The client is a Malaysian technology start-up focusing in Agriculture segments, providing AgriTech solutions in plantation and farming sectors. Agriculture industry has been perceived as a traditional industry that is suffering from various inherent challenges which prohibits the industry from rapid growth. The Client sees this as an opportunity and aspired to become the enabler that will disrupt the current industry structure and bring forth the 4th Industrial Revolution for the local agriculture industry.
FULL STORY
The agriculture industry is a multi-billion business where the global market size is estimated at USD 3.4 trillion, where Asia has the largest market size among all continents in the world at more than 60%. Globally, agriculture industry has been producing nearly 26 billion tonnes of foods annually, where Asia contributed close to 50% of the total production. However, there exist multiple points of value leakages along the agriculture value chain from farm to plate, which are commonly seen in most of the countries. Issues such as inefficient handling process and the short shelf-life of food produces have resulted in close to 40% of food lost before it reaches a consumer.
Besides, the rapidly growing world population is expected to worsen the global food insecurity issues to a more severe level in next few decades. Globally, the ageing farmer crisis would also cause a shortage of labour in the agriculture industry, risking the long-term sustainability of food production. This is partly due to the income gap between agricultural workers as compared to the average income of other sectors.
Built upon the above industry outlook, the Client has an ambition to be a global AgriTech disruptor in the space of plantation crops and organic farms. It aims to provide estate owners, farmers and agriculture land owners an integrated precision farming solution which simplifies the decisions making process in agriculture by harnessing the 4IR technologies such as IoT, AI, Cloud Computing, Big Data Analytics and Drones.
As a start-up firm with unique value propositions and technology advantages, the Client is desirous to chart out a 5 years business plan and implementation strategy that will guide the company’s growth and pitching for investment funding. It is with these circumstances we were engaged by the Client – an agriculture start-up to devise a business strategy that will guide them in their business expansion efforts, leading to an IPO within next five years. Our tasks were mainly on the market sizing, value chain analysis, corporate structuring, business strategy planning, product development strategic as well as the IPO advisory.
KEY OUTCOMES
The team begins with a global and regional market research on AgriTech industry to establish a baseline understanding on the ecosystem of various AgriTech segments. This included the market size of various agriculture products in the region, production scale of selected South East Asian countries, estimated market size for AgriTech by agriculture sub-segments, and a list of AgriTech players with their estimated revenue size. This allowed us to plot a detailed Value Chain Mapping for the major agriculture sub-segment, as well as the key AgriTech players along the value chain.
This followed by a detailed Value Leakages Analysis which look at specific agriculture sub-segments using the dataset in Malaysia market. This analysis evaluates the current practice of each value chain stage in an agriculture industry sub-segment and assessed the potential lost in values due to improper agriculture practices and operation processes. With the inputs of our Subject Matter Experts in Agriculture, Modern Farming and Agritech, we moved one step further to assess the digitisation potentials and translated these into monetary value, reflecting its potentials to transform certain agriculture process using AgriTech which will result in time and cost savings, as well as uplifts in productivity and production volume.
While this is on-going, another workstream was concurrently looking at the Client’s products offerings, corporate structure and financial profile. The analysis found out that the Client’s flagship products have great advantage over the other competitors in the market, mainly due to its in-house manufacturing facilities and R&D team which enabled them to continuous innovate new product inventions that are difficult to be replicated by the competitors. However, we also found out that the Client had a weak organisational structure and improperly managed financial accounts which created various hidden risks that would threaten the company’s mid-term to long-term growth.
With the above analysis, we begin to formulate various business strategy surrounding the corporate structure, product development and financial planning for the Client. Firstly, we developed a leaner corporate structure which simplified the reporting structure and shorten the time taken to obtain management consensus and funding approval on R&D and fulfilment activities. Secondly, we developed a new product development roadmap with go/no-go assessment framework for new product ideas based on the value leakage analysis, to guide Client in its future R&D planning and process. Lastly, we worked with the Client’s finance team to sanitise the management account reporting process, and conducted financial scenario tests to simulate its financial profile under different market circumstances and productions factors. This resulted in a 5 years financial and funding strategy that helps the client to unlock free capital to fund for product development and business expansion efforts.
By the end of the project, our team assisted the Client to produce an Investment Memorandum with various investment scenarios and funding options for the negotiation with prospective investors. Our team also assisted in the negotiation process with more than five potential investor groups for investment in the business.
The final phase of the project was the business strategy implementation planning, which include activities planning and KPIs setting. Various sales and operating KPIs were also set to foster a result-oriented culture among the company. A monitoring mechanism was developed to ensure effective performance monitoring, issues rectification and on-going improvement with clear and achievable KPIs.
