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Drones in Agriculture

Drones in Agriculture: A booming sector?

About the industry

The use of drones in agriculture enters to a more mature phase and no longer considers to be a radical novelty. Early adopters are paving the way to provide research evidence and operational best practices.

In short, farmers can optimize spraying of pesticides in areas that need treatment, and significantly reduce the amount used, reduce water use, control crops quality and access areas that are difficult to reach with traditional farming tools. For instance, agriculture drones can spray 40-60% faster than manual spraying with saving 30-50% in chemicals. In addition, drones are also able to conserve up to 90% of water usage for agriculture.

The agriculture drone market is expected to grow at a CAGR of 31.1% from 2019 to 2025 to reach $5.19 billion by 2025.

The growth in this market is mainly attributed to the factors such as growing population and rising pressure on the global food supply, increase in venture funding for development of agriculture drones, growing e-agriculture or information and communication technologies (ICTs) in agriculture, rising automation in agriculture, growing emphasis on enhancing agriculture efficiency, and rising need for water conservation across the globe.

However, technical limitations of drones are likely to hinder the market growth to some extent.

Main benefits:

Multiple factors hinder the mass-adoption of drones although their benefits are straightforward. Drones require less labor to execute occasional or intermediate spraying and monitoring. In some cases, drone-spraying uses less water almost 90% to distribute the chemical or biological components to the crop. There is no soil compaction damage, to carry the heavy machinery or workforce on the crop. The spraying can be done even if the field is muddy and not approachable by other means.

Use cases:

Drones are used for soil and field analysis, crop monitoring, irrigation, crop spraying, crop field mapping, crop health assessment, and livestock monitoring all by using remote sensing.

Precision Farming

Precision farming involves the use of innovative technologies and tools for agriculture. It involves the analysis of the data acquired from fields, followed by applying appropriate inputs to increase crop productivity. Precision farming helps manage variations in the field to grow more crops using fewer resources and reducing production costs. Precision farming optimizes farmland efficiency and the agricultural practices that are already in use. Different types of cameras such as multi/hyper-spectral, infrared (IR), thermal, LIDAR, and high-resolution cameras are mounted as payload on the drones, which help monitor the yield.

Livestock Monitoring

Livestock farmers can use drones to monitor the area where livestock is kept. With the help of thermal imaging and high-definition cameras, drones can help farmers to remotely keep an eye on their livestock. The safety of the livestock, and its movements and health condition can be accessed through the advanced imaging and analytics. The major sub-applications of livestock monitoring mainly include feeding management, heat stress management, animal comfort management, and behavior monitoring and control.

Precision Fish Farming

Fish farming is a form of aquaculture that involves raising fish commercially in tanks or enclosures. It is done to increase fish farm productivity to meet the increasing demand for food. Fish farming has become a common practice to increase the income of practitioners and, in the process, reduce the wage expenses on fish imports. The major applications covered under fish farming include fish tracking and fleet navigation, feeding management, and water quality management.

Smart Greenhouse

Greenhouse provides a controlled environment for plant production with sufficient sunlight, temperature, and humidity. The greenhouses are built to provide an optimal indoor growing environment that suits the plants’ requirements; hence, they need exposure to maximum light and ventilation. Drones can monitor greenhouse environmental factors such as temperature, humidity, carbon dioxide, luminosity, and volatile organic compounds, apart from plant growth and stress.

Forestry & Bird Control

A niche use case could be in the forestry, as drones are efficient in planting trees especially at remote areas. It drops a bullet with the seed to the ground at a precise location. Also, drones shaped like birds, like predator birds can keep away spices that inflict damage on the crops otherwise.

Main challenges:

The previous use cases might make seemingly obvious economic and environmental sense, but success is far from granted.

Legal & Regulation

In the EU, the new EUSA regulations covers an EU-wide regulatory approach to the UAV/ drone industry. To enable a drone to intervene besides just monitoring, such as spraying the use case gets complex. Since the drone requires to lift weights, powerful rotors are needed, which falls into a heavy machinery category (more than 25kg) which needs a 2nd level legal approval to execute the intervention. Furthermore, the drone is equipped with a highly concentrated chemical solution, which is a toxic, hazardous material, therefore an even stringent control is required.

Even if drones are pretty autonomous, think about the robot pilots, it requires human supervision, with a highly qualified and certified personnel. The drone controller, must attend theoretical and practical course work and perform an exam to obtain the permit & license.

For spraying you need a certified biologist to observe and approve the intervention. The biologist is also responsible to ensure that the right component was diffused at the right place and at the right quality.

Batteries

Heavy drones can spend up to 40 minutes in the air without carrying the payload. If equipped with 20kg of spraying components and 5kg of sensors the flight time shrinks drastically to around 15 minutes. Otherwise we need drones with more rotors with a 1 rotor (helicopter), 3 rotors (tricopter), 4 rotors (quadcopter), 6 rotors (hexacopter), and 8 rotors (octocopter), along with more unusual setups such as 12 and 16 rotors. Unfortunately, the scaling of rotors does not correlate with flight-time increase.

Although a lot can be done with a drone in such a short time frame, and a quick pit-stop to change the batteries might not be a head-ache but we can easily imagine longer flight times. Experiments are ongoing for a better battery technology using components other than Lithium or even nanotechnology.

Weather conditions

Drones can be safely operated in a nice, calm and sunny weather. With little airflow, let alone a wind, the precision of executing mission is at risk. Even if some drones manage to balance off mild drifts, the risk of precision spraying is still prevailing.

Technology Gap

Highly sophisticated software to operate and execute a drone mission, might often meet with simple user requirements. In order to fully take advantage of the technology, “farmer centric innovation” is necessary, otherwise a highly-qualified, highly-skilled workforce is needed to cover the agricultural operations.

Altogether, drones in agriculture is a fascinating technological progress, but the true potential is yet to be unlocked in the coming years.

By MAXELLCO

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The changing natutre of EU-grants

As we move forward with the new 2020-2027 Multiannual Financial Framework we expect the nature of EU funding changing. It will be more like investment proposals rather than grant-applications. In this section we walk through the most common pitfalls we see with unsuccessful funding approaches and what we can learn about them. 

#1 Pitfall: Investment ideas are not mature enough.

EU-grant applications will tend to look like investment plans. Often the ideas presented are at the level of European projects looking for grants rather than investment proposals:

a.) Business model not elaborated: tendency to describe the investment idea from the “European project” point of view, failing to elaborate on the business model’s concepts and bankability.

b.) Commercial and sustainability aspects missing from the investment proposals, due to inability to clearly define their business models

Focus more on returns, impact and sustainability. We are at next level where dreams only are not enough.

#2 Pitfall: Incomplete applications.

Surprisingly, often there is a clear indication that the submission was done last minute, resulting in a poor content and many elements missing or superficial.

Preparing a good application takes time!

Consider a month for the preparation of the content, to bring all internal and external inputs together in an organised format.

#3 Pitfall: Investment ideas are too technical.

It is challenging to implement complex engineering challenges into the financial and business context. A successful application shall clearly describe the business model and to use a simple language without being too technical.

An investment idea needs to be clearly described. Make sure your idea is readable and understandable to a wider audience. It is better to involve people with various background to the process.

Is it technical or professional? Where is the healthy balance?

Pitch your idea to a finance guy and to an engineer. The finance guy must wrinkle her forehaed but still nodding, for the engineer it must be obvious.

#4 Pitfall: Lack of private sector backing

The EU increasingly seeks the assistance of the private sector to proove the viability of projects. It is increasingly becoming important to demonstarte market viability this way. Absence of institutional and private sector backing: inability to show commitment of core partners and stakeholders through signed MoU’s and letters of support.

To demonstarte private sector engagement a clear declaration of interest from companies should be secured. It gives a first positive indication that the project may meet a market need. Applying for public funds only may raises questions about the commercial value of the project,

In other cases blended finance (both public and private) can be a good option for some investment propositions.

5 Pitfall: Absence of the international dimension.

In the next level of EU-funding companies need to think beyond borders. In successful projects participants are technology providers and integrators.

Core partners are mostly coming from different regions from the same country rather than different countries. To promote interconnected technology value chains it is going to be compulsory to partner with international companies to deliver results.

The value of international networks are set to increase as well as cross-border cooperations.

#6 Pitfall: Consortium vs. legal entity.

The next elevel of EU-funding is set to foster international cooperations. Before, the consortium was the preferred form to manage a project by pooling the resources together and acting as a single entity. In the future each team member shall have a clearly defined scope, role and aligned within the legal entity to realise the project.

#6 Pitfall: Roles of the project team are not explained.

A failure to prove that the project team has the relevant experience and expertise needed for the finalization of the business plan and its implementation is a common pitfall.

A question of leadership: capacity of a project manager to develop and run a complex project.

A question of Implementation: the core team should demonstrate it has the right profiles a clear governance structure for the elaboration of the business plan and the implementation of the project.

#7 Pitfall: Insufficient market analysis.

A failure in describing their market, the main actors in the value chain, competitors and potential customers might leave your project ungrounded. You should be ready to answer the following questions:

What have you done to identify the market?
How large is the market and what could be your share?
How will you cater products and/or services to your customers? What do you know about competing products?
How will your product/service be priced?

Where can you find relevant market intelligence?

#8 Pitfall: Unique value proposition (UVP) is not clearly defined.

Although this question might seem obvious, it is a great example of introducing market-thinking to the next level grant-schemes.

What value do you offer for your customers?
To whom will you send your first invoice?
What is the service/product you are invoicing?
Why would your customer pay?

Take time to walk-through these questions and provide example or market reference for your answers.

#9 Pitfall: Absence of the cash-flow projections.

To convince judges you must clearly indicate the revenue generation, the cash flow projections and the resource needed to realise the project.

a.) Cost assumptions will be used to test the validity of your cost structure (e.g. flat sales staff costs whilst revenue increase, absence of IT investment with surging revenue for a technology co, etc.)

b.) The costs structure needs to be aligned with your strategy.

c.) Benchmark your cost structure by looking at existing companies having a similar business model. This helps estimating the costs structure more accurately.

d.) Investments in assets (Capital Expenditures) needs to be considered thoroughly – usually larger at project start.

#10 Pitfall: Failure to (pre)identify other potential funding sources.

Before applying you should identify potential resources elsewhere or to demonstarte the lack of other solutions (e.g. national funding instruments).

To conclude:
a.) Generate revenues.
b.) Present an envisioned business model and contain a clear investment proposition.
c.) Manifest their commercialization path and close-to-market innovation with a clear evidence of impact.
d.) Ideas can have a public funding/co-financing component as well.

It is high time we talk about hyper-automation

Imagine a world where there are no service centers. The entire customer relationship management is configured and fully automated with a click of a few buttons.

Client facing retail businesses obliged to manage and document every single customer interaction for the record. Think about insurance, banks, utilities, telcos or even airlines. It is business interaction at a massive global scale. Each and every customer inquiry are tracked (ZENDESK) and processed by a not-so-high waged employee who can routinely handle repetitive tasks at the other side of the world, execute steps by a carefully writing codified manual or handbook. Robotic process automation RPA takes this handbook, record the actions taken and repeats it automatically and at a massive scale. If all the process is automated from the beginning till the end the robot can be unattended. If needs exception handling it is called an attended robot.

According to Adroit Market Research the contact center outsourcing market is set to almost double by 2025 to a 131.56b globally. Hyper-automation is the fancy term capturing the phenomena and set to massively transform the service sector. The term was defined in Forrester and Gartner research reports predicting enormous growth opportunities in the future ahead. The flagship solution in this world is UI PATH (Read about the UI Path growth model) a Romania based champion, setting the torch for startups in the CEE.  (Read why B2B SaaS startups can win from the CEE). UI path provides the development framework and environment to design and implement process automation tasks. It costs around $3000 per year per user to set up the RPA environment and churn out robots, a bargain if you factor the potential savings in terms of working hours.

But what is the right growth model for RPA startups?

This is not a one solution fits all case. Every customer’s system, process and workflow is unique, result or organic or inorganic development, far from being identical. There are different, often competing and mutually excluding system are in place. The beginning of a process is aligned or connected with APIs without proper process mining, and implementation as well as testing it is not yet possible to deliver a subscription based service only.

The possibilities of the problems to be solved are endless. A good strategy could be to target and focus on a very specific problem: like emails.  We spend almost 30% of our working time with emails, most of them are repetitive and time-consuming. “Email tree” https://emailtree.ai/ – A new startup in Luxemburg set to conquer the space. Email tree promises the classify, detect and execute emails and replies automatically, pulling data from databases and provide assignment. Partnered with Ui Path it can provide the right quality of new and existing clientele a synergy is guaranteed. The team has participated in competitions and incubator programs to gain traction. A Microsoft, EY and Orange partnership lays the fundamentals of a success story.   

Service centers typically are located far from business centers, (think about India and Asia) where wages, working conditions and economics play an important factor. Having the implementation and delivery process established Email tree found the way to bounded a onetime consultancy-like fee with a yearly subscription fee together. The business model is challenging as firms are facing both cost effective scaling solutions and make-or-buy decisions in the ever evolving enterprise solution landscape.  

TAM-TAM: Hit the drums! Get your head around Total Addressable Market.

Just like a powerful overture when a symphonic orchestra start with base-drums at the back, to send shock and grab the attention of the suit & tie audience, the number crunching mind-trick behind Total Addressable Market metrics serves the same purpose. 

When you open your business files the TAM question is likely to pop-up within a few minutes. By definition “TAM is the overall revenue opportunity for a product or service, given a 100% market share” an unlikely status in markets, an abstract figure. So what is the catch? 

The Venture Capital and investment world is full of bets. An educated guess on which market, industry and company is more likely to succeed than the other. In the US the saying goes like “1 out of every 10 early stage investment is likely to succeed to balance and over-shine the loss of 9 others”. This figure recently climbed up to 1:15 or in the CEE region is even at 1:20. So the venture capitalists are betting on to find that 1 out of 10, which were selected from other 100 investment opportunities, to make or break their financial returns. An important guidance on how they analyze, compare and select companies, lies on the potential to tap into a large, growing and considerable Total Addressable Market.

The Top-Down Approach

This way of estimating the market size of your project is based on external and more likely macro-date to begin with. This is the most common approach when you have no track record and you need to collect all the inputs to justify your market from public data or from expensive market-reports. 

The output of the research and answering the questions are an estimate based on 3-5 solid assumptions to make it look like more credible, like this: “The global market for pet medicine in 2020 worth $XXXbn, with a growth rate of X% annually. It is based on growing disposable income in welfare states, the growing proportion of what is spent on animal care, the increasing number of pets per households, and the growth rate of the past 10 years on average”

If you look closely every word has its significance: 

  1. “The global market” – So you opt for competing on a global scale, which is ambitions. You might need to drill down to manageable sizes (see later)
  2. “Pet medicine” – the carefully chosen name for your industry you are in. If you are about to invent your very own industry, try to combine two related or associated sector for this purpose.
  3. “in 2020 worth $XXXbn” – The size of an industry usually refers to the total amount spent on the product or service within a given year. If we are talking about the global scale it is usually quotes in $, USD terms.
  4. “with a growth rate of X% annually” – It is important to give your venture a likely perspective to follow. Having an industry snapshot is important to get the absolute terms, but offering a bright future ahead can be crucially convincing. 

Fire by words and back them up with data. Collect, verify and prove your assumptions with credible and reliable source of information.

  • Assumption 1: “It is based on growing disposable income in welfare states”
  • Assumption 2: “the growing proportion of what is spent on animal care”
  • Assumption 3: “the increasing number of pets per households”
  • Assumption 4 “the growth rate of the past 10 years on average”

These “rock-solid” assumptions are likely to support our idea to venture into the market as all the curated indicators imply a bright future ahead of us. 

The bottom-up approach

This is the way to build up your potential market starting from within and expanding to the horizon. It helps if you have track record, which gives your initial number to start with like: “Out of 100 software companies 3 would pay $XXX,XXX for a service like mine at the moment” This way you can start building up your model by your geography, your segment or your industry, growing out the boundaries of your current situation. “There are more than 10,000 software companies in the region” 

“if I can grow the proportion of companies willing to pay for my services form 3:100 to 5:100 and increase my fees by 5% from $XXX,XXX – then I can serve a market with $XXX,XXX,XXX”

Here, market surveys or focus group discussions could have great importance further strengthening your case. Expect to invest time & effort to bring insightful results, but the output will give you a competitive edge over vast, global datasets.

Differences between TAM, SAM, and SOM

TAM = Total Addressable Market, SAM = Serviceable Available Market, SOM = Serviceable Obtainable Market. TAM, SAM, and SOM represent the various subsets of a market. TAM refers to the total demand for a product or service that is calculated in annual revenue. SAM stands for Serviceable Available Market, and it is the target addressable market that is served by a company’s products or services. SOM, on the other hand, is an acronym for Serviceable Obtainable Market, which is the percentage of SAM that is realistically achieved. Identifying these subsets within an industry requires some market research to understand the proportions of each area.

It is essentially narrowing down your offering to a more manageable and realistic levels to handle market size. 

So, which approach is better?

It depends of course. The top-down approach if done correctly could show macro trends and demonstrate a thorough understanding of what business you are in.  If you can back your vision with bottom-up numbers, it is even better making your assumptions bulletproof. Breaking down the big size into smaller manageable segments helps you and your reader to better understand your chances of success. 

Does size really matter? Yes!

Is there a case where a market size is too big or too small? 

After narrowing down your number significantly and you still talk about billions, probably you failed to find a right market segment for your project. This is the case when you are attempting something unprecedented in human history or simply that there is no public or reliable data available to support your thinking. In this case you need to be creative to use proxy industries or competitive insights to frame your estimates within boundaries. 

On the other hand, if you end up with a Total Addressable Market with only a few millions, you might have fall on the other side of the horse. You might have narrowed your estimated down excessively or pointed towards a niche market either by geography or segment. When you end up with too small numbers try to think more broadly about how and who can pay for your product or services.

Again, the TAM game is about to help investors to make a well-educated guess about their investment decisions so help them to find you more likely to succeed.

Swappable batteries changing the game for e-scooters?

Battery swapping technology is expected to be the game changer from electric vehicles, mopeds to e-scooters. Although it failed largely in EV’s, are swappable batteries the future for micromobility?

This promising technology aims to reduce the size of batteries, eliminate waiting time for charging and decrease the total carbon footprint of the electric vehicles.

Already for few years this technology was about to revolutionize the electric vehicles market. It did not. Few attempts were unsuccessful to establish a fully-fledged market. Category leader in EV’s battery swapping, Israeli Better Place, filed for bankruptcy in 2013. Not much happened in EV’s market since.

However, since 2013 new e-mobility services emerged on the market. Shared mopeds and e-scooters became the mainstay of micromobility in large urban areas. Swappable batteries reduce the time to charge the vehicle and reduce the use of service vehicles. Therefore, for example, a mope or e-scooter with swappable battery can be reached by a moped or even a scooter and – voilà, the work is done! This technology reduces emissions of combustion service vehicles and therefore decreases the entire CO2 emissions of e-mopeds and e-scooters.

There are already several e-micromobility service providers that use swappable batteries. They do it because they are conscious about their cost, time and carbon footprint. Aiming to provide the best quality service for their users. Skip in the US and Hulaj in Poland are just two examples of such conscious companies. Other companies are flirting with this idea and some companies are seriously planning to launch it in a very near future.

Is Central and Eastern Europe behind the e-scooters revolution?

E-scooter revolution captured Europe after the staggering success in the United States. Bird and Lime the primary e-scooter sharing startups from California are now micromobility gurus quickly expanding in Europe and the rest of the world. Jumping on the trend many European startups are trying to follow through developing rapidly their e-scooter sharing services.

Is however Central and Eastern Europe (CEE) behind the trend?

One picture tells a thousand words. A quick glimpse on three maps below reveals that CEE is almost a blind spot on Europe’s fastest-growing micromobility trend.

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Source: Bird and Lime respective websites (accessed September 2019) and Europe startups from Amy Lewin, ‘From Voi to Circ, we compare Europe’s scooter startups’, published on website Sifted on 15 July 2019.

American giants, Lime and Bird, made a modest entrance in CEE, appearing mainly in the capitals and more developed Polish cities. Those companies with an appetite for growth and expansion are however careless for conquering entirely this region. From the beginning of 2019, they have already secured funding of more than $700 million that ensures their profitability and rather encourages them to expand into more lucrative markets of Asia and the Gulf countries. Other Western European startups, like Voi from Sweden, secured $30 million funding to fuel its expansion in Europe. 

E-scooters became the favorite solution for pedestrians in heavily congested, large urban areas. Yet, CEE, in a very thorough assessment of Amy Lewin on the European scooter startup scene, remains an area where nothing happens.

Is this region really neglected by the big companies and lacking local potential in the e-scooter revolution? 

The Central and Eastern Europe is usually out of focus however, this region of almost 300 million inhabitants (EU CEE) and with steady annual economic growth has much potential. The big ideas are there, the well-educated workforce is there, and the market is also there. Several startups are already operating locally e-scooter sharing services and many more are planning to do so. 

Wolf-e is one of the companies that want to make a difference. This Romanian startup aims to revolutionize first the largest city in Romania and, then expand in the region. What more, is that Wolf-e desires to establish communities of users with feedback loops to continuously improve their services. 

Other promising startups are already operating in Poland. Hulaj, operating in Krakow, introduced e-scooters with changeable batteries to reduce transportation cost for changing the batteries in logistic hubs. Whereas, Volt, operates in Lodz, actively participating and supporting various local initiatives. 

Moreover, blinkee.city , already a well-established Polish electric moped sharing company, forayed into more micromobility services such as bicycles and e-scooters. Blinkee.city operates e-scooters in approximately 15 Polish cities, with potential for the service to expand to other regions, especially where blinkee moped sharing services are already in operation. 

Local initiatives in CEE show that the region jumped on the e-scooter hype train however, not everything is so rosy. 

Funding, funding and funding is the key issue that local startups are struggling with. Not only in the e-scooter business but with almost any kind of business. Capital markets in CEE lag behind the more developed Western European markets and although 2018 hit a new record for investment in CEE, the difference between capital access in Western, and CEE region is still staggering. 

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Source: Dealroom.co

Time and time again startups from CEE (Skype, Transferwise, Prezi, Kiwi.com, etc.) prove that the path towards success is more challenging for them but it is possible. Many of them had to finally relocate to Western Europe to gain funding and finally reach success. 

However, in the new scene of the e-scooter revolution, the success will be measured locally. Potential is there, as the middle class is growing, infrastructure is constantly improving, legislation to ensure clear rules for this new mode of transport is being drafted. Cities in CEE are growing, traffic congestion is increasing and shared e-scooters might become the number one choice for pedestrians in this region in very short time. 

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