Argentina’s technological prowess is spreading across all sectors, but the agricultural industry is driving an upsurge of new agritech (agriculture technology) startups with a focus on innovation in the sector.
The country possesses one of the top ten highest amounts of agricultural land in the world, at nearly 1.5 million square kilometers, leading to an important necessity and strong demand for industry-supporting tech.
Interestingly, the U.S. is the most important market for Argentina’s agritech developments, with most agritech companies already selling to the U.S. market or planning to do so in the near future, according to Vanesa Kolodziej, Acceleration Manager at Xpand Ventures.
“Brazil constitutes a natural partner and China an aspirational market, but the U.S. is the real validation market,” said Kolodziej. “Even so, while investment is pouring globally into the sector, especially from the bigger firms such as Monsanto, those investments have not yet spread to Argentina. This gives giving local players the chance to be pioneers.”
As well as the local venture capital funds and accelerators, there are some from the U.S. that are looking at expanding their global agritech funding efforts into Argentina. One of these is The Yield Lab, a startup incubator in St. Louis. “We’re venturing into Argentina to access the best technologies that can’t always be found in the States,” said Matt Plummer, Principal at the company. “The country is comparable in climate and industry to the American mid-west, so there are a lot of synergies that we can tap into.”
One of The Yield Lab’s investments has been in an Argentinian agritech company called S4 (or S4agtech), which is based in both St. Louis and Argentina. Founded in 2011, S4 has developed a risk management index to help farmers determine soy bean and corn evolution during drought and flood.
“Venture capital firms, private investors, and the corporate venture arms of large companies are interested in creating an agritech ecosystem in the country,” said Tomás Peña, Partner and CFO at S4. “U.S. companies are looking at Argentina for this to search for more talented teams that have different approaches to these technologies.”
Favorable Public Policy
Further synergies are being created by the country’s public policy, which is leaning toward a more favorable climate for agritech and providing good opportunities for foreign players to get involved. For instance, a new law for entrepreneurs was approved earlier in April, allowing Argentineans to set up companies in just one day. It also rules that investors funding local entrepreneurs will receive tax incentives, and local crowd-funding platforms will be regularized to promote further local investment.
“Agritech is set to be most popular sector in Argentina next to fintech,” said Esteban Campero, Undersecretary of Entrepreneurs at Argentina’s Ministry of Production. “The government is contributing US$15 million into ten accelerator funds over the next four years, with public investment covering an additional US$15 million. At least one of these accelerators will be exclusives for agritech.”
As these innovative businesses get created at a more rapid pace, and with the country also expecting US$14 billion in private investment this year, Argentina could be grabbing at the last handholds as it climbs out of a deep pit of recession.