Lots of tech startups, but mine is not, is this the right place for me to learn?

by humaniteer. Posted on Sep 12, 2020    2    18


My startup is not really tech oriented, except in the sense that I am automating my processes for efficiency. I have no apps, no coding abilities, and no platform. My start up is vertical farming. I am not a farmer, but a real estate specialist, and small business entreprenuer. So I basically do not know who to approach for VC funding, advice, a place to learn about start ups or anything?

Is there a place where I should be to learn the ins and outs of startups outside of tech? Thanks!


Comments

S0VEREIGNTY

Automation use Arduino. So it is a program. Startup isn't always about website or digital inventions.

one_ivan 1

Hi, I'm providing a free consultancy in terms of service providing company:
www.urlaunched.com
So, if you are interested in such, would be pleased to chat.


Notes: launched 24 startups in the last 3 years, and more than 30% of them get to profit. In terms of 99.7% startup fail worldwide statistics it is an awesome result we have so far.

hevad 1

You are looking for accredited angel investment or private equity https://www.investopedia.com/articles/financial-careers/09/private-equity.asp But you need to have income. It seems like before you invest in an operation like this wouldn’t you need to find customers willing to buy small quantities first and build a small proof of concept that you can afford. 20~40ft container? Once you have steady cash flow and actual customer feedback with real projections based on this cash flow it will be a lot easier to find larger vc type investments.

  humaniteer 1

Ah yes, you hit on a point we tackled almost immediately in our calculations. So a small scale operation does not even need a SCADA set up, and so this would look almost nothing like the larger, more automated systems, which would be profitable. The smaller you get with these, the less profitable they are. The idea to make a profit from little herbs and lettuces is nice to think, but doesn't really appeal to big time investors. We would make the bulk of our profit though franchising and retail of non-food items, while at the same time, eliminating food deserts in small rural communities, and growing healthy fresh produce in a tiny foot print (compared to traditional farming).

With all that said, we do have some systems we are designing which could fit into a shipping container or smaller, and would easily grown enough produce for a large family. Maybe that is something people will want as climate change worsens in the future? I am placing bets on that happening in the future, since I am working on this right now, and spending my money on it.

hevad 1

I don’t doubt the climate shift to support this. The uncertainty is gauging demand of the demographic for this, not ability or profitability of production. If people will leave the current eco system that is available for the automated one (adoption pain). Even a pop up store (on wheels) or delivery service that just sold variations (3rd party sourced) that you plan to produce is more risk averse than to blindly invest and build without feedback.

Analyst-Suspicious 1

In 2020 there basically isn't such a thing as a non-tech startup. Even a dildo has a processor in it running some code because it's cheaper than doing it with old-school electronics.

Automation and control theory you'd need in your farms is pretty hardcore tech. So you are a tech company, you just aren't for the average consumer on the app store or whatever.

You can embrace the technology and perhaps figure out a way to scale. If you invest in figuring out the technology to help you farm better, what is stopping you from making more farms or selling the technology to other farmers?

For example in Russia they are hacking old soviet harvesters by attaching cameras, some robotics to turn the wheel and acceleration/brakes and some safety features (detecting humans etc). Using machine learning they can detect where the crops are and position the harvester perfectly to maximize yield (steady speed so they can also dump it into the truck while moving) so the operator can focus on harvesting, not driving so higher yield. A lot less cognitive load too so you need less experienced drivers (an 16-17 year old is fine) and they last longer (from sunrise to sunset) since the work becomes much easier and they can swap in a teenager to handle the easy bits in the middle of the day while the guy with 20 years of experience is taking an extended lunch break.

In Asia they are using cameras to determine the quality of produce so they can charge a higher price for the premium stuff. In Europe they use hyperspectral imaging with drones to determine the quality of the farms and forests.

Even in real estate you can write software to automate for example picking the best farm locations (cheap, good access with big ass trucks, labor available, good location for logistics, lots of whales such as expensive restaurants or premium "farm to table" food stores that you can sell produce at 10x the price to etc.).

Even if you open a pizzeria, you'll probably want to invest in technology to optimize pizza drivers, work schedules, anticipate local demand etc.

  humaniteer 1

> You can embrace the technology and perhaps figure out a way to scale. If you invest in figuring out the technology to help you farm better, what is stopping you from making more farms or selling the technology to other farmers?

Yes scalability + franchising is our goal, and once we have a rabid and established fanbase, we would move into the retail space in our stores, selling only licensed products, plus broadening our produce selection to some fruits grown locally (not set up for fruit trees), and eggs, etc. We would leave these to the discretion of the franchisee (with some guidelines), so that they can make that profit as an incentive to open up a new location. Once we are steam rolling, there is a lot of profit, but once we are building out, getting settled in the community, and growing, it will be slow profit... Or maybe not? It could potentially just take off right away, but I would not know this without some proof of concept.

NulliusVanFook 1

Most of companies that claim to be tech have nothing to do with it. For example: WeWork, AirBnB, even Uber.

Cultural_Beyond8851 1

All businesses are basically the same: how big is the market? How much of the market can you capture? Do you have a barrier to entry? what is your go to market strategy. and specifically for investors: what is your exit strategy and timeline. Doesn't matter if it is tech or vertical farming.

  humaniteer 1

Ok well, I agree with that statement, but would approaching a VC funding company be my best best? I don't see many non-tech companies under their portfolio. Mine is even less tech oriented than the ones in just about every portfolio I have seen.

Cultural_Beyond8851 1

VC funding is rarely your best approach. Your best approach is always to bootstrap if you can. VC money is the most expensive you will ever take.

It sounds like you haven't looked at too many VC's portfolios. Don't look at those in Silicon Valley, look at those in the midwest or closer to where you live.

  humaniteer 1

I am bootstrapping right now, but probably about $125k into it. So far I have a commercial piece of land, developed up, and a 3 story, 3 unit building built out. The system itself though would take me YEARS to fund on my own. This isn't something I can "bootstrap" in the traditional sense... I have tried to obtain contracts with grocers and the local Co-op, but it just doesn't work like that with produce, no matter how boutique the plants are. There is actually fair amount of machinery and programming to do, which all adds up to a ton of money.

Cultural_Beyond8851 1

Here is your problem. It doesn’t sound like a business that will either go public, or sell for a high multiple in 5 years. That is what VC’s are looking for.

  humaniteer 1

Gotcha, well then it appears I am barking up the wrong tree. Any suggestions on who to approach on this? Banks are not convinced, since, as I said earlier, I am in real estate. I can definitely get a high interest loan, no problem, but that's not really sustainable.

farmingvillein 1

> I can definitely get a high interest loan, no problem, but that's not really sustainable.

Why not?

Broadly speaking:

  • If your venture is going to have near-term, somewhat dependable cash flow ==> get a loan

  • If not ==> consider venture. But, per other note, if you don't have something that looks like venture-scale returns...you're going to find it tremendously difficult to attract capital (why would I invest in your speculative thing if it is never going to be that big?).

    This may sound a little harsh and reductionist, but if you can't build a business on proper debt (like you highlight) or attract angel/venture dollars...it is probably not worth your time (from a financial POV).

    The only other obvious gap funding would be impact investing-type funds...but most of those are still looking for at least the potential of a venture outcome.

    Exceptions exist to everything I note above...but they are sufficiently rare that I would almost entirely dismiss them out of hand.
  humaniteer 1

I am not debt averse at all, as I have built my real estate business on heavy debt. This debt makes me FAR more money than I need to pay on a monthly basis. But this seems to be a little different of a debt, and something I am not comfortable with. It would definitely take a bit to generate the cash a VC would want to see. But again, I don't have experience with them, so I don't know what they are looking for. I am ok holding that debt myself for a bit, but just getting it off the ground would wipe me out pretty quick, and so I am stuck.

Cultural_Beyond8851 1

Well, let me ask. What is in it for investors? What is your valuprop? How are they going to make their money back and make a profit? Why should they risk their money on your idea over another investment?