VC-backed farm management start-up in search of acquisitions with fresh $75m financing

Semios CEO Michael Gilbert said the agtech company's profit-making status puts it in a position to grow through acquisition to 'close the loop on risk mitigation and decision-making.'

By Chris Janiec, Agri Investor

Farm management software provider Semios is hunting for add-on acquisitions following a $75 million funding round, said its founder and CEO.

“This is actually the first time we were raising money and we had a positive EBITDA and were profitable, so this was really intended to be a war chest for acquisitions, not for organic growth,” Michael Gilbert told Agri Investor, an affiliate publication of Venture Capital Journal.

“Bringing in an acquisition that would enable us to turn on and off a valve [on a sensor] would be complimentary,” he added. “We are just trying to find ways to essentially close the loop on risk mitigation and decision-making on the farm.”

Vancouver, British Columbia-based Semios offers farm management software that utilizes data collected by the more than 1 million sensors, installed on 150,000 acres managed by its customers.

The sensors relay measurements of agronomic factors, including microclimate, soil and plant conditions and others every 10 minutes. Semios analyzes that data through proprietary models that produce specific guidance on managing pests, disease, frost and irrigation for producers of permanent crops including almonds, apples and grapes.

Funding round backers

The $75 million funding round was led by Morningside Venture Capital, a subsidiary of Morningside Group, a Hong Kong private equity and venture capital firm that provided the majority of capital in the round, Gilbert said.

A collection of tech-focused angel and family office investors made up the remainder of investors, whom Gilbert declined to identify further. The round brings Semios’ total capital raised to $115 million.

Many ag-related software and data startups that received funding during a flurry of investor interest roughly five years ago, Gilbert explained, have since faced revenue and profitability challenges. He added that after sporadically raising smaller rounds of $3 million and less to reach specific development milestones since its 2010 founding, recent sales growth allowed Semios to aim higher in the recent round.

“These days – for whatever reason – there has been a change in sentiment and investors are not as willing to invest in business models that may or may not be profitable down the road, or that will solve the problem of profitability ‘when we get there’,” Gilbert said. “We manage our growth and kept it [annual revenue] to only doubling [since 2015] for that specific reason; to make sure we can get a path to profitability early on.”

Profits have been produced through an annual subscription fee paid by Semios customers that ranges between $50 and $200 per acre, depending on crop type and other factors, Gilbert said.

Family-owned farms account for much of Semios’ customer base, about one third of which is made up of institutional farming operations, Gilbert said.

“They [institutional owners] tend to be the ones most focused on scaling systems,” he added. “There are probably some smaller farmers that really understand every acre of their farm, but when you are operating 10,000 plus acres, you need better systems.”

Morningside did not reply to messages seeking further detail by the time of publication.

This story first appeared in affiliate publication Agri Investor. Chris Janiec is a reporter at Agri Investor. He can be reached at chris.j@peimedia.com.