After years of meticulous planning, designing, testing, and prototyping, the ultimate goal for agtech and foodtech startups is commercialization. This crucial phase involves getting products into the market and finally seeing a financial return on all the hard work. However, the journey from innovation to market can be fraught with challenges, and even the most groundbreaking solutions can falter if the bring-to-market strategy is underfunded or poorly executed.
**Blockers to Commercialization Success**
Most new agtech and foodtech businesses will encounter at least one of several common obstacles when attempting to commercialize their products. Many organizations will face more than one, making the path to market even more complex.
**Understanding the Target Audience**
One of the most critical steps in the commercialization process is understanding the target audience. By this stage, startups should have conducted extensive discovery to grasp their ideal customers’ needs and demands. It’s essential to clearly articulate how the product will solve customers’ problems and ensure that others are willing to pay for it. However, the agrifoodtech market is dynamic, with constant technological advancements. Startups must commit to ongoing market research, including competitive analysis and communication with early adopters, to ensure their products continue to provide value. For instance, precision agriculture tools are more likely to attract farmers and ag dealers if they are easy to integrate into existing farm operations and simple to learn.
**Lack of Marketing**
Investing in marketing activities such as digital campaigns, advertising, and public relations is crucial for educating potential customers about a product. Building awareness and generating excitement around a product or service is essential for engaging enough customers and closing sufficient deals to scale the business. Startups that neglect marketing efforts often struggle to gain traction in the market.
**Insufficient In-House Talent**
Agtech and foodtech businesses need to hire a diverse range of experts, from scientists and researchers to mechanical and software engineers, for product development. Once the product is ready for commercialization, additional experts in marketing, sales, and customer service, as well as skilled workers for production, are necessary. Without this talent, the company cannot grow at a reasonable pace. Continuous recruiting, hiring, and training investments are essential to ensure a solid foundation for scaling the business.
**Inability to Keep Up with Demand**
In an ideal scenario, demand for a product skyrockets. However, this is only possible if startups can keep pace with that demand. Failing to meet supply requirements can anger customers and damage the business before it truly takes off. Meeting demand often necessitates building out a manufacturing facility or a larger lab, requiring costly equipment and personnel. Having a plan and the finances to take this next step as the market demands is vital.
**The Biggest Challenge of All: Investment Allocation**
All these blockers share a common thread: they require significant financial resources. When launching, agtech and foodtech businesses often have limited capital, with a substantial portion allocated to equipment and technology. This leaves little for other critical investments, such as ongoing discovery, marketing, hiring, and training. Without these investments, growth is often stunted. Startups must take an honest look at their capital allocation and make necessary adjustments to give their product the best chance of reaching commercialization. This may involve seeking alternative funding sources for expensive facility builds to free up capital for higher ROI initiatives.
This challenge is especially pertinent now, as global agrifoodtech investment has significantly declined compared to previous years, making capital difficult to secure for many startups. Investors in 2024 are keen on ensuring solid returns, so startups must be transparent about their capital allocation.
CSC Leasing offers a solution by providing low-cost funding for equipment and technology purchases, allowing startups to use their capital for initiatives that ensure a successful launch. For more information, startups can contact Jordan Stowe, Regional Director at CSC Leasing, to explore cleaner, more flexible financing options.