Explore how AI is transforming the agtech investment landscape in this episode of Fresh Takes on Tech. Host Vonnie Estes sits down with Chuck Templeton, founding partner at S2G Ventures, to discuss AI’s role in sustainable innovation. Discover how companies are using AI for personalized marketing, efficient resource management, and collaborative solutions in food and agriculture. Learn about the shift towards more agile, cost-effective business models and how AI is enabling faster, targeted problem-solving and innovative partnerships. Join Chuck and Vonnie as they delve into AI’s potential to reshape agtech.

Key Takeaways

• Investment Efficiency: AI is drastically shifting investment landscapes by enabling companies to be more capital-efficient, moving at the pace of industry adoption cycles.
• Cross-Industry Solutions: AI enables creative collaboration across different sectors by developing shared solutions, showcasing new models for innovation in agriculture.
• Dynamic Business Models: With AI, companies can discover opportunities faster and restructure marketplaces, redefining traditional industry models.
• Personalized Communication: AI is revolutionizing how companies communicate with their customers, creating customized content tailored to individual learning styles and preferences.
• Collaborative Research: Initiatives like pre-competitive consortia offer pathways to industry-wide collaboration, enabling shared research and development efforts.

Guest Resources

• S2G Ventures - Investment firm focusing on sustainable food and agriculture
• OpenAI’s GPT-3 and its applications in organizational tasks and content development
• Companies like Arable, Brightseed, and Shiru mentioned as examples of AI’s impact on the industry

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0:00:24 Intro Speaker: Let’s get into it.

0:00:58 Vonnie Estes: We’re going to talk about how AI is changing the investment landscape, who the early winners and losers might be, and how SVG is ensuring that the next wave of innovation leads to a healthier planet. Welcome, Chuck. It’s great to have you.

0:01:14 Vonnie Estes: Yeah. Great. So you’ve been at the forefront of sustainable innovation for years. What was your aha moment around AI and its potential for climate, food and ag tech?

0:01:33 Vonnie Estes: You and everyone else.

0:02:00 Chuck Templeton: Could you just read through it? And so, you know, and so how can we. So that really started to think about what were some of the possibilities with that and sort of mixing it into how do you think about growing a business in a different way? And so that’s where I think sometime late last year and sort of looking at thinking about how could you summarize it in a way that worked for a particular type of company or, you know, my summary might be different than your summary. And so some of the realizations as to like it just wasn’t a one size fits all. It really was this ability to customize it depending on the needs or the, the specifics of an individual. Really started as to where I started get really inspired by the opportunities.

0:02:59 Chuck Templeton: Yeah, so we had a number of our companies probably like in the 30 to 40% of our companies who were using AI as sort of the core piece of their differentiated technology and sort of what they were offering, whether discovery platforms, machine learning, looking at how do you get a greenhouse and understand whether there’s different types of stresses on plants or they’re getting the right nutrition, all that. So using vision learning for that.

0:03:54 Chuck Templeton: And so we’ve started a bunch of different user groups. We have sort of an advanced user group, we have a sort of an up and coming user group. We’ve done a fair amount of contact, we’ve got a discussion board. So really starting to lean into how do companies really think about not just using it as the core capability or differentiation that they have, but also in the day to day operating aspects of their business.

0:04:32 Chuck Templeton: Yeah, which it’s a mindset. Right. To me this is like if we talked about a specific technology today, maybe by the time you posted this it would be outdated in two weeks or something. Right. And so for us what we’ve been really focused on with our entrepreneurs is really about the mindset that you have of how do you think about, from a CEO standpoint, integrating this into the business? You obviously can’t tell everyone to stop doing what you’re doing and start using this on day one.

0:05:36 Chuck Templeton: And those technologies were like 80 or $90,000 for the year and a license and all that kind of stuff like that. And now for like 20 bucks a month for ChatGPT, like we can do a lot of that now just by, you know, how fast the technology’s come along. And so we’re really trying to think about from a, whether it’s a sales standpoint. And sales is actually where a lot of our portfolio companies are really leaning into this and thinking about how do they help the top of their funnel, the middle of their funnel and the bottom of their funnel and sort of move from, you know, we talk about sort of, you know, they’re selling, then you get to account based selling. And this is even maybe a step beyond that of individual based selling. So, you know, single person, you can target them specifically having content that is more likely for them to be interested in or the way they consume content. If you are a data person, we can company can send it in a much more data structured and data arguments. If you’re a narrative person or a story person.

0:06:50 Vonnie Estes: No, it makes complete sense. I was talking to someone, I haven’t tried this yet, but someone was telling me that, oh, it was Elliot Grant who, you know, that there’s one program where you can give it a topic and it will make a podcast. You know, AI will make a podcast for you. And I can, I’m a very much an auditory learner and consumer and so for me that’s just great. You know, that I could actually listen to two people kind of discuss something, you know, instead of trying to read it and understand it.

0:07:59 Chuck Templeton: And like you said, not everyone’s going to be the, the perfect person to get that content, but there is a subset of the world that will actually thrive on that. I’m a much more of an, an audio person as well. I listen to a lot of podcasts and that’s how I get a lot of my information also. And so it’s the perfect type of thing where you can specifically target an individual and how they learn and actually provide content, content to them in a way that works best for them.

0:08:48 Chuck Templeton: Yeah, I mean, there’s again, like back to this, you know, using it for finding individuals and being able to communicate in their sort of methodology. Another, frankly, is where some of these processes to build a proposal for a particular company. We have a company that really focused on, you know, water and water reduction and actually then being able to look at the hyperscalers and work with them on how do you help them.

0:09:40 Chuck Templeton: And so being able to figure out who’s using water, who needs the water reduction, what tools might be able to help with that water reduction. They can actually now put together a proposal that is targeted at the hyperscaler and it’s targeted also at the local. In this case, it’s, it’s farmers and being able to help them reduce their water usage. And so now the hyperscalers are actually paying the farmers to help them reduce their, their water usage in a way that now the farmers don’t have to pay for the equipment. They actually do get to save the money. But, but the, the hyperscalers now are. The data centers get to actually take advantage of the water savings in those communities, which now makes a very different business model than there was before on that. Because before it was really targeting farmers to help them save money, reduce the water usage, but there wasn’t, you know, the economics actually just weren’t enough to push a lot of farmers to do that reduction. But now there’s actually a much more financially viable way for these farmers to do those kinds of things. So some really interesting ways of looking at how do you piece together different needs that people may have to create this, this all in one solution.

0:10:47 Chuck Templeton: Yeah, exactly, exactly.

0:11:06 Chuck Templeton: And so each one of these. Yeah, sorry, each, each of these proposals used to take about, you know, 40 hours to do, to do all the research for it, and now it can be done in under 30 minutes type of thing.

0:11:34 Chuck Templeton: Yeah, it’s, it’s interesting. So in where you are, the Bay Area and the bear is the Epicenter like of this, you know, sort of craziness right now. And you know, I do think there’s going to be a boom and a bust. There’s, you know, just like other, the, you know .com era went through it as well and you know, sort of was part of that. However, there’s going to be some companies with real value that emerge out of the backside and those aren’t going to be AI companies. Those are be companies that solve a particular problem.

0:12:26 Chuck Templeton: And is this a we’re going to have less people in the company and you know, have a lower opex or we’re going to have more people in the company and try and do a lot more, accomplish a lot more. So like one, I was at an event one night and it was talking to a bunch of different entrepreneurs and I was specifically curious about how many people are they going to have in their company. Like what is their sort of target ideal?

0:13:09 Chuck Templeton: And so it’s really a way for them to keep the OPEX low. I mean, a lot of these people obviously paid more than the average employee in many companies. But at the same time, the ability to just iterate and move fast is so much different now than it was. And so like, as I look at some of our companies who have these long sales cycles and long sort of adoption cycles out there, what it does is allows them to raise a lot less money, allows them to sort of move at the speed of industry and not try and build these massive facilities that oftentimes sit idle for the first, you know, 12 or 18 months and then they start selling customers into some of the usage of these things like ingredient companies in particular.

0:14:32 Chuck Templeton: But at the same time it actually enables them to be far more efficient and start to think about third parties and more virtual sort of ecosystems of ways that companies and other, you know, multiple companies can actually work together to solve problems. So we’re super excited about seeing these companies actually be much more cash efficient as they’re growing, find that product market fit.

0:15:21 Vonnie Estes: But are you now focusing more on let’s look at solving some of these problems a different way or how are you thinking about that difference between there’s still going to have to be some product and some kind of steel and concrete and then there’s going to be other systems that you’re setting up like we’re talking about.

0:16:20 Chuck Templeton: And if you pile up too many of those J curves on top of each other or on, below each other, you know, the amount of capital that you spend is crazy. It’s too much. And so what this does is this allows smaller teams, in our opinion, to be able to build a sort of a cost structure that’s going to take sort of. It spends money at the pace that industry can sort of absorb these capabilities. And so it’s now looking at how do I think about our org structure in a different way that actually will allow us to use time as a friend rather than time as an enemy. The amount of burn that you have and that kind of stuff. So it really is thinking about how do we design these organizations in a way that move at the pace of industry, which is often slower, you know, and there’s nothing against the food nag. You know, it’s, you think about, sort of said this before, but Google’s been around for 27 years or whatever, it’s worth a trillion, you know, a couple trillion dollars.

0:17:27 Vonnie Estes: I hadn’t thought about this. I mean, everyone keeps saying constantly, AI is changing everything and it is changing everything but the way that you just described it and how it’s changing the way we build companies and the way we finance companies and how companies move and what your future portfolios are going to look like. I hadn’t, I didn’t thought about it that way. That really does change everything, right?

0:18:03 Vonnie Estes: Yeah. There’s been so much gloom and doom recently talking just about what’s going to save ag tech because of the current funding cycle and Companies are overvalued. And so this actually may be it. What saves agtech is these kinds of structures, right?

0:18:20 Vonnie Estes: That’s really exciting. I had thought of it that way. So in looking at your portfolio now you talked a little bit about Arable. Can you talk about some other types of companies in your portfolio that are using AI and how they’re using it?

0:19:15 Chuck Templeton: But what this enables them to do is think about different ways. That one really sort of we think about is you’re changing, you’re disrupting discovery. You have to disrupt what the business model is and then you have to disrupt what the story is that you’re telling right in that. And do it in different ways that are sort of more cost effective. And so the discovery, a lot of them been using AI for 3, 4, 5 years now.

0:20:12 Chuck Templeton: Like your 17th, 18th and 19th product. Put them out there, Let, let it be open source, let people use them, it builds. That’s a now marketing tool, right? Because you weren’t gonna be able to monetize that product anyway. Cause it’s 17 or 18 products from now and you’re still trying to monetize your first 2, 3, 4 type of thing. And so that’s now a currency you can use to actually think about. How do you get the credibility, how do you think about other companies, you know, putting maybe you require them to list your company on their label or put like logo on your packaging, but they get to use that product for free. Right. And so it now really starts to put you in the center of I think some free advertising and some free marketing if you will, if there is a such thing. But it starts to get your name out there a lot more to be able to show that there’s possibility or that you’ve got something that is not just a one hit wonder, but it actually has multiple opportunities or applications that you can use.

0:21:36 Chuck Templeton: And then you can actually think about a consortium who can think about how do we monetize this together? Because you know, we need this solution. But it’s actually I’m going to use it for beverages, you’re going to use it for crackers, someone else is going to use it for, you know, a different food category. And so you’re actually creating these groups that can get a product over the line a little bit faster and have less start to create the critical mass around it.

0:22:06 Chuck Templeton: Yeah, exactly.

0:22:08 Chuck Templeton: Yeah, because that’s a lot of the problem, right? It takes you for a lot of these. It takes you two years to raise money to build a facility. It takes you two years to build a facility. It takes you two years to sell out the facility. Then it takes two years to get profitable on that facility. Right. And so that’s an eight year. And so if you can close that down to six years or five years, Right. Because you’ve got this consortium that’s working together, create the right pull and enough customer interest, you can, you know, build faster you can raise faster.

0:22:38 Vonnie Estes: So those consortium like that, I mean I’ve worked in early days of clean tech and we kept trying to talk about that as far as enzyme development and you know, having a pre competitive group and it just never could get quite funded. We’d try to go through universities or we’d you know, try to get different ways. But how do those types of kind of foundational research get funded? Is that by people like you or is that like the companies see, okay, we need to create this way of working or how will that go forward?

0:23:49 Vonnie Estes: Yeah.

0:24:14 Chuck Templeton: But this actually the way that Shiru got it designed is actually that all of the companies get to have access to the IP in their verticals. Right. And so are in the verticals that they’re, they’re looking at. So this actually we believe and we’re starting to see some interest in this GLP1 process. We’re actually seeing the interest in the GLP1 consortium that’s getting together is actually impressive to see. I mean it’s some real brand names that you’ve seen that are sort of interested and they’re going through the process of there’s a learning what does this look like how do I make sure that again, I’m going to have access to the ip?

0:25:13 Vonnie Estes: That’s really fascinating. Well, Chuck, thank you so much. It’s been great talking to you. And it really, you know, along the lines, like I said, of everyone saying AI changes everything, these are a couple areas I hadn’t thought about of how you guys are, how S2G is building companies and working with companies and just being able to take some of these products to market without having to spend so much money and kind of reviving the whole investment thesis into food and ag tech. So thank you for doing that for the industry and it was really great to talk to you.

0:25:48 Vonnie Estes: Great. Thanks.