Pontifax AgTech's Gil Demeter on Investing in the Next Generation of Robotics and Bioscience
Jan 15 2021
On this week's episode of LA Venture, hear from Gil Demeter, the vice president at Pontifax AgTech. We had a great discussion about next generation robotics and bioscience. Pontifax AgTech has over $465 million in assets under management, and is one of the largest food and agtech funds in the world.
<h2>Key Takeaways</h2><div></div><ul class="ee-ul"><li>Pontifax is a growth-stage investor in food and agriculture technology, and invests somewhere in between late-stage venture and early-stage growth.</li><li>Typically, their investments range from $15 to $25 million in initial capital and typically twice that over the lifetime of the company.<em> </em></li><li>Gil notes that farmers are pretty sophisticated when it comes to new tech and utilize multiple pieces of software. Growers don't necessarily have the whole institution backed up to analyze it.</li><li>Gil says labor and water are the two biggest issues for growers, distributors, and many others in the agricultural ecosystem.</li><li>When it comes to agriculture,<em> </em>gene editing is huge, as is innovation around natural, usually organic solutions to spur growth in crops without having to put more inputs, chemicals or expensive seed into the process to yield a better result<i>.</i></li><li>Food tech has blown up in the last five years and intersects with interest in health tech - including food and diet.</li></ul><p><em><strong></strong></em><strong>Gil Demeter </strong>is vice president at Pontifax AgTech. </p><p><em>Want to hear more of L.A. Venture? Listen on <a href="https://podcasts.apple.com/us/podcast/la-venture-venture-capital-vc/id1471701230" target="_blank">Apple Podcasts</a>, <a href="https://www.stitcher.com/podcast/la-venture" target="_blank">Stitcher</a>, <a href="https://open.spotify.com/show/2syPj1jttbIHjHIEwSrApH" target="_blank">Spotify</a> or wherever you get your podcasts.</em><br></p>
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On a recent crisp winter morning outside an empty office park in the San Fernando Valley, there were no workers to be seen. That is unless one counts the cooler-sized delivery robot slowly whirring down the sidewalk as Felipe Chavez, founder and CEO of Kiwibot, nervously watched to make sure the droid did not veer of course.
Just as no one now thinks twice about seeing e-scooters that were non-existent before late 2017, the sight of a robot ferrying salads, pizza, or groceries could become common on Los Angeles sidewalks before this year is over.
<p>Kiwibot has quietly been testing its robots – specially designed to look cute and non-threatening – for the past few weeks in the Valley, as well as more recently at a major university campus the company won't yet name. If all goes well, Kiwibot will begin offering delivery to students through as early as next month before expanding to Santa Monica and other parts of the city after that.<br/></p><p>
"L.A. is going to be our most important city this year," Chavez said. "In the first five months of the year we plan to employ 100 robots here in the city, and we expect that by the end of the year we're going to have around 400 robots deployed."</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTQ0NTYyOS9vcmlnaW4uZ2lmIiwiZXhwaXJlc19hdCI6MTY0MzA5NzM5NH0.XIK8EyaSjh1xhgLSUaCB35_0R7HRw4_2ZZ3GabhlzJE/img.gif?width=980" id="20808" class="rm-shortcode" data-rm-shortcode-id="beb0ac78eb4a43e30872152dc849cdcf" data-rm-shortcode-name="rebelmouse-image" alt="Kiwibot robot delivery" data-width="480" data-height="270" />
</p><p>Postmates, which is now owned by Uber, <a href="https://www.wehoville.com/2020/03/03/city-council-approves-test-of-sidewalk-delivery-robots/" target="_blank">has been testing a handful of delivery robots in West Hollywood since April.</a> While those are accompanied by a human chaperone, the Kiwibot robots set out on their own, though operators take over remotely for more complex tasks like crossing the street.<br/></p><p>
Kiwibot has already made over 120,000 deliveries since 2017 during rollouts at University of California, Berkeley, <a href="https://thespoon.tech/kiwibot-partners-with-sodexo-to-roll-out-delivery-robots-at-the-university-of-denver/" rel="noopener noreferrer" target="_blank">University of Denver,</a> and San Jose, <a href="https://techcrunch.com/2020/07/21/kiwibot-delivery-robots-head-to-san-jose-with-new-partners-shopify-and-ordermark/" rel="noopener noreferrer" target="_blank">where it partnered with Shopify and Ordermark.</a> But L.A., with its vast geographic footprint, is a whole new degree of difficulty.
</p><p>
"It's a great challenge for us," said Chavez.
</p><p>
Kiwibot chose L.A. because the city already has a high adoption of food delivery, it is home to potential partners like <a href="https://dot.la/chownow-2646172692.html" target="_self">ChowNow </a>and <a href="https://dot.la/startups-in-los-angeles-2649633594/particle-5" target="_self">Ordermark</a>, and the city has been a willing collaborator through its Urban Movement Labs (UML), mostly by sharing data on city streets and sidewalks.
</p><p>
"We trust L.A. to be the best new market for us because the food delivery habit is already there, and we feel backed to scale in an organized and socially responsible and sustainable manner," said David Rodriguez, Kiwibot's head of business.
</p><p>
After a confrontational approach between cities and ridesharing <a href="https://www.theregreview.org/2019/01/03/mancuso-electric-scooter-regulations/" rel="noopener noreferrer" target="_blank">and e-scooter companies,</a> Lilly Shoup, UML's interim executive director, says L.A. is trying to be more collaborative with delivery robots.
</p><p>
"I think we've learned that it's important for city transportation agencies to get ahead of new technology before they appear on city streets," Shoup said. "It's important to understand their business models and proactively develop policies."
</p><p>
UML is also working on a pilot to deliver goods via drone by 2022 and in both instances Shoup says the technology can help reduce pollution and congestion since most deliveries now are made via cars.
</p><p>
"It's really exciting to think about new ways to reduce the environmental impact of delivery," Shoup said.
</p><p>
Robots substantially bring down the cost of delivery, which could help restaurants that operate on thin margins during even the best of times and have been devastated this year. But it will also mean fewer delivery jobs, most of which have been preserved as contract work in California with the recently <a href="https://dot.la/startups-in-los-angeles-2649633594/particle-5" target="_self">passed Proposition 22</a>.
</p><p>
<a href="https://www.cnbc.com/2020/05/15/city-lawmakers-provide-restaurants-with-relief-from-delivery-fees.html" rel="noopener noreferrer" target="_blank">Restaurants typically pay between 15% to 30%</a> on orders placed with delivery services like Postmates or Grubhub and <a href="https://www.ridester.com/how-much-do-uber-eats-drivers-make/" rel="noopener noreferrer" target="_blank">drivers are hardly getting rich. In fact, they often make less than minimum wage.</a>
</p><p>
Kiwibot charges fees of a couple dollars on each order – which can be absorbed by the restaurant or passed onto customers. The company says its cost per delivery is now $2.98 but as it scales and the technology improves it can shave the cost down to $1.23 by the end of 2022.
</p><p>
Right now, Kiwibot robots – which cost between $2,500 and $4,000 each – can only operate in a 1.5 mile radius but the company's next generation can go eight miles and is large enough to fit a 12-inch pizza.
</p>
<h2>Will the Public Accept Robots? </h2><p>
Even when the technology is ready, Kiwibot has what may be a tougher obstacle to overcome – public acceptance. Public safety commissioners in West Hollywood<a href="https://www.wehoville.com/2019/10/15/public-safety-commissioners-are-skeptical-about-robotic-delivery-in-west-hollywood/" rel="noopener noreferrer" target="_blank"> raised concerns about Postmates' robots</a> and even in tech-friendly San Francisco, <a href="https://www.wired.com/2017/05/san-francisco-wants-ban-delivery-robots-squash-someones-toes/" rel="noopener noreferrer" target="_blank">a city lawmaker, worried they might run into pedestrians, tried to ban them. </a>
</p><p>
<a href="https://wefunder.com/kiwibot/about" rel="noopener noreferrer" target="_blank">Kiwibot warns potential investors on its crowdfunding page:</a> "Delivery bots have proved controversial in some regulatory environments with some cities, like San Francisco, putting out laws that make it difficult for us to deploy. If this became widespread we would have trouble going to market."
</p><p>
Chavez says he spends a great deal of time thinking about how he can get the public to be comfortable with robots.
</p><p>
"There is a sector of people that are concerned about robots and I think that it is very important to listen to them and to get their feedback on everything. but robots are going to happen," Chavez said.
</p><p>
The robot also has a sign affixed to the back to clarify that it is not recording any video, something that was added after homeless people in San Jose feared they were being spied on.
</p><p>
There is a "black box," which records in case of an emergency, but none of the devices have been stolen — so far.
</p><p>
Even though local regulations can allow for robots to go as fast as 10 mph, Chavez has found a speed of 6 mph makes people feel safer.
</p><p>
There are also important visual considerations. Kiwibot's robots look nothing like the hulking devices conjured up in sci-fi movies like "Transformers" or "The Terminator." They are more like a plastic cooler on wheels with lights on the front that resemble a smiling face.
</p><p>
"The new version is even more cute," said Chavez. "It's like a squirrel on a rock."
</p><p>
Taking a page from nature, the design is deliberately playful and small.
</p><p>
"When you see an animal and it is bigger than the width of your shoulders you feel threatened," Chavez said. "So we have made sure that the robot is never going to be wider [than you] so that people don't feel threatened."
</p><p>
Coronavirus has also been helpful, helping accelerate the adoption <a href="https://www.reuters.com/article/us-health-coronavirus-usa-tech-feature-t/drones-to-robots-pandemic-fuels-u-s-autonomous-delivery-idUSKCN24L1OI" rel="noopener noreferrer" target="_blank">not only of delivery but also of robots</a> – who you don't have to worry about coughing on you.
</p><h2>Competition with Bigger Robot Deliveries</h2><p>
Kiwibot, which is based in San Jose, has raised more than half $1 million from more than 650 investors in its latest crowdfunding campaign, to bring its fundraising total to over $3 million.
</p><p>
That pales in comparison to not only Uber but also much larger rivals <a href="https://crunchbase.com/organization/starship-technologies" rel="noopener noreferrer" target="_blank">Starship</a>, a robot food delivery service launched in 2014 by two <a href="https://crunchbase.com/organization/skype" rel="noopener noreferrer" target="_blank">Skype </a>co-founders that plans to rollout deliver to 100 universities by next summer and Nuro – an autonomous vehicle startup founded by two ex-Google engineers valued at $4 billion. <a href="https://abc7news.com/nuro-robotics-autonomous-delivery-cars-bay-area-mountain-view/9148912/" rel="noopener noreferrer" target="_blank">The company received regulatory approval last week</a> to operate on city streets in the Bay Area.
</p><p>
But with global autonomous last-mile delivery <a href="https://www.businesswire.com/news/home/20200304005593/en/Global-Autonomous-Mile-Delivery-Market-Expected-Grow" rel="noopener noreferrer" target="_blank">projected to grow from $11.16 billion next year to $76 billion by 2030,</a> Kiwibot sees room for multiple competitors.
</p><p>
"In L.A. right now we are talking with multiple partners, very big companies," said Chavez.
</p><p>
"Everything is moving very fast," he added, as his robot inched along the sidewalk, heading back to the lab to continue more testing.
</p>
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTQ0NTY0MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NjY3ODY5MX0.zCf8K6ViwGGIEspo55obzNJXy_Yps1X392gMgl63qo0/img.jpg?width=980" id="bd1c2" class="rm-shortcode" data-rm-shortcode-id="ab9b3ec00219dc4c21df261c42177279" data-rm-shortcode-name="rebelmouse-image" data-width="1644" data-height="1233" />
Photo by Ben Bergman
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On this week's episode of L.A. Venture, hear lots of insights on equity crowdfunding from Buck Jordan. He's raising $50-$100K a day, mostly on SeedInvest, for the robotics and food companies coming out of WaveMaker Labs.
Jordan also addresses the dramatic changes coming to the food industry, and why WaveMaker is so focused on the application of robotics to this industry in particular.
"The best investments I think come from the really hard problems," he says. "There's not a bigger problem right now or an industry that's more under siege than the food industry is."
<p>
Even before COVID struck, he said, the food industry was a very difficult business.
</p><p>
"Restaurants fail faster and more often than startups," he says. "This is an industry that's under massive strain from all areas. There's rising labor costs. There's rising food costs. Real estate costs is going crazy [...] And most of those problems I mentioned are really well served by automation."
</p><p>
Robotics is uniquely poised to solve these problems, he says, because of recent advances in technology, as well as a massive drop in costs. Robotic arms that cost around $100K in 2015 are now selling for $1,000, he says.
</p><p>
"
<em>A</em>ll of a sudden, really only in the past couple of years, the entire problem of automating low-cost labor is relegated to more of a software problem and less of an expensive hardware problem.<em>"</em>
</p><p>
<em></em>Jordan also shares his ideas about equity crowdfunding, corporate innovation and how seed stage companies can take advantage of corporate partners.
</p><p>
<em>Click the playhead to hear the full interview, and subscribe on </em><a href="https://podcasts.apple.com/us/podcast/la-venture-venture-capital-vc/id1471701230" target="_blank">Apple Podcasts</a><em>, </em><a href="https://www.stitcher.com/podcast/la-venture" rel="noopener noreferrer" target="_blank">Stitcher</a><em>, </em><a href="https://open.spotify.com/show/2syPj1jttbIHjHIEwSrApH" rel="noopener noreferrer" target="_blank">Spotify</a><em> or wherever you get your podcasts to hear more from L.A. Venture.</em>
</p>
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