considering the challenges of labor shortages, food security, and climate change, which emerging or existing AgriTech technologies are you particularly enthusiastic about, and what makes them stand out to you?

The two companies we’ve invested in so far have obviously really caught my attention. First, there’s a company called L5 Automation, which is developing a two-armed strawberry harvesting robot. The design addresses the fundamental challenge of field strawberry harvesting: the foliage covers the berries, so it’s necessary to carefully move that foliage out of the way to see and harvest all of the ripe berries. Typically, people can only stoop to harvest strawberries until they’re around 35, after which the physical toll on workers’ backs becomes too great. Large strawberry operations consistently face difficulties in finding enough workers for this task.

We believe an autonomy solution is essential here, and I’m skeptical of the efficacy of a one-armed robot in this context. L5, based in La Cañada, California, impresses me with their boots-on-the-ground co-development approach. Their collaboration with Good Farms, spending extensive time in the field to understand and integrate their solution into the farming operation, is exactly the kind of effort we need to see.

The dialogue around automation often raises concerns about job displacement. However, I am of the opinion that we should aim to eliminate the need for people to perform certain backbreaking tasks. Solutions like L5’s not only address this but also enable workers to focus on higher-quality tasks in the field, potentially leading to partial vertical integration and allowing farms to capture a greater share of the profit margin. This was a challenge I personally faced while managing blueberry operations in Oregon, where the lack of workforce prevented us from packaging our own produce, forcing us to accept whatever price packers or shippers would offer.

Solutions that integrate seamlessly into farm workflows are crucial because they facilitate adoption and enable farms to capture a larger portion of the food dollar, which they’re currently missing out on.

On a different note, genetics plays a significant role in the future of mechanization. New West Genetics, based in Fort Collins, Colorado, is a leading company in hemp genetics that I’m excited about. They  breed hemp that can be cultivated with existing Midwest row crop equipment. This presents an exciting and realistic opportunity for hemp acreage to increase, especially in the context of the growing demand for sustainable aviation fuel.

The potential for hemp to contribute to farm profitability and sustainability is significant. It requires less water, pesticides, chemicals, and fertilizer than dominant crops like soy or corn and has a deeper root system that could lead to more effective carbon sequestration in soil. This win-win scenario for both profitability and environmental sustainability is something I find particularly compelling.

What are your predictions for the evolution of agricultural technology in the next 5 to 10 years, particularly with regard to addressing global challenges such as food security and climate change?

Looking ahead, I foresee that we will still see people working in fields 10, 20, even 30 years from now. A lot of what the future holds for ag tech will depend on policy decisions, which I believe will play a crucial role.

Having worked extensively in Europe, I’ve observed the shift in agriculture there, particularly with initiatives like farm to fork, compared to the developments in the U.S. and the impact of Climate Smart practices. So, the outlook for the next 5 to 10 years will significantly depend on the paths we choose to follow.

I expect to see further consolidation of farm operations, which seems inevitable and might not be entirely negative from a sustainability and agricultural workforce wellbeing standpoint. It’s critical, however, to ensure market competition remains healthy. Without innovative support mechanisms, small operators primarily selling commodities will face significant challenges in staying afloat.

The sector needs more diverse risk capital vehicles, including concessionary capital, tailored for farmers and farm solutions. Venture capital, as it stands, is unlikely to support small and medium growers simply because the economics do not align. There’s potential for change, and I’m actively working towards that. However, the bulk of venture capital is expected to continue targeting larger operations.

The industry could benefit from a wider acceptance of alternative risk capital mechanisms. I anticipate seeing an increase in farm business management companies, such as REITs and other farmland investment structures. While there are pros and cons to this trend, it could lead to either well-managed land or the opposite, depending on the management structure.

Given agriculture’s significant role in greenhouse gas emissions, estimated at 20 to 33 percent, the ag tech sector will inevitably draw opportunistic climate tech engagement. Addressing this issue is urgent and will remain a focal point, encouraging debates over the best strategies to pursue. Such contention is necessary for achieving progress.

Based on your experience and career in investing in agri-food tech, what advice would you give to entrepreneurs who are thinking about or have entered the agri-food tech space?

If you can afford it, work on a farm. And I don’t mean your local CSA that is a nonprofit with volunteer hours. While that’s great and nice, it’s not scalable industrial agriculture. I’ve done that too, support it, and buy from it, but be aware that you’re probably not going to design technology for an operation like that. It might still be valuable to understand how the economics of such operations work because there’s very little room for you to sell into that space, but again, the more exposure you can get to the larger scale farms that produce the majority of the food and control the majority of the land, the better.

Also, I totally acknowledge that this isn’t possible for everyone. As an alternative, talk to farm workers and farmers. Build relationships. Do some research before you show up. Being culturally informed when you arrive will allow you to ask better questions and learn more effectively.

Thinking back on your career in agri-food tech investment, which spans roughly a decade, what have been your most significant learnings or unexpected surprises?

One significant realization I had was the extent of sexism in the field, which I somehow hadn’t anticipated. It’s a real factor in venture capital, technology, and agriculture—a kind of trifecta. I have a personal rule where I don’t complain about something without trying to fix it, so I’m working on addressing this issue.

Another surprising aspect is the political divide in our country and how agriculture tends to be conservative, while tech leans more liberal or libertarian. Despite these differences, I see a lot of opportunities for common ground. Almost everyone I’ve worked with in agriculture, regardless of our diverse backgrounds, agrees on the need for immigration reform. This consensus presents an opportunity to unite and improve our food systems and country.

Lastly, it’s surprising to me that many people think you can flip an ag tech company in 5 to 7 years using a standard formula. The agricultural cycle, such as how long it takes to grow a crop or raise a pig for bacon, doesn’t align with quick tech innovation cycles. The deployment of funds in spaces without acknowledging these basic timelines is shocking, as it overlooks the fundamental aspects of agricultural production.

For startups looking to make an impact and get involved with Farmhand Ventures, how do they get involved? What do they need to do?

I have a strict open-door policy. You can direct message or send a LinkedIn request with a little note, and I will reply. I do get backlogged, but my website has a form you can fill out if you’re a startup. We write checks of $250,000 for companies focused on the future of work in agriculture. Help me understand how to help you. I’m probably not investing in cultivated meat ventures—never say never, but I don’t want to waste your time, and my time is limited as well.

We talk to founders and accept cold outreach. I’m also willing to connect people with others in the space because I dislike the exclusivity of venture capital. I have a particularly open door for underrepresented founders. You might find yourself talking to me while I’m walking my dog, but I will always make time.