Ag-tech startup CropX acquires water company Tule
CropX, an ag-tech software startup, acquired Tule, a smart irrigation company, for an undisclosed amount, the companies tell Axios.
Why it matters: Ag-tech groups that started off with highly specialized software need to add services to grow with just a handful of food producers as customers.
Details: Tule will be wholly absorbed by CropX, and all Tule employees will move over to CropX, the company says.
- CropX customers will have access to Tule's smart irrigation systems following the deal's close.
- The deal will also increase CropX's presence in California, where Tule was based.
Zoom out: Companies attempting to make food production more resilient and climate-friendly have been a hit with private investors in recent years as startups started combining elements of biotechnology, smart devices and software into their business plans.
- The Chan Zuckerberg Initiative, a philanthropic group of Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, has backed several ag-tech companies that combine biotech initiatives like CRISPR with traditional food production.
- CropX is primarily a software company that relies on data around external conditions to help farmers more efficiently grow food. Tule similarly relies on data from smart irrigation devices to decrease water use in fields.
Context: Investors predicted that ag tech would be ripe for consolidation following strong fundraising activity in 2022.
- Others have suggested that food producers' pressure to simplify ag tech's many disparate products into one-stop-shop offerings could spur acquisitions in the industry.
However, exits among ag-tech companies fell in the latter portion of 2022 as market volatility hurt the outlook for IPOs, Axios reported in September.
- That leaves M&A as one of just a handful of exit options for mature ag-tech companies.
💭 Our thought bubble: This won't be the last ag-tech M&A deal we see as companies look for new avenues of growth with a fairly stagnant customer base.