This Next Billion-Dollar Startup Was Built To Save America’s Farms With Tractorbots

[Music] deutschingen agricultural equipment company is tough it's Capital intensive and cash-strapped Farmers tend to be a conservative lot but california-based Monarch which has raised 116 million dollars in equity from investors and reached a valuation of 271 million dollars in November 2021 at its latest Equity funding seems to have hit a Tipping Point last year it booked 22 million in Revenue up from just 5 million in 2021 this year co-founder and CEO pravia pen Meza expects Revenue to increase three to five-fold as it expands he expects that more of its Revenue will come from software subscriptions which cost up to eight thousand three hundred and seventy six dollars per tractor per year the software gives Farmers real-time alerts how things like sick plants and safety risks and it gathers and crunches a ton of data to improve crop yields those numbers helped Monarch make the cut for this year's Forbes next billion dollar startups list our annual Showcase of the 25 companies we think most likely to reach a one billion dollar evaluation every farmer around the world is under tremendous pressure because of lack of Labor with this labor shortage they're also being asked to do more because a transition to sustainable regenerative Farm practices requires Farmers to do more operations in the field instead of spraying once with dangerous chemicals they have to do more mechanical operations like mowing or weeding that is going to cost them more in diesel more in labor which is what is holding that transition back so that's the second big challenge that farmers are facing the third big one is people asking for data from the farm whether it's Regulatory Agencies certifying agencies that are looking to certify organic sustainable practices or even consumers like you and me wanting to know more about how this fruit or vegetable that I bought was farmed all of this means that now the farmer has to go and collect data on the farm at a time when there's no labor and collecting data is going to result in more emissions from diesel equipment Monarch targets Vineyards and Fruit and Vegetable Farms for its tractors these require smaller machines than the giant ones used by those who raise corn or soybeans we are the only all-electric smart driver optional tractor in the world that farmers can buy today and the fact that it's all electric uh really helps the farmers out in reducing their fuel costs it also helps us in reducing emissions that comes from farming the way we view the system is kind of three main elements so there's a fully electrified and by wire platform in some sense it's actually the lower half of the tractor is fully electric and fully by wire controlled so that means that we have electronic control over everything that the tractor does we are enabled to learn what a human operator a skilled human tractor driver is doing because we see all the inputs that they are putting into the system when they're doing a specific operation out on the farm and that knowledge then we can feed up into the autonomy system to say this is how your skilled human operator ran a mowing operation or ran a spraying operation and that information now we can encode and start to learn from so the some of the artificial intelligence is really learning what the human operators are doing and then applying that to allow the system to recreate those same operations but in a fully autonomous fashion so the base platform is electrified and fully by wire are controlled and then that connects to the roof or kind of the top half of the tractor and in the roof we have all of our computation and communication and sensors the understanding of what the system is doing and all of the heavy computation to decide what to do with the tractor where to go how to stay centered in a row turn it around at the end of a row all of that detail how to get from point A to point B how to do an operation correctly all of that is is encoded in the roof and in the software that's running at the edge in the root the third layer in the system is the digital elements of the system or the cloud-based elements of the system that data from one tractor in a fleet is reported up to the cloud lessons that we learned from one tractor from watching One driver we can learn that lesson transmit it up to the cloud and then reapply that lesson across the entirety of our Fleet big I think like huge opportunity is this autonomy feature we as Farmers every single day during the growing season when there's fungal pressure which there is in every Farm region around the world we have to put on hazmat suits and to spray chemicals to deal with fungal pathogens and even with Organic contact sprays right you still have to wear a mask and all this just with a safe day by day everything going smoothly you're exposing yourself a lot then there's also the dangers of terrain and things that could happen so by being able to automate farming we're removing the operator from the most dangerous place in the farm and we're elevating them into a much happier healthier cleaner safer lifestyle so data is is massively important there's a great McKinsey and Company study that has come out and said that by 2050 Farms will be 70 percent more productive because of data so it's reactionary it's the ability to implement changes like if you have disease pressure in a part of your Vineyard or you part of your farm your orchard you can catch that earlier and hopefully mitigate a plant from potentially having to be replaced to actually just having to make a couple cuts and you're fine that plant Will Survive the greater data that we can get the more productive we can be as Farmers the farm owner now is seeing the big picture view and they're saying okay I've Offset you know this many kilograms of CO2 I have these five issues in my field that have been automatically identified you know I'm seeing the beginning of a pest or of a fungus or something thing I'm starting to see the beginning of that because that data is starting to be reported back so kind of at all three of those levels at the operator at the kind of farm manager and at the farm owner the insights that the system is providing are enabling all three of those people to do their jobs better and to basically spend less time to get more work done what we are seeing with our farm customers is for the first time in agriculture as well a lot of them have purchased multiple tractors some of them have bought 10 17 tractors at a time in their first year that tells us two things the fact that they're willing to buy a number of tractors in the first year of production tells us that their challenges are real and huge word number two they're also looking at a tractor as a solution for some of these challenges and the fact that we can actually address these challenges for them I think is the game changer so we are essentially creating new revenue streams for the farmer in this new world of sustainable farming and carbon credits for agriculture we are saving them Opex in terms of diesel savings and also in terms of Labor efficiencies I come from a world when you know phones used to cost 20 30 dollars now all of us are comfortable paying more than a thousand dollars sometimes for a phone the same thing has happened with smart devices when we think about thermostats or you know security doorbells Smart Ones or security cameras once we digitally transform or machine the value provided to the end user is a lot higher so we actually feel that our tractor is Affordable in terms of fruits and vegetables Farmers being able to access the tech and get the savings but long term there's nothing on this tractor that prevents us from continuing to drive the cost of the device down to where every Farmer in the world can eventually buy a tractor power with Monarch technology or a monarch-like tractor [Music] to keep up with demand last August Monarch Inked to deal with Foxconn the Taiwanese company famous for manufacturing most of the world's iPhones to make its SUV size tractors it's also licensing its technology most notably to cnh Industrial the london-based outfit that is the second largest tractor maker in the world I never imagined in a million years that I'd be involved in a technology company although in farming we are using technology all the time I always say that farmers are the most Innovative people on the planet we're constantly reacting to a very changing environment and climate change has made that even more difficult because we're on the front lines of everything that's happening as Farmers with climate change one thing you are right about is there are risk overs because when you talk to a farmer you we all have to realize that we're talking to somebody who only gets maybe 40 or 50 chances in their lifetime from the time they get control of the farm to when they have to give it to them Next Generation so when we go in there and ask them to change their operations or make wholesale changes that could put the whole farm at risk or their production at risk they obviously are risk hours from that standpoint but they're not afraid of trying new things I think the biggest thing that I've learned about Farmers is how open they are with what their issues are you don't have to like wonder what what a former is worried about or thinking about they'll tell you exactly what they need and if you can bring that solution to them they'll adopt your product Winery and Vineyard here in Livermore California behind us is the vineyard where their focus is right now are growing great great grapes to make great wine but now they can also Farm the exact energy that's growing their crops to create energy to power their farm right now it's estimated that farmers when they spray are about 95 inefficient meaning that five percent of the fungicides or insecticides actually hit the target by being able to slow down through automation we're able to even if we can increase that by to 30 efficient that's a huge savings to Farmers and even more importantly we're not asking Farmers to set this up with huge amounts of data entry if there's one thing that farmers hate is it sitting and entering data so our AI system that is powered by all of these cameras and the computers are sit on the roof we provide the insights without the farmer having to sit and do a lot of data entry on where is this row located what is the row number what is happening on this road and the farmer has the benefit of looking at it on their mobile app or once they get back home they can kind of fire up their PC and look at that so these are all things that really gives them full access to the farm from a digital standpoint and allows them to make faster decisions including an autonomous electric tractor is difficult doing so at a price that farmers can afford is even harder in the early days monarchs Engineers pitched a tent at wenty Vineyards to develop and test the machine monarch made only two at a cost of half a million dollars each in 2021 it introduced a second version that cost 250 000 and began testing with Vineyards and Dairy Farmers to keep things simple they focused first on automating one of the most basic Farm tasks mowing [Music] the current production tractor is a fourth or fifth generation of the products with each iteration we basically drove the cost down and also Incorporated feedback from the prior generation from testing in our own test facility and primarily from testing with customers if you actually look at the generations of the product the second or third generation from a technology standpoint actually had significantly more technology and more complexity and as we put them in the field and Solomon was working and saw what had high value we started stripping that complexity out of the system so in a sense we kind of peaked on the complexity and then we came back down to increase the customer value and the robustness and drive the cost down very quickly we realized that all of our strengths had to be harnessed together to really solve the problem when we think about what Carlo brings to the table he was a talk leader on regenerative farming Mark brings his skating experience and his past experience from Tesla he had to deal with the challenges of how do we build a very complex machine at scale and deliver it globally Zachary or mahundro has been working on autonomy especially off-road autonomy since 2005. his past experience not only on autonomy but also a past experience on agrobotics on what the electrification of the tractor could be and should be and my past experience having seen what energy transformation can do I was starting a company in 2010 when energy security was a new world so I felt like starting Monarch tractor was the right thing to do because I felt like food security would be a challenge for the future and today we live in that world where food security is being heard more and more often so bringing everybody together to solve the global challenge of how do we make farming profitable and the food ecosystem sustainable was easy because we all bought into the mission first and it seemed also like a natural team for us to kind of start working together [Music] from a farming background I had no experience in farming prior to starting the uh the company for me I looked at the farming space in the lens of my experience which is through manufacturing and supply chain but also through electrification from an electrification perspective there was nothing in a farm that really had any sort of electric propulsion system and for that reason it was a wide open space the other side of it was for me that I've worked in factories for my entire career and when I looked at a farm I didn't really see a farm I saw a factory for food I didn't really see Manufacturing Technologies that we have really had in factories for the last 40 years the way that we utilize things in in factories it just didn't exist on farms they didn't have the equipment they didn't have the technology they didn't have manufacturing discipline I looked at that as an opportunity for Farms to take all the technology that we've had for 40 years in in factories and applied to the Farms from an automation perspective because in factories people don't do that much in a high volume environment anymore thing about all of this data that we're collecting into wingspan and making it easy to use is we can also export this data to all the different stakeholders in agriculture and farming so if there's an expert and Carlo and I were actually doing this when Carlo was in Europe recently and looking at some of his Farms here you know being able to show that data and sharing that data with some of the experts you know in Italy and talking to them about what's happening in California but with data and showing them hey this is what it looks like at this point and this is what's happening really allows Farmers now to have access to global experts in providing recommendations and that data can also be shared with different partners on financing side insurance agencies fertilizer agencies a number of these people can all come together to provide these Solutions funding a hardware company that is going into agriculture and has an autonomy component to it is always going to be challenging I remember the days when some of one of our early investors that I was pitching to call me a masochist he said you're trying to go into a market that has not seen much success we can't name a billion dollar company yet in agriculture Farmers right are hard customers they are constantly looking for Value before they they purchase and scale and more importantly autonomy and automation is a deep Tech field and they're combining all three which is exactly what we did not because it was easy to fund not because it was a short-term fad but because we saw an industry that was ripe for transformation and we felt like that industry would come to us that being said the early years were quite challenging but over the last couple of years we are actually starting to see more and more investors start to see the same opportunities that we are kobit has actually accelerated some of the mega Trends the labor shortages have gotten worse food sustainability has has really accelerated and food security has become a common term investors are seeing the same themes so now they are much more open to funding companies like ours so funding fundraising has actually gotten a lot easier over the last four years and that is also reflected in our valuation it's amazing because every single person on this planet is connected to agriculture you know it was just I think 1900 half the population of the United States was was a farmer now it's 1.8 percent so there's been this disconnect right there's a shifting happening saying hey where does my food come from we certainly have that in wine where does this bottle of wine come from how was the climate that year that made it special right or what was the climate that year that made this difficult not good and I think that's transitioning quickly into food people want to know where their food comes from people want to know how it was farmed people realize that how their food was formed will actually affect their gut microbiome and their health it's another bit that's really cool with mono tractors you're able to absorb all this data and now you can tell that story at the grocery store foreign there's just one problem charging monarchs machines need to run for many hours in fields Far From Any electrical outlets or even roads what potential solution is solar charging but for now most of the robots require access to a charging station that could cost thousands of dollars to install our vehicle basically meets the existing level 2 or AC charging protocol that is now deployed throughout North America for all of the existing on-road electric vehicles so we're using an existing standard so we can use all of that existing infrastructure and because now there's a good Supply base for kind of the wall side units to provide that charging power in terms of solar what we are seeing is that many of the Farms that we're working with either already have or are planning to install on-site solar on their Farms but many of these installations are large scale right you might have a farmer that's installing a half megawatt solar array and that's what makes economic sense for the given farmer and so that solar array then is feeding into the Grid at the farmer's facility and then we are pulling power off of that same grid of course there's always you know in automotive you'd call it range anxiety in in ag it's probably more accurate to call it operating hour anxiety or operations anxiety in terms of will I have enough power to to run the system that being said what we've seen in real world application is that the battery size that we are providing is sufficient to last for a full day of operations for most of the operations that the farmers are running some of the generations earlier that was really dialing in the battery capacity needed to achieve a full day of operation and so we have hit that for most operations also for Farmers that are running particularly heavy operations some of our customers on the larger scale and the more industrial operations may want to run 16 hours a day so our Battery Technology we have a swappable battery pack so we have an infield battery swap system that enables you to do that so if you really need to run 16 hours a day we have a technical solution for that these power ports allow us to provide energy out of the middle of the farm we are here and there's not a single energy source that you can actually find so farmers usually are dragging out generators and then dragging out you know Jerry cans to fill up those generators with diesel again whereas with our tractor thanks to our big battery you have energy on demand you can also using our features summon the tractor to provide energy so if you're out in the middle of somewhere you want to run some lights or something else like Carlos talking about we can actually using the app get the tractor out plug whatever you want in to the Tractor and then power all the not only lights but also other attachments and implements can be powered from the tractor you know oftentimes we pick in the middle of the night time and the tractor is making this loud noise and you realize the only reason the tractor engine is rumbling is to keep the lights on so these lights allow us to basically see when we're working at night time but with a quiet calm no gas polluting way which is really quite lovely yeah [Music] California state incentives for electric tractors can offset as much as 75 percent of the cost of a vehicle like monarchs there's another potential roadblock to consider California regulations don't yet allow tractors to be fully autonomous they still require a human operator to tag along Monarch has petitioned for full autonomy and the state has agreed to reconsider after it collects more safety data I think the safety part of Monarch tractor is one of the most incredible things the most dangerous place on the farm is in the tractor seat and so by being able to automate farming you're able to essentially remove armors from the most dangerous place on the farm there's so many things that come with this also if you are driving there's a lot of things like the ability for us to see where the tractor is going and what's happening even with an operator in it and allow for the tractor to stop if you know an operator hypothetically falls asleep or something like this so there's lots of collision prevention built into the tractor and then obviously when it's operating autonomously it can see everything and like we were talking about it has 360 degree Vision so anything that comes within a few meters it'll the tractor will stop send an alert to the farm manager saying hey this is in my path is it okay to continue going for it or should I stop and the farm manager can say no that's good you're continue on or duly noted if it's something that comes into the path it'll honk at it it'll say hey get out of my way person can get out of the way and then the tractor will continue on but if it stays there it'll send the alert on the safety side the fact that we are removing like Carlos said the driver from the most dangerous place on the farm which is the driver's seat also means that less exposure to chemicals less exposure to the elements and this is a dull dirty dangerous job which is why we are having a shortage of tractor drivers whether it's in California or around the world so I was in an Indian village and there were only like two people in the whole village who could operate tractors the reason for that is it's a very skilled job but it's also a dull dirty dangerous job so people would rather work in construction or do other skill labor stuff which is you know much easier on them so at the end of the day what our technology allows us to do is to make it more of a creative job takes them away from the seat puts them back in the barn where they can really monitor a fleet of these tractors and also take care of all the attachments and implements and prep all these things so that we can do more on our Farms while being safe and that's the game changer you know this that California is the most agriculture intensive state in the country there's more dairy in California than there is in Wisconsin and so for that reason we're in the perfect place to start this company our customers in the vineyard Orchard and dairy space are all perfect for the first product that we're releasing also from an incentive perspective California has programs to make sure that the incentives offered to the farmer to be able to adopt our product are really World leading the other thing that we have to be thankful for in California especially the California energy commission for helping us set up our manufacturing operations here in the state which helps us expedite development as well as scale here in California I'm a fourth generation farmer winemaker they've always said you're a steward of this land it's not your land you're working on protecting this land for the Next Generation to try to elevate everything and leave the planet in a better place or this piece of land in a better place then then you received it one of the reasons why I join this incredible movement at Monarch tractor was because I needed the technology so it wasn't something like oh I'm gonna build this and try to sell this to a farmer like we all desperately need this technology if the question is really how how affordable can we make this so that every Farm can afford this like how can we scale this as quickly as possible when I talk to Farmers I know their pain points because they're the pain points that I have admitsa believes he could sell tens of thousands of tractors and reach Revenue in the hundreds of millions of dollars within three years enabling Monarch to go public then he ultimately hopes to make a cheaper version too that could sell for less than fifteen thousand dollars in Asia and Africa having come from India and having grown up in an agriculture family I'm very close to the challenges that the global farmer faces and that's really where we feel like our impact can be massive is in countries like India and in continents like Africa but starting this new technology development in Asia or Africa is not going to allow us to validate the tech and scale it like most Technologies we felt like we had to you know incubate it in California make sure that we develop it here and then once it's mature or like mini spark Technologies and even electric cars these days we can then take it back to Asia and then make it very accessible at a lower cost and a much more usable configurations one of the great thing about transformational Technologies is what works in one country very often has to be modified especially from a business model standpoint and go to market strategy when we go to other countries we saw that with the cell phones you know where once you went to India you saw pay as you go minutes we got you know single text message charges so the fact that use as you go models are more prevalent in Asia and Africa and are ways to get expensive but valuable Technologies into users hands means that our tractor also is going to see more traction in a pay-as-you-go model so what we have done with that is we are partnered up with local infrastructure companies in those areas who can use our tractor as energy storage but can also help basically act as an aggregator of demand and finance the whole capex so that the end user only pays for the time that they used without having to carry this capex burden and this model has been extremely successful when we look at things like electric buses in India or other smart components in India so our tractor is also going to be one of those devices with a very different use case and a very different business model [Music] people are pessimists say that oh we're not going to be able to address climate change so let's just keep driving 180 degrees right into the wrong direction right or these chemicals are making life easier so let's just keep using them let's keep going down that old Route and from a consumer basis when they don't really care about farming or they don't seem to like really appreciate I think it's just because of a lack of connection and if you don't have that connection to farming I think it's easy to dismiss it because you just don't know it's just like people with climate change when they say oh I don't believe in climate change well wait till climate change comes at your doorstep and we'll talk about it my fear is that if we don't course correct on every aspect of every single sector of our planets industry that's associated with Humanity if we don't course correct the next generation will be stuck with something so uncontrollable that they can't they can't pivot I would like to be able to be a part of course correcting that and being a part of the change that allows for us to be able to pass on this planet to the Next Generation in a way that that's manageable that the biodiversity instead of being in Decline is coming back that our soils are healthier that the waterways are healthier that our food is healthier and that our life is better and that's what we're working towards here at Monarch and I would love for this to be that pivotal moment in time where that changes in one sector and I I'd like to see that happen across all sectors but I'm happy to be working on it in this one

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Keywords: Forbes, Forbes Media, Forbes Magazine, Forbes Digital, Business, Finance, Entrepreneurship, Technology, Investing, Personal Finance, monarch tractor, farming, tractors, EV tractor, electric vehicles, EV farming, monarch, solar, farm, farms, harvest, best EVs, best EV tractors, vineyard, manufacturing, innovation, tech, automated, automation, automated farming

Id: mIIM90YKJ6g

Length: 29min 45sec (1785 seconds)

Published: Wed Sep 06 2023