How to make $345k counting bumblebees: Agrolabs case ?
Dnipro-based company Agrolabs, which produces devices for greenhouses and indoor farms, reached $345,000 in sales and pre-orders by December 2019, entered the Hong Kong accelerator Brinc, opened a representative office in London and Hong Kong, and attracted the first investments. The editors of AIN.UA have spoken to the co-founder of the company Michael Lazarenko and tell the story of this business.
How Agrolabs Started
The founders of the company Michael Lazarenko and Maksym Horinov are old school friends. Maksym has already had experience in the biotech business: the company Biozashchita, which grew predatory insects like ticks, wasps, or bumblebees to get rid of parasites. And Michael had experience in creating hardware startups.
“We didn’t plan to launch a ‘long’ startup, we rather thought about the possibility of making money. We decided to make devices for agriculture, as I had experience in hardware, and Maksym had connections with distributors,” Michael says.
Over time, it turned out that the devices for farmers the partners were thinking over, would have to be developed much longer than planned. Therefore, they decided to deal with them in full time. In late 2017, they registered the company, and in early 2018 they began the work.
Work on a soil analyzer
At first, the team wanted to make a robot that would spray the plants autonomously. It took about 3.5 months to develop it, but the team realized that the process could take a long time. While it was working on the robot, the team realized that greenhouses have another problem: there is no equipment to analyze plant watering. “We talked to farmers, and they said that they are interested in it,” Michael says.
They put off the robot and started working on another device: a substrate composition analyzer, on which plants are grown in greenhouses.
“There was a plan to make the device in 3 months and bring it to the market. As a result, we did it for 10 months,” the co-founder of the project says.
This device was produced entirely at Ukrainian plants. There were some difficulties: in the beginning, the company got 5 or 6 batches of constructions which simply could not be assembled. “It was so that parts were incorrectly welded at the plant, we indicated that it was welded incorrectly, they promised to fix that, but again did everything wrong,” Michael tells.
But in the end, the product was developed, and the company started selling it in October 2018.
It’s a device called Agrolabs W-Sens. In greenhouses, plants are grown not in soil but plastic containers containing substrate, this device analyses the composition of the substrate. It shows the farmer the results of watering the plant and the state of the root system, reflected in the parameters of humidity, drainage, EC, PH, etc.
In such a way, for example, you can determine when the plant is receiving too much water, not getting enough fertilizer, etc. According to the co-founders, such an analysis could result in savings of $5.500 per hectare of greenhouse per year. The company calculated this figure from a real case, where a greenhouse was watering plants with more than the necessary amount of nutrient fluid. And with the help of an analyzer, it found excessive watering.
How was the “door for bumblebees” made
According to the founders, farmers spend about $700 million a year to buy bumblebees: the yield from pollinated and non-pollinated plants can differ by half. This is a rather big market, but it is not quite obvious. And it has its own problems.
Bumblebee producers grow them in laboratories, then pack them into boxes, and send them around the world. The farmer receives bumblebees and sets a hive with them in the greenhouse. Bumblebees live for 8 weeks, after that, it is necessary to buy new ones. It is necessary to install 15-25 hives per hectare.
“What is the problem? Bumblebees are very complex creatures, they must be properly protected. The hives must be covered so that, for example, insects do not fly to the lamps. But if the farm has 20 hectares, it is difficult to close such a number of hives at the same time. Our device closes and opens the exit from the hive automatically,” Michael tells.
Similar devices are already on the market, so Agrolabs B-Control added the ability to count bumblebees that fly out or fly into the hive. According to the company, this is important, because, for example, after a flight from India to Ukraine, bumblebees may not be very active, and this affects the pollination of plants, and ultimately the crop.
As a matter of fact, Agrolabs B-Control is an automatic hive door having an ability to count its inhabitants. The device runs on a single charge for 8 weeks (just as long as bumblebees live).
How it participated in the accelerator in Hong Kong
This device can be bought now. So far, circuit boards for bumblebee analyzers are being printed at a plant in Kyiv, but the company wants to increase production, so it is negotiating with three plants from China.
In order to get to know the Chinese market better, in 2019 the company filed for participation in the Hong Kong accelerator Brinc and opened an office in Hong Kong.
According to Michael, the accelerator helped the company a lot to find an investor. Now the company has closed a deal with the Australian fund Artesian Venture Partners for $100,000 and expects to attract a seed round from the same investor.
“At Brinc startups are actively being introduced to plants, production processes, and there are lectures on working in the Chinese market. They opened for us a new world of Hong Kong,” Michael says.
There is another reason to participate in the accelerator: they help to find partners in the local market. “Relations with Chinese plants need to be built. I do not believe that anything can be done from Ukraine at all. If you didn’t come to the plant, didn’t look at the line, didn’t have lunch with them, it would be hard to figure out everything,” he says.
The startup was running the program in the accelerator just during the active stage of protests in Hong Kong, but, according to the founders, it had hardly ever an influence: only in the first week of December it was difficult to get to the office due to blocked roads.
Agrolabs business performance and plans for the future
The first year the company developed bootstrap. Now it is self-supporting, but so far unprofitable: all income is being invested in business development.
The company earned about $70,000 from the first device that analyzes the substrate first year, and another $25,000 is expected from pre-orders for it. In total, the company received about $345,000 in sales and pre-orders for the first year of operation.
Agrolabs has already had large customers, for example, the British Driscoll’s, the world’s largest producer of berries, with an annual turnover of $2.8 billion. The team met them at the Greentech exhibition in Amsterdam. In test mode, it works with the bumblebee producer Biobest.
In the coming year, the team is going to raise the seed round. The money will be used to employ new employees (10 people currently work in the company), new agrotechnical products working on machine learning and data science and opening a sales office in the EU. R&D is planned to be developed in Kyiv and Dnipro.
The company has recently received a government grant (about $65,000) in Hong Kong through the Cyberport Incubation Program. This amount is allocated free of charge for 2 years, participants are also provided with a free office and assistance in finding investments.
The company also plans to spend these funds on a new product which has already been under development. This is a wireless IoT system that allows you to connect sensors available on the market and autonomously collect data from them in real-time. With the help of it, it is possible to connect up to 250 sensors per hectare.