Seeding innovation

Seeding innovationKenneth Scott Zuckerberg, Wells Fargo Senior Vice President and Strategist

The expansion of the Wells Fargo Innovation Incubator (IN2) into agriculture technology ─ in partnership with the Donald Danforth Plant Science Center ─ represents a unification of philanthropy and impact investing with innovation and economic development. And for the industry, this partnership actually does more than that. It provides opportunities for Wells Fargo Agribusiness customers to gain early exposure to next-generation scientific and information technology advancements. This is critical as farmers and the food supply chain adjust to the new reality that business models must change, from both an economic and environmental perspective, in order to ensure long-term sustainability. Onward!

The Innovation Incubator (IN2) program overview

I recently began working with Mary Wenzel, Wells Fargo’s head of Sustainability and Corporate Responsibility, as part of a six-month job rotation with an objective to contribute to the expansion of the Wells Fargo Innovation Incubator (IN2) program. Launched in 2014 as part of Wells Fargo’s 2020 Environment Commitment, this initiative provides annual funds typically to environmentally focused non-profits. IN2 is a unique collaboration platform to advance “smart” and “sustainable” clean technologies which often fail before going to market unless properly vetted, tested, and marketed with a strong customer value proposition.

By combining technical expertise with capital provided by the Wells Fargo foundation, IN2 strives to overcome these challenges, therefore accelerating the validation and commercialization of new, early-stage technologies. For CleanTech, the technical expertise comes from the National Renewable Energy Laboratory (NREL), a research organization operated by the U.S. Department of Energy, which has partnered with Wells Fargo on IN2 since the outset, and currently serves as co-administrator for the program.

Expansion beyond CleanTech

Earlier in 2018, the Advisory Board of IN2 made a conscious decision to expand the focus of IN2 to agriculture and food production, an industry ripe for innovation particularly through technological advancements that can reduce the industry’s adverse impact on the environment. To aid in this expansion, Wells Fargo entered into a multi-year partnership with the Donald Danforth Plant Science Center in September 2018 whereby Danforth will provide the relevant, technical Ag expertise.

Bottom line, the partnership combines Danforth’s 20 years of independent plant science research expertise and world-class laboratory infrastructure with Wells Fargo’s and NREL’s experience in clean technology research, banking, and philanthropy. Together, the three partners are committed to funding, researching, validating, and commercializing technologies that can help reduce the agriculture industry’s carbon footprint, energy, and water consumption, which contribute to climate change. I believe that IN2 has the opportunity to make a major, positive impact on production agriculture, in particular managing and mitigating nutrient run-off in fresh water systems and agrochemical field drift caused by conventional applications of crop protection chemicals and traditional crop farming methods.

Why Agriculture?

Production agriculture (crop, livestock, and dairy farming) is a large, core area of lending for Wells Fargo Bank. Production agriculture occupies the upstream portion of the food industry value chain, and produces the raw materials acquired by midstream food processors and manufacturers that are subsequently distributed downstream to consumers. In recent years, agricultural production has attracted capital from a wide spectrum of investors (venture capitalists, private equity sponsors, family offices, endowments, and pension funds) seeking positive returns as the entire food supply chain embraced digital transformation. Wells Fargo believes that as farmers and agribusinesses adopt data intensive tools, the system will produce food more efficiently and thoughtfully with less waste and less environmental impact.

Why the Danforth Center as a partner?

I was first introduced to the Danforth Center in 2015 while attending the Ag Innovation Showcase, an annual September agriculture technology symposium that features emerging farming and food production technologies. Founded in 1998 and based in St. Louis, the Donald Danforth Plant Science Center is the world’s largest, nonprofit research institute dedicated to plant science, with a mission to improve the human condition through plant science. It operates with 193 scientists, of which 23 are principal investigators, and a total staff of 250 from more than 20 countries.

In my opinion, Danforth brings significant value to IN2 as it expands its focus to sustainable food production through the digitalization and modernization of agriculture. First, Danforth is a vertically integrated center of excellence, bringing together academic knowledge of science and applied research methods with environmental awareness and technology. It is the right kind of laboratory to test and validate new agricultural advancements. Second, Danforth’s efforts are independent of the businesses of its sponsors, therefore its conclusions are agnostic as the form of end product, rather than geared towards a particular product category.

The Danforth Center’s core technologies

My recent physical tour of Danforth’s laboratories provided greater insight into the Danforth Center’s scientific research capabilities. As described on the organization’s website, the Center focuses on six core technologies which seek to accelerate crop improvement.

The Danforth Center’s core technologiesSource: The Donald Danforth Plant Science Center, Dec. 2018

How will the Wells Fargo IN2/Danforth collaboration work?

It begins with a collaboration platform where key stakeholders such as industry players, trade groups, universities, investors, and other industry participants can come together to identify, discuss, and define key problems that farmers and agribusinesses are facing. Once key problems are identified, startup companies that are selected as part of an IN2 cohort can then work with research scientists and principal investigators at the Danforth Center to develop new ideas or technologies that address the industry pain points. Subsequent to that step, IN2 brings together the necessary partners to test and validate such technologies for commercial roll out, essentially removing risk from the technologies prior to the funding and execution of a commercial, go-to-market strategy.

What value will the new agricultural focus bring to Wells Fargo’s customers and other stakeholders?

Wells Fargo’s Food and Agribusiness customers are being disrupted by numerous structural challenges and changing paradigms including, but not limited to, tightening operating margins; new entrants; commodity price volatility; trade tensions and tariffs; greater regulatory requirements; and the need to reduce the environmental impact associated with food production, manufacturing, distribution, and post-consumer food waste.

While large banks may not typically be considered to be on the cutting edge of innovation, for more than 20 consecutive years Wells Fargo has been the leading commercial agricultural production lender, and currently has more than $40 billion in outstanding business banking loan commitments to the Food and Agribusiness industry. The benefits of IN2 across Wells Fargo’s various stakeholder groups include:

Wells Fargo bankers, credit, and risk professionals – develop a better understanding of emerging advancements in plant science and information technology that will impact customer business models and future profitability, and will factor into lending decisions

Wells Fargo Food and Agribusiness customers – gain early exposure to next generation scientific and information technology advancements that can help produce higher quality food more efficiently and with lower environmental impact, thereby ensuring economic and ecological sustainability

Wells Fargo Private Bank customers, including high net worth individuals, family offices, foundations, and endowments – gain access to investment ideas and philanthropic opportunities that intersect with their impact and sustainability goals.

Is Wells Fargo otherwise focused on AgTech?

In addition to providing AgTech and FoodTech companies with a comprehensive array of commercial banking services and investment banking capabilities, Wells Fargo is continually working to connect these companies with agricultural producers, processors, and investors up and down the food chain. These efforts have included discovery meetings with early- and middle-stage AgTech and FoodTech companies; hosting our own customer symposiums and webinars; and attending and speaking at high-profile industry conferences and roundtables focused on issues related to the digitalization of agriculture and the technological transformation of food and food production.

Wells Fargo is also involved in several external collaborations including Farm2050, a collective of diverse partners committed to advancing the future of food through supporting AgTech entrepreneurs and startups. The joint efforts of our Food and Agribusiness team and our CleanTech team span the following subsectors which fall under the heading of precision agriculture:

Animal technologies: temperature and location monitoring, gene editing, breeding, devices/IoT, veterinary drugs/vaccines, nutrition, feeding and milking systems

Crop protection and prescriptions: biologicals, specialty plant nutrients, seed treatments and adjuvants, active ingredient discovery

Equipment and field decision support: weather stations, weather, temperature and moisture sensors, automation, robotics, variable rate applications

Farm management information systems: farm management software, enterprise resource planning systems, accounting and inventory/input management and other software systems (SaaS, PaaS)

Imagery: satellite, drone, analytic software

Indoor farming: Controlled Environment Agriculture (CEA), greenhouses

Science: breeding, genetics, genomics, genetically modified organisms (GMO), gene editing

Other: financial technology (FinTech), payments and logistics, grain trading, and marketing

How can I get additional information on Wells Fargo’s IN2 program and the new focus on agriculture?

To learn more about the Wells Fargo Innovation Incubator Program (IN2), please contact Ramsay Huntley at (303) 882-5645 or Kenneth Scott Zuckerberg at 917-637-0410 or visit www.IN2ecoystem.com

To learn more about NREL, please contact Trish Cozart at 303-275-3682 or visit www.nrel.gov

To learn more about the Donald Danforth Plant Science Center, please contact Claire Kinlaw at 510-967-4083 or visit www.danforthcenter.org/