AgTech: A Look At The Bayer - Microsoft Venture

From AgFunderNews, February 1:

How significant is the Bayer-Microsoft deal for agtech? The response

Editor’s Note: This post is co-authored by AFN’s editor Louisa Burwood-Taylor alongside Mark Johnson, who recently led grain trading platform GrainBridge to acquisition and was cofounder of Descartes Labs.

A few months ago, Bayer and Microsoft announced a partnership.

Typically, these cloud ‘partnership’ announcements are nothing more than customer agreements: company X has become a customer of cloud provider Y.  After digging a bit deeper, Louisa published an article on AFN introducing the concept that this might be something much more interesting than purely Bayer’s decision to use Microsoft’s cloud computing service Azure.

That article went quasi-viral and spurred a number of responses including from Mark, but also the likes of other agtech newsletter writers, Rhishi Pethe and Shane Thomas. This article tries to unpack some of the responses to give a more complete picture.

What’s the big deal?

Light on details, the deal appears to be a plan for the two parties — both leaders in their spheres — to create a digital infrastructure platform for agtech software companies to build applications off.

Said in another way, the partnership will take care of data processing, storage and behind-the-scenes data management and calibration so that third-party engineers and data scientists (entrepreneurs) can focus on building algorithms to offer the agrifood industry insights from the various data sources at their disposal.

Bayer and Microsoft would not confirm what data sets they would bring to bear for this service; it was implied that any third parties wanting to use the platform would provide their own and they would comply with all data privacy protections etc, but given their huge — and growing — footprints across the industry, it’s hard to believe they wouldn’t offer up use of some of that to potential customers.

Louisa leaned towards believing this platform could become a significant source of new revenue for Bayer – and also possibly for Microsoft through revenue sharing; Bayer has yet to make direct revenues from FieldView. Mark ruminated on the idea that the partnership was a sort of trojan horse for Microsoft to expand and consolidate its growing footprint in agriculture via Great Plains and Microsoft Dynamics.

But we also set about getting feedback from the industry on what the significance of this partnership could be for the industry.

What the poll said

Is this not much more than an announcement regarding Bayer’s plans to use Microsoft’s cloud computing service Azure, or could this be the foundation of a “Meta of agriculture” that controls much of the world’s agricultural data?

Sixty-five percent of people thought the deal was significant, according to a somewhat over-simplified poll Louisa put up on her LinkedIn feed. The rest of the 193 who voted said it was not; and several of the 12,605+ people that saw the poll reached out to say they wished there was a third “jury is still out” option.

Before we dig into the responses, let’s define the problem, solution, and the customer with what we learned and know as a framing.

The problem: Agtech companies seem to build everything tabula rasa as if they were the only company building software for agriculture. There are common types of data (field boundaries, USDA data, prices, etc.) that every company builds software around. This wastes an enormous amount of resources that ought to be going into solving user problems.

The Bayer/Microsoft solution: Our most generous reading is that Microsoft and Bayer are trying to build a platform to enable the rapid development of agrifoodtech applications, by bringing a combination of modern cloud tools and adding a layer of data....

....MUCH MORE