Sarah Nolet co-founded Australia’s first dedicated agrifood tech venture capital fund, Tenacious Ventures

When Sarah Nolet isn’t busy scanning the globe for the most promising agtech startups, she can be found tossing a ball on Sydney’s sunlit beaches…“I play beach volleyball, I’m very much in coronavirus lockdown now, but otherwise, any time that I get on the beach, I play as much volleyball as possible.”

Her love for agtech can be traced back to a childhood immersed in the big dreams and entrepreneurial pull of Silicon Valley.

As a teenager, she spent a fair bit of time on her parents’ hobby farm before going on to study computer science and engineering at MIT, growing her roots deep into the possibilities of technology and a love for all things green.

“My parents were pretty keen on, ‘go make money and then do something good for the world.’ So I did that for a while. I worked in the defence industry as an engineer, but I took a holiday to South America and that turned into a bit of an accidental gap year. I lived in South America for about nine months mostly on farms.”

In South America, she connected the dots around the potential of agriculture technology to be both sustainable and profitable: “I became interested in United Tech, and that was around the time when Monsanto acquired the Climate Corporation and so the agtech wave was kicking off. I was hooked and dove in as much as I could.”

What she didn’t know was just how far her deep dive would take her. After launching a consultancy on agriculture and innovation and an accelerator programme for farmers turned entrepreneurs, she went on to co-found Australia’s first dedicated agrifood tech venture capital firm, Tenacious Ventures.

The fund helps the best greentech startups make their mark: “We’re looking for how we can shift agriculture towards high levels of carbon-neutral and climate change resilience. On the commercial side, we look first at the team, and then the business model, and then their technology.”

What advice would you give to greentechpreneurs looking for investors?

Think about why you want investors. Sometimes getting investors can put people under too much pressure, or they’re just following the playbook of; ‘I have an idea, now I’ll find an investor to make it work.’ Think about what you care about in your investors and that you are qualifying them as much as they’re qualifying you.

The pitch and getting in front of them does matter. We see dozens of pitch decks per week, so finding a way to get a warm intro and to stand out is really important. But that doesn’t mean making a crazy video.

If you can’t answer those three things clearly, you probably won’t get a follow-up meeting or a meeting in the first place. Often people don’t communicate about those three things enough.

A startup needs to find that balance of the vision and the impact along with the commercial foundations to make the business successful.

How can startups effectively manage investor relations?

Establish your working relationship from the start

Just have the conversation about how you’re going to work together and what the expectations are. In the fundraising process, you’re building that relationship and working out whether you’re going to be a good fit, how you’ll communicate, and what kind of reporting expectations your board will have.

Thinking about your investors and customers as different audiences, and different stakeholders that you need to manage is important.

Be clear about how you’re using funds

Where we often see tension is when a business plan isn’t clear, and the use of funds isn’t clear. If you deviate from the business plan, you need to manage the investor expectations and talk about why you’re making those decisions and how it’s going back to the financials and the success of the company. If the plan changes, be honest and upfront, build that relationship throughout the process.

Have you noticed key qualities or patterns that lead to business success or failure?

We look a lot at the team, and we think about whether they understand the industry:

Do they know how to execute? Is there evidence from their past, whether it’s building a company or any other experience of working hard, and despite adversity, and managing people, and bringing them on board? And that experience can be at a bar or a car dealership.

We focus a lot on the dynamic and the evidence we have around the founders’ ability to execute.

What are common blind spots in greentech innovation?

Unintended consequences are especially important for agtech entrepreneurs to consider.

So you might be thinking about solving one problem, but you’re creating more waste or you’re solving a problem with automation, but you’re displacing jobs or upsetting the regional community.

A second common blindspot would be around businesses’ combination of hardware and software. They have a bit of a hardware element that’s important for whatever they’re trying to achieve. But it might be more expensive to get to where you’re going because you have that hardware component. So how do you explain that to investors and still have compelling economics and a compelling business plan?

How could the Covid-19 pandemic impact the investment landscape?

There are several implications: fundraising right now is tough for startups because investors are focused on their existing portfolio companies and making sure that they have enough money. They’re playing things out and focusing on what they need to do to survive. So investors are distracted, to say the least, and are more focused on existing companies.

Another one would be the impact on valuations. In past crises, in the 2008 or the.com crisis, we’ve seen that private markets tend to follow public markets by about 18 months.

The public markets are down, and so we can expect that the private markets will follow. We’re already seeing with the investors we’re talking to, valuations are 30 to 70% lower than they were five weeks ago. So that’s very tough. If you’re a startup you may have to plan to not have as much revenue coming in.

What new opportunities might emerge post Covid-19?

More broadly, we do see this as an opportunity for people to think differently about where their food comes from and the challenges we’ve had globally in responding to the pandemic. What does it mean for our ability to respond to climate change?

There are some big, hairy questions. How are we going to think about our agriculture supply chains in the future? For example, in Australia, if we don’t have chemicals coming in like we normally do because of supply constraints? Farmers are already looking to invest in precision agriculture technologies that help them apply the chemicals in a more limited and effective way. That’s a great climate impact because they’d be using less chemicals.

So some areas are already seeing a potentially positive outlook. Labour is now a challenge, so maybe the pandemic will speed up the adoption of autonomous technologies. Some trends may or may not stick around long term, such as people cooking more at home, eating healthier, and buying more local food. But those are great opportunities for sustainability-oriented entrepreneurs.

There’s an optimistic view that current trends could catalyse a transition into using more renewables and greener technologies.

Which keywords describe working in agtech?

Complex systems, incentive design, user-centric, farmer-friendly

Which greentech innovations are you most excited about?

The possibilities around waste management, novel packaging and processing technologies, and automation bringing more efficiencies to farmers.

Do you have a favourite quote?

My grandad used to say, ‘the unexamined life is not worth living,’ but then he’d follow it up with…‘and ignorance is bliss.’

Sarah’s book recommendations:

Seeds of Science, about an anti GMO activist who become very pro GMO

Limits to Growth, Charles Massey

The Call of the Reed Warblers: a New Agriculture, a New Earth, James Charles

A networking event you should go to:

The Sydney or New South Wales Agtech Meetup – it continues to run virtually throughout lockdown.