Startups develop food and improve agricultural management and sales, according to EMBRAPA analysis
Alexandre Affonso/Revista Pesquisa FAPESP
In 2014, law graduate Thiago Rosolem heard the expression “carne de caju” (cashew meat) in a song by Pernambuco composer Alceu Valença and decided to turn the idea into a business. As part of a study conducted at the Brazilian Agricultural Research Corporation (EMBRAPA) in Fortaleza, Ceará, Rosalem worked with gastronomy researchers and specialists and concocted dumplings and vegetable burgers from the fibrous mass of the cashew fruit, the “meat” typically discarded after extracting the valuable pulp. Now CEO of the company Amazonika Mundi, this year Rosolem plans to handle triple the amount of cashew bagasse fiber he used in 2022. The company will process 30 tons of carne de caju in 2023, producing meat substitutes enriched with açaí extract and oils from other Amazonian plants, to be sold in supermarkets in ten states across Brazil.
Amazonika is one of the 281 startups in the agricultural sector—also called agtech or agrifoodtech companies—listed in the food category of EMBRAPA’s Radar Agtech Brasil 2022, a survey mapping the sector that was published in November. “The search for foods that are healthier, less environmentally harmful, and tailored to specialized diets is a growing trend and is encouraging innovation in the agricultural sector,” observes business administrator Cleidson Dias at EMBRAPA, one of the study’s authors. The mapping survey was conducted in collaboration with the consulting firm Homo Ludens and the investment fund SP Ventures, with support from the Distrito startups platform and the Brazilian Micro and Small Business Support Service (SEBRAE).
Companies that produce innovative foods such as plant-based meat substitutes, cashew nut milk, or foods with better nutritional content make up the largest group (16.5%) among the five main categories in this year’s edition of the Radar, which covers 1,703 startups. The total number of Brazilian agtech companies has more than quintupled since the first mapping study conducted by EMBRAPA in 2018. Companies are identified through records in the National Register of Legal Entities (CNPJ), websites, social networks, and forms filled out by the entrepreneurs themselves.
Alexandre Affonso / Revista Pesquisa FAPESP
In presenting the study, two of the managing partners from SP Ventures, Felipe Guth and Francisco Jardim, noted that Brazil’s vast size, its diversity of soils and climates, and the differences in proportions among rural properties “make importing technologies and innovations an inefficient process, empowering the development of local solutions.”
Often born out of academic projects, the greatest concentration of companies built to support rural landowners are in the cities of São Paulo (21.6%), Curitiba (4.1%), Piracicaba (3.6%), Rio de Janeiro (3. 3%), and Campinas (3%). São Paulo stood out as the only city in Latin America ranked among the 30 most relevant startup ecosystems in the world, according to two surveys cited in EMBRAPA’s mapping: the Global Startup Ecosystem Ranking 2022, published by StartupBlink, an Israeli center for research on global startup ecosystems, and the Global Startup Ecosystem Report from the US innovation consultancy Startup Genome. The São Paulo capital is in the 16th and 28th positions, respectively.
Divided into 34 categories, agricultural startups are dedicated to a variety of activities, such as developing seeds, new feed for livestock, or techniques to reduce agricultural waste, as well as monitoring production through satellite images, using drones to apply pesticides, and developing internet-enabled devices for applications as diverse as detecting pests, predicting the weather, and irrigation planning.
Amazonika Mundi / Leo RivelloHamburger (above) and quinoa fritters (beside)Amazonika Mundi / Leo Rivello
In introducing Radar 2022, EMBRAPA president Celso Luiz Moretti and executive business director Tiago Toledo Ferreira observed: “The national agricultural innovation ecosystem is increasingly complex and comprehensive, driven by significant participation from startups (agtechs) and investors.”
In 2021, Brazilian agtech firms received public, private, and foreign investments of around US$1.3 billion, according to AgFunder, an American venture capital company cited in the study. Brazil is number six on the list of countries receiving the most investments, after the United States, China, India, Germany, and the United Kingdom.
The EMBRAPA survey examined the revenues of 168 companies. Within this sample, almost half (43.4%) reported annual revenues under R$81,000, with the majority (62.5%) earning less than R$360,000. Another 16.7% of companies earned up to R$16 million, and none of the companies sampled earned more than R$16 million. The conclusion is that “low-income, startup companies are most common.”
Alexandre Affonso / Revista Pesquisa FAPESP
From seeds to drones The study examines three categories of businesses: Before, On, and After the Farm. The first encompasses activities prior to work in the field, such as developing genetic materials (seeds, seedlings, or semen) and new laboratory methods for analyzing soil nutrients. The second group involves activities directly linked to agricultural production, such as managing property, planting, or livestock. The third category studies the distribution and sale of agricultural products, such as online markets.
“Since 2019, when we started doing the mapping study, the difference between the number of agtechs in the two main categories, ‘On’ and ‘After’ the farm, has decreased, but the possible causes still need to be researched in depth,” Dias notes. From 2019 to 2022, the share of startups working On the Farm rose from 35% to 41.4%, while the proportion of after-farm agtechs decreased from 47% to 44%.
Terra App Solutions, a company in Belém, Pará, is listed in two categories, both “Before” and “On” the farm. Created in 2014 by researchers from the Amazon Institute of People and the Environment (IMAZON), the firm develops programs for production management, socioenvironmental, climate, and rural credit risk analysis, and monitoring preservation areas on rural properties.
Now in its final validation phase, its most recent software, developed at the request of potential users, will be able to gather data from 2,000 producers who work with 20 different crops, such as cupuaçu, cocoa, açaí, and cassava, as well as prospective national and international buyers and two financial institutions. “Producers can apply for financing based on their harvests and bank managers will have the security they’re providing credit following regulatory agency requirements,” explains business administrator Andrew Breno, commercial manager.
Terra App SolutionsTerras App Solutions team working in the field in Santa Bárbara do Pará, in the Metropolitan Region of BelémTerra App Solutions
Breno says the company is monitoring how the program is used, in the interest of making future adjustments. “Agtech teams need to work with their users to create trust and good products,” says Breno. Dias, at EMBRAPA, believes collaboration can help prevent a common mistake: “Many times companies create solutions that don’t connect with the needs of producers and then have to change direction.”
One problem to be confronted is the lack of rural internet access, which increased from 5% in 2020 (see Pesquisa FAPESP issue no. 287) to 23% in 2022.
After food and technology companies, which form the second largest group of agtech startups, the third largest category is made up of online marketplaces selling agricultural services and products, including food. “The pandemic forced many sectors to increase their use of online services that connect agricultural raw materials suppliers, rural producers, grocery stores, restaurants, and consumers,” says Dias.
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Muda Meu Mundo (change my world), a Fortaleza-based company, launched in 2019 and today connects 650 small rural producers who can negotiate with 60 retailers and other food companies from 170 cities in the Northeast, Southeast, and Southern Brazil regions. “We’ve eliminated the middlemen from the production chain, such as distribution centers, so that family farmers can obtain a fairer value for their products,” says Priscilla Veras, the company CEO. “In 2021, demand increased, and we tripled our revenue.”
Based on her previous experience with rural producers while working for an NGO, Veras develops metrics on farmers’ earnings, productivity, and sales, as well as reforestation areas and the participation of the female labor force. She is one of the 28.7% of women who are partners in Brazilian agtech companies, a world dominated by men (71.3%), according to the EMBRAPA survey, which in 2022 looked at gender for the first time. Despite their lower market participation, there are already investment or venture capital funds focused on women’s startups, such as Microsoft, We Ventures, EB Capital, Mubius, and Sororitê, which are cited in the survey.
Alexandre Affonso / Revista Pesquisa FAPESP
The Radar Report states: “Women rural producers face more obstacles than men in accessing production resources and services, technology, market information, and financial assets. Women are underrepresented in local institutions and governance.”
Growth strategies
“In 2020, when I interviewed managers of Brazilian agtech companies for my doctorate, I noticed that most of them were run by men,” says agronomist Paulo Ramos, from the Federal University of São Carlos (UFSCar), Lagoa do Sino campus, who did not participate in developing the EMBRAPA survey.
When he began working on his doctorate in 2019, he had never encountered a single survey on Brazilian agtech firms. That was the year the first edition of Radar came out, which the researcher used to identify similarities between 28 companies that had reached the so-called scalability level—indicating the probability of future growth—when a company has at least 10 employees and has shown annual revenue growth of 20% for at least three years in a row
As described in an article published in January 2022 in Revista de Gestão, Ramos identified five decisive attributes that mark the growth of these companies. The first is a well-defined governance structure, with consultative and deliberative boards that periodically evaluate corporate strategy.
The second is the formation of specialized teams. The third, clear definitions for the roles of each department and employee, something the researcher says isn’t found in many startups, where the same person performs various activities. The fourth is attention given to human resources, which are continuously improved through educational courses and motivated by sharing in the company’s profits. And finally, these companies have a business model that is validated by their customers, based on knowing the target market and its needs. “Not having a solid business plan before building the company is the most common mistake agricultural startups make,” Ramos observes.
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