Growing Global Businesses

“I didn’t purposely set out to start a company,” admits Bridgit Hawkins, the Chief Sustainability Officer for CropX Technologies. “It evolved from the circumstances I found myself in and the path I was on. I’ve worked in Agritech for a long time but it wasn’t called Agritech when I started.” 

Hawkins grew up on a sheep and beef farm outside Taupō before qualifying from Massey University with an agricultural science degree. While working in business development and science commercialisation roles in the primary sector, she was frustrated at the disconnect between Research and Development (R&D) teams in universities and research institutes, and the practical realities of what the farmer was dealing with on the ground.

“There are so many people in universities and in R&D roles beavering away without pausing to think, ‘How will this solve a problem for the farmer?’” she says.

“With startups in New Zealand — not just in Agritech but in every sector — there’s this idea that success is one or two people in a garage who bootstrap the business, raise a bit of money to take on the world and build a $50 million business. There’s this myth that you have to do it all yourself out of New Zealand”.

— Bridgit Hawkins, CropX Technologies

Hawkins partnered with Massey University to develop decision support systems based on sensor technology that provides farmers with real, practical insights. The technology analyses weather, soil, and other environmental data to provide science-backed recommendations for effluent and irrigation management. It results in less runoff of fertilisers and effluent meaning less pollution in our waterways. It also helps farmers track their council regulatory requirements and saves them money. Hawkins founded Regen in 2010 to commercialise the technology and help farmers make better decisions.

“It wasn’t a success from the start because startups are really hard work,” says Hawkins. “Convincing people to change is hard work. People are very resistant to change, not just farmers. But think about the challenges food production systems face around climate change, environmental sustainability and animal welfare. What’s needed is individual farmers doing things differently every day.”  

Regen supports farmers to improve their practice by providing them with accurate, timely information. Hawkins knew the concept and the technology that made it possible had value not just in New Zealand but in other markets around the world. She also knew that the company she built didn’t have the capacity or capital to grow a global customer base. 

“We realised that we could ruin ourselves and the company by trying to go global,” says Hawkins. “We had shareholders who were willing to put more money into the business but the question we asked ourselves was, ‘How far can we take this on our own?’”

Hawkins took a different approach. She decided to look for a strategic partner for Regen. 

“We got to a point where it was difficult to grow organically at the rate we needed,” she says. “One of the hardest things in Agritech is your channel to market. How do you actually get customers? We knew we had a great product and good customers in New Zealand but we figured working with a global strategic partner was the most effective way to build our customer base overseas.”

Regen put out some feelers in the marketplace and as is often the case in a small country like New Zealand, it’s not what you know but who you know. One of the Regen directors was also an investor in Israel-based CropX and he connected the two companies. 

Ten years after Hawkins founded the company, CropX, a global leader in digital solutions for farm operations, acquired Regen in September 2020 and incorporated the technology into their in-soil data and farm management analytics and automation tools. Overnight, Regen went from being a company with a solid customer base in New Zealand to working with a global player. 

Ironically, CropX had evolved out of initial work carried out by Manaaki Whenua (Landcare Research), a New Zealand Crown Research Institute, before moving to Israel. Finistere Ventures, a major player in the New Zealand Agritech community and an early investor in CropX, supported Regen with the acquisition negotiations.

COVID-19 lockdowns and travel restrictions meant a deal was negotiated without meeting in person. That was challenging for a number of reasons, not least the cultural differences between New Zealand and Israel.  

“The CropX team from Israel are incredibly direct people,” says Hawkins. “When we first started talking with each other, if I disagreed with something I’d let them know in a very New Zealand way. They had no idea I wasn’t happy because I was too polite. Likewise, they’d disagree with something I’d say and I’d think, ‘God, that’s rude.’ But I learned we have different ways of communicating. If I knew back then what I know now I’d probably have held out for a better deal, but at no point have I regretted the decision.”

“… don’t underestimate the value of becoming part of a larger team… It’s not just about growing the business; you can also grow as an individual.”

— Bridgit Hawkins, CropX

CropX acquired Regen but it’s been much more of a partnership than an acquisition according to Hawkins. 

“They couldn’t have replicated the code or the data or the knowledge base we’ve built over ten years and we couldn’t have gone global in the space of 12 months like we have done,” she says. “It’s not just about the capital; it’s about their knowledge, networks and approach to things. It would’ve been a lot more painful and a lot higher risk if we’d tried to do it ourselves.”

Another motivating factor for Hawkins was the impact that her company and technology could have on farmers around the world. 

“That’s why I started the business in the first place,” she says. “I passionately believe in the value of the primary sector and how important it is to New Zealand as a country and for the people who work in the sector. We need to be lighter on the land in everything we do but at the same time, farmers feed us every single day. They need to be able to stand up and feel proud about being a farmer.”

The results have been better than I imagined,” says Hawkins. “I thought CropX would come in and take over and I would exit after a period of time. But it hasn’t worked out that way. Personally, it’s been great to work with a team of intellectual, like-minded people who understand agronomy and farming. Running a company from New Zealand can be very lonely but now I’m part of a global science team.”

“Don’t underestimate the value of becoming part of a larger team. Building a small company, you have hardly any peers and that’s a really hard place to be. When you get into something bigger you find there’s all these other people like you. It’s not just about growing the business; you also grow as an individual.”

Lots of New Zealand Agritech companies grow to a certain point and then plateau. That doesn’t necessarily mean they don’t have good ideas, but they may not have enough capital, or the know-how to break into global markets, 

“I look at some Israeli companies and there’s generally a level of maturity in terms of the commercial skills of the people in business that’s hard to compete with,” says Hawkins. “Here in New Zealand, we might throw a few million dollars at a few kids who come up with a good idea in university but are they going to learn enough, quickly enough to compete on the world stage? From a technology point of view, Kiwis are just as smart, but sometimes we lack the business smarts.” 

Hawkins says the government agencies like New Zealand Trade and Enterprise (NZTE) and Callaghan Innovation do a good job of supporting Agritech companies but building a strong network of your own is crucial. 
“Along the way you meet people further ahead in the journey than you and you can learn a lot from other people,” she says. “It’s important to know when you’re pitching and when you’re seeking support because they are two very different conversations.

“We’re a small country so we should be encouraging collaboration, not competition. How can we work together so everyone benefits? Some companies are so determined to win in their space they view anyone doing something similar as competition instead of someone they could collaborate with. We should look for common ground as opposed to the things that make us different. Identify the challenges we all share and work together to solve those.”

In terms of how companies can position their business to make it attractive to potential investors or strategic partners, Hawkins has some simple advice.

“You need to sell the vision of what you think the business can be. You need to tread a fine line between the current reality and the future potential of the business. Think about what you can bring to the partnership. It’s got to be more than just your technology or your Intellectual Property (IP), particularly if the investor can get that somewhere else.”

“When it comes to negotiating with investors or buyers you need to listen to the market, not just the voice in your head that tells you that your business might be worth more than it really is. I’m not saying to undersell yourself but it’s not very common that an international company will swoop in, offer you twice as much as you thought you were worth, and it’s all kittens and puppies. More likely they’ll offer you a third of what you thought you were worth. Somewhere in between is usually fair. You need to balance your ambition and aspirations with reality.”

“You need to sell the vision of what you think the business can be. You need to tread a fine line between the current reality and the future potential of the business.“

— Bridgit Hawkins, CropX

Snap Group is one New Zealand company with huge ambitions. Front and centre on its website is this mission statement: “We want to positively impact the lives of at least one billion people through technology, AI and data capture.” 

And it isn’t shy about sharing how it plans to do that: “We develop and grow innovative and transformative companies to inspire and transform the industries they operate in.”

The company has come a long way from Dave Rodley’s garage where his sons Chris and Andrew first started playing around with webcams. Rodley Snr., who worked as an electrical engineer, put a camera on his holiday home in Hanmer Springs so he could keep an eye on the weather from his home in Nelson. It was a bit of novelty back in the early 2000’s, a fact reflected in the $5000 price tag to import the camera from the US. 

“It was probably one of the first webcams in New Zealand,” says Chris Rodley, the CEO and co-founder of Snap Group, “but it was a crap piece of kit that took terrible photos. We figured we could do better. We bought a camera for $100, took it apart, hacked it, soldered new stuff onto it and embedded a tiny microprocessor that uploaded data to the web.”

“The support from Callaghan Innovation enabled us to hone our commercial skills, not just the technology and IP that startups tend to focus on.”

— Chris Rodley, Snap Group

The company received a number of 50 percent co-funded grants from Callaghan Innovation worth $2 million, which helped pay for R&D as well as help and guidance from NZTE and the Ministry for Primary Industries (MPI). Callaghan also provided strategic advice and support including project road-mapping, connections to high-end suppliers and helped confirm the company was focusing on the right opportunity. 

“The support from Callaghan enabled us to hone our commercial skills, not just the technology and IP that startups tend to focus on,” says Chris. “That was really helpful for us.“The temptation is to think that your product — in our case the camera and the data capability behind the technology — is the star. But actually the customer’s problem should be the star, not your solution. When we’re working with any client or sector the first question we ask is ‘What’s the problem you need to solve?’”

Snap offers GPS tracking, satellite communication, on-board video cameras, and specialises in AI-driven data storage which is capable of identifying fish species, type, and size. By auditing catch limits it enables safe, legal fishing practices that reduces compliance costs and assures the ongoing sustainability of our wild fisheries.

In 2021, the Nelson-based company acquired Canadian partner Teem Fish Monitoring, a fisheries enterprise using advanced electronic monitoring (EM) technology to support fish harvesters to meet their regulatory requirements and ensure the future of sustainable commercial fisheries. Before acquiring Teem Fish, Snap already delivered the majority of Teem Fish’s hardware and software required for its fisheries monitoring systems.

“It made sense to combine our two areas of expertise,” says Rodley. “It will help both companies to scale quicker than they could have otherwise. Using our tech and Teem Fish’s understanding of fisheries, we know we can assist fishermen with a compliance solution, but also take that data and repurpose it for business intelligence.” 

“The real benefit comes from empowering fishermen to make changes to their business. The value isn’t the camera or the data; it’s what you can do with the data. Good information leads to good decisions. If we know how many fish there are in the ocean we can set appropriate fishing levels so our children and grandchildren can eat fish from the ocean when we’re gone.”

“We’ve proven it’s possible for New Zealand companies to buy international companies even when you’re a small organisation like we are“.

— Chris Rodley, Snap Group

Snap Group closed an investment round with high-net-worth individuals in early 2019 to finance the acquisition of Teem Fish and the company is planning a Series A round in 2022 to pursue additional acquisitions as part of a long-term strategy.

“Our focus is not on acquiring companies,” says Rodley. “Our focus is gathering data and using that data to form a connection between the consumer and the producer. The existing food ecosystem is broken. It was exposed by the pandemic where you had fishermen with hundreds of thousands of dollars of product sitting on wharves in the US.” 

“Consumers are already demanding local products and they want to know the story behind the food they consume. They want transparency and certainty that the food on their plate is farmed or fished sustainably. We want to change how the world produces and consumes food.”

Rodley knows it’s a goal that’s too big to tackle on their own. As of July 2022, the company was in negotiations to add two more companies to the Snap Group portfolio.

“We’re targeting companies with a ready made team in our target sector delivering products to the market, with a desire to grow, and some limitations in their technology,” says Rodley. “When we incorporate the tech and AI that Snap has developed into a new business, then it’s much easier to scale. I’m looking for competent teams that are already executing really well, that are passionate about the sector they’re in, and want to work with us.”

Relationship building is the key to a successful acquisition strategy, says Rodley. 

“We didn’t just jump on TradeMe or eBay and put in a bid for Teem Fish. It was a relationship that started back in 2012 and it was built on trust and getting our feet on the ground overseas. Sometimes you have to climb a ladder to get business. And sometimes you have to go overseas to meet new partners. I think we’ve proven it’s possible for New Zealand companies to buy international companies even when you’re a small organisation like we are.”

“The days of us developing everything in house are over. When we see a need for a solution, we also look outside.”

— Lisbeth Jacobs, Gallagher

Gallagher is one of New Zealand’s largest and most successful Agritech companies. The  company was founded in 1938 by Bill Gallagher Senior to commercialise a very simple but ingenious piece of hardware — the world’s first electric fence. 

Since then, the Hamilton-based company has been helping farmers harness the power of hardware, software and more recently data, to make their jobs more efficient. Gallagher recognises the future of farming is in technology and the company is committed to making farmers’ lives easier. 

Lisbeth Jacobs heads up the Animal Management division worldwide, a $200 million business that develops and manufactures almost all of its products in New Zealand and sells them in over 60 countries around the world.

“Our focus is on connecting our products to a future farm ecosystem or platform and we’re looking to partner with organisations with technology solutions that fit within our ecosystem,” says Jacobs. “The days of us developing everything in house are over. When we see a need for a solution, we also look outside.”

A good example of this strategy is the acquisition of Agersens in 2021. Gallagher first invested in the Australian company in 2016 but the acquisition will enable them to further improve their eShepherd solution and distribute it in Gallagher’s international markets. The eShepherd platform allows farmers to control the location and movement of cattle using a web application and an intelligent, solar-powered neckband connected to the internet.

“Our platform and our focus is on giving farmers the gift of time,” says Jacobs. “With eShepherd you don’t have to walk the paddocks to move your cattle. You can do it from your kitchen while you’re having a cup of coffee.”

The company also recently invested in Christchurch-based Farmote Systems, which has developed a unique new way of automatically recording precise, consistent and reliable pasture data. Other technologies that Gallagher has developed or invested in include automated weighing, livestock performance and water monitoring.

Gallagher’s new platform will bring all of their animal management solutions together in one place so the farmer can tick what technology they use and see all of the data on one platform. They’re also building third party integration with other apps. It promises to make it much easier for farmers to take care of their livestock and the land and provide compliance data because the farmer can track where their animals have been.

“Because of Gallagher’s dominance in our core business of electric fencing, we needed to look at adjacent growth,” explains Jacobs. “That means taking our existing products into entirely new markets or developing new products for our existing markets. We can do that through product development or we can do that through acquisition. If the technology exists already and it aligns with our strategy, then our approach is to talk to the company and see if we can work with them.”

“We can do that in a couple of ways. We can develop distribution agreements and build APIs to incorporate their technology and data into our platform. We can invest in startups and help to develop and accelerate their growth by helping them scale quicker. Or we can acquire companies to become part of the Gallagher group. If companies aren’t willing to work with us then we’ll compete with them. If they are, then it makes sense to join forces. But it has to be a win-win. If we do it right, then we win and the partnering company wins. ”

“With Gallagher it’s not about doing a quick deal for a quick win. Our goal is to build a $1 billion company and to do that we have to take a long term view and look at the bigger picture.”

— Lisbeth Jacobs, Gallagher

To pursue an acquisition growth strategy you need a few things. You need plenty of money in the bank and a strong balance sheet. You need a focused strategy to identify the right companies to target. And you need the backing of shareholders or in Gallagher’s case, the owners. It’s rare to have all three but Gallagher ticks all the boxes. Just don’t call them corporate venture capitalists.

“We’re not venture capitalists because we don’t make any passive investments,” says Jacobs. “There are lots of venture capital groups in New Zealand and we invest alongside some of them, like Sprout, Icehouse Ventures and Finistere Ventures but we’re active investors. If the only thing a company is after is money, then we’re not interested. The only reason we want to invest and work with startup companies is to use our expertise to help grow their business and ours. We can help them solve technical problems by giving them access to our technical people and their years of experience.”

“We typically look to work with founder teams that are coachable. Some startups have a great product but they are run by individuals who are not coachable. Apart from a great team of founders we’re interested in companies with a hardware, software and data component and products that have international appeal. With Gallagher it’s not about doing a quick deal for a quick win. Our goal is to build a $1 billion company and to do that we have to take a long term view and look at the bigger picture.”

Jacobs is encouraging other Agritech companies to do the same. 

“New Zealand is a small country at the bottom of the Pacific. There’s a reason we’re left off world maps because we’re tiny in the bigger scheme of things. That isolation means some New Zealand companies are unaware that the world is a big, bad place where the competition for market share is fierce. That’s something you appreciate more if you’ve lived or worked overseas.  People with overseas experience realise they need to join forces if they want to be relevant.”

“I come from Belgium, another small country and I’m impressed by how close a lot of people in the New Zealand Agritech sector are to the land because they grew up on a farm. There’s an incredible amount of innovation in New Zealand. What we lack sometimes is the ability to work together. That’s what we’re looking to do at Gallagher.” 

“We want to be a startup magnet. We want to work across the ecosystem. We have the manufacturing capability and distribution networks to scale and I encourage people to come find us and let’s have a chat.”

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