One way that AI is transforming family farms

Some of Japan's innovations are going to have a much bigger impact outside of Japan.

Like most startups, most AgTech startups sensibly tend to focus on their own markets. While this makes things easier at first, it tends to overlook the huge challenges -- and potentially huge profits -- that exist in the developing world.

Today we talk with Shunsuke Tsuboi of Sagri, and he explains how Sagri started life as a satellite -imaging startup focused on incremental innovation in Japan, but then quickly transformed itself into a disruptive FinTech startup serving India and Southeast Asia.

It's a great conversation, and I think you'll enjoy it.

Show Notes

The truth about university startup support in Japan Why India is a better target for this Japanese startup Why selling to family farms is harder than selling to industrial farms Why sustainable business models are hard for agriculture startups The challenges for market entry in any agriculture startup Three reasons there are so few agriculture startups in Japan Why most Japanese VCs don't invest in AgTech What Japanese universities can do to improve creativity

Links from the Founder

Everything you ever wanted to know about Sagri Friend Shun on Facebook TV Interview about Sagri. (Japanese) Nikkei interview with Shun (Japanese)

Transcript Welcome to Disrupting Japan, straight talk from Japan's most successful entrepreneurs. I’m Tim Romero and thanks for joining me. Today, we're going to about agricultural startups in Japan. You know, it's interesting, with Japan's high food prices, the financial support for farmers, and the strong system of university agricultural research, I've always been a bit surprised that we don't see more AgTech startups in Japan. Well, today's conversation goes a long way to explaining exactly why that is, it's both fascinating and a little frustrating. Today we sit down with Shunsuke Tsuboi of Sagri, who is using satellite imaging and AI to help small-scale farmers, some in Japan but mostly in the developing world. Shunsuke explains the challenges of launching a startup from universities without specific startup support, why going global often has nothing to do with the US or Europe, and why the world is a better place when there are tens of millions of small family farms in it and why those are worth preserving. But you know, Shunsuke tells that story much better than I can, so let's get right to the interview.

Interview Tim: I'm sitting here with Shun Tsuboi of Sagri, who is using satellites and artificial intelligence to solve agricultural problems. Thanks for joining us today. Shun: Yeah, thank you very much. Thank you for this time. Tim: It's great to have you, and I mean, agriculture tech, AgTech is something that's it's interesting in Japan, and people don't talk about it enough, so I'm really glad you're on the show. So can you explain a little bit more about what Sagri does, what is the service you're offering? Shun: Sagri company is based in Japan and India. So we are using satellite data to checking the each of the farmland and also the food of farmers we get using satellite data for smartphone, such as when is the best harvesting time and also which is a good soil situation, we can check it. Tim: The soil analysis, is that done by satellite or do you have people on the ground checking? Shun: They're using satellite, yes. Tim: Really? Shun: Yeah, along the 1,000 farmland, checking just 10 farmland detail, we can spreading the satellite information. Tim: So from satellite imaging, you can tell soil composition, you can tell farmers when the ideal time to apply pesticides, when to harvest. How do your customers interact with this? Is there a smartphone app? How does it work? Shun: So using satellite data checking through the application, they can connect it that mechanical, so this machine is automatically do that. Tim: So the machines would automatically apply fertilizer? Shun: Yes, this is more needed all over the farmland can check through the satellite. Tim: Tell me about your customers, who's using this? Is this small family farms? Is this large industrial farms? Who are your customers? Shun: So now is mainly is up to 10 hectare is a target. Tim: Okay, so still very small. Shun: Oh, yeah. So in Japan, most of the farmers are very small, so they can get easily through satellite data. So in United States and the European is a more big farm, so this is not our target. Tim: Interesting. I want to really dig into all of the different use cases and the things you're exploring in a minute, but before we get there, I want to back up a bit and talk a bit about you. So you're currently still a grad student at Yokohama National University and you started Sagri a few years ago. So is this something you're doing with the university or something on the side? Shun: That app is three years ago we started. So I'm a space technology, I belong to in my laboratory, this one is collected our business. My laboratory doing the soil situation or mechanical situation using satellite data. So making the company, some cases we are using this technology, but otherwise we are running own self, mix it, do that. Our CTO is a other university professor, so like a collaboration as a technology and combined making the business. Tim: It's funny, when we talk about university startups in Japan, Todai and Keio seem to get all the attention. Shun: Yeah, yeah, yeah, yeah. Tim: So what kind of support did you get from Yokohama National University? Shun: Two things - I'm a mechanical engineering, and during the university, I get the chance to join the laboratory more faster. And the second thing is business issue to go to the Silicon Valley and the Boston can get the chance to be, so this two thing, Yokohama National University supported to me. Tim: But not much in terms of fundraising support or-- Shun: It is so weak compared to Tokyo University or yes, Keio University? Tim: Yeah, those two universities, they have their own venture funds so it's hard to compare. Shun: Yeah, yeah, yeah, our university don't have it. Tim: Well, I don't know, I mean, I guess that's good for a founder, it forces you to be more resourceful. But I noticed as you've launched, you guys have done a lot of pitch contests, and has that been really useful for business development? Shun: So the first year, the second year, at first we don’t have the chance, that's the reason we pitch things on many contests, such as the Singularity University and Silicon Valley 500 acceleration program. Through this, we get a chance so nowadays, government and some big company understand our technology so using. Tim: Pitch contests are really interesting. There's so many of them now. Shun: Yeah, yeah, yeah, yeah. Tim: And so it's hard to know, sometimes they seem like really valuable, sometimes they seem like a real waste of time. But you guys have generated real business from these pitch contests. Shun: Yeah. At firstly, like VC, the company people can't imagine the world like few years later, but we can. So pitch contest's value is like pitching being the contest so they can understand this technology will happen to the future. So they think they want to hear from us. So like, so business chances often happen, but a few times I win, now I can do that, because of many years business chances are coming. Tim: Okay, so that's good. You sort of graduated. Shun: Yeah, yeah, yeah, yeah. So but the first year, second years are needed, now in our third year, so I’m choosing about pitch contest, this one is I needed to apply but this one is okay. Tim: What's your advice for other founders in terms of pitch contests? Is it something you should do early on and then just graduate, go into a new phase? Shun: Now is a graduate phase, this year we are already finishing the venture capital funding, so we want to spread the business more. Tim: That makes sense. Shun: Yeah. Tim: And actually, let's talk about some of the different business models you're exploring and the different kind of customers you have. One of the things on your website that you're talking about is your work with Japanese government to identify abandoned agricultural land? Shun: Yeah, yeah, yeah, yeah, yeah. Tim: Why is that important? Why do they want to do that? Shun: Yeah, because most of ,cities in Japan every year by manual checking, all of the farmland, around the 30 million farmland is existed, so we can use in satellite data. Tim: So currently, they have dedicated staff looking at satellite photos, or they have dedicated staff driving around to different-- Shun: They are driving and checking by manual each of the farmland. Tim: Oh, okay. Shun: But we can getting the satellite data and the AI distributing, so this farmland is abandoned, this one is not abandoned. Tim: And why is that important? Is it taxed differently? Shun: Yes, about tax, abandoned farmland, not abandoned is a different tax. And also, most of the farmlands is abandoned recently, because most of the farmers is getting older and older, that is a reason. About 5% percentage is more higher, so every year must checking. Tim: That's why it seems like an interesting use of the technology, but it doesn't seem like a scalable business. I mean, how much demand is there for that kind of analysis? Shun: Yeah, so now this thing is around 1,700 cities is doing every year. Maximums is around 1.5 billion yen, so it is so small market but the next department checking what kind of foods like rice or wheat, they are checking by money also. This situation also we can change. Tim: That makes sense. So there is some room to grow by expanding the functionality within the different cities and prefectures. Shun: This technology, not only Japan, can spread the global. So we are making this technology in Japan, but spread this technology to East Asia and India.