The Irrigation Show in Las Vegas was an amazing showcase of new technologies and innovation in irrigation equipment, electronics, sensors, system components, software, data analytics, telemetry and web-based water/irrigation system management platforms. Many of the technologies and products share the common goal of improving water conservation and water use efficiency. We had the chance to meet with over 20 CEOs at the Irrigation Show to gain their insight on where they believe the industry is heading, as well as its challenges and opportunities.
On the agricultural side of the industry, low crop commodities prices continue to impact growers’ investments in new technologies as they “buckle down” and reduce spending, even when those new technologies often can lower irrigation operating costs and/or increase yields. On the landscape and turf side (commercial, residential, sports/golf), the incredible slowdown that occurred after the great recession seems to finally have waned and many companies that serve that market are now well beyond their pre-recession sales levels.
A number of venture capital and private investors have been active in financing innovative water and irrigation technology companies over the last couple of years. Rachio raised $7.1 million late last year to fund growth and launch its residential turf/landscape smart irrigation controller with intelligent cloud-based software and web-based dashboards. Hortau is another example of a company that has received substantial new funding, having raised a total of $21 million since 2013, $10 million of which was raised earlier this year. Hortau specializes in advanced wireless and web-based irrigation management solutions that integrate proprietary soil sensing innovations (soil tension) with the latest information technologies for a wide range of agricultural crops.
The need for further consolidation in the industry remains, as many companies struggle to differentiate themselves with contractors, dealers and retailers that control the “last-three-feet” relationship with end-users. Some of the major strategic players have acquired smaller technology entities as part of their strategies, such as Jain’s acquisition of PureSense and Valmont’s partnership with AgSense. Others have sold or merged to create some additional scale and strengthen positions in specific markets, as seen with HydroPoint’s recent acquisition of Baseline. Still others have made an initial entrance into the market such as ONICON’s acquisition of innovative flow meter manufacturer Seametics.
The irrigation equipment and technology space remains an active focus area for SDR, and we anticipate further M&A activity over the next few years.