How Acquisitions and Partnerships Are Growing CropX’s Business

THE INNOVATORS

How Acquisitions and Partnerships Are Growing CropX’s Business

One of CropX’s soil probes.

Israel-based ag tech firm CropX has made waves with its do-it-yourself soil sensors and cloud-based software system. Because its sensors can be easily installed by end users without technician help, CropX’s business boomed in 2020 despite the travel restrictions and social distancing requirements of the COVID‐19 pandemic. That year, CropX also acquired U.S. firm CropMetrics and New Zealand–based ReGen and announced a major partnership with irrigation equipment manufacturer Reinke. In this interview, CropX CEO Tomer Tzach tells Irrigation Leader about his company’s recent advances and prospects for the future.

Irrigation Leader: Please tell us about your background and how you came to be in your current position at CropX.

Tomer Tzach: I was born in Israel but raised in both Israel and the United States. I attended high school in Irvine, California. I then went back to Israel for the military service that is required of all Israeli citizens upon reaching the age of 18. I was fortunate to be accepted at and to graduate from the Israeli Air Force Flight Academy and thereafter served as a transport pilot for the air force until the age of 25. After leaving the air force, I began studying computer science. After almost 4 years of studies, I joined Intel as a software developer and worked there for the next 4 years. During that time, I completed my MBA and shortly thereafter went to work for a venture capital firm for several years, which was quite exciting.

After that, I went back to the operational side. I accepted my first CEO position at a small startup in the internet space. The startup was essentially in distress. We somehow managed to turn it around and, after about a year, sold it to a competing company. It wasn’t a big exit, but it was still a relatively good outcome given the status of the company when I inherited it. Then, I founded my own e-commerce company, which focused mostly on selling diamond jewelry online. I ran that for about 6–7 years, and it grew nicely to the point that I was eventually able to sell the main brand name to a large diamond manufacturer in 2016.

At this point, I was approached by a headhunter who led me to the CropX opportunity I am currently involved with. Agriculture is underserved by technology today; there is so much more that could be done to enhance this space. I saw the huge opportunity there and was excited about the fact that CropX specialized in both hardware and software. It was clear that this combination provided an extremely strong competitive advantage. I was also impressed by the company’s investor base. Being a former venture capitalist myself, I know the huge importance a strong board and investor base has for a company’s ultimate success. In hindsight, I made a very good call the day I decided to join the company 4 years ago, at the beginning of 2017. It’s been an amazing ride, and particularly in the last 2 years, things have been going well for us.

Irrigation Leader: Please tell us about CropX and its products.

Tomer Tzach: A moment ago, I mentioned that our product has both a hardware component and a software component. The hardware is a proprietary, revolutionary soil sensor that we developed ourselves. The software is an app that farmers download to their mobile devices to improve their practices. We started with irrigation: where, when, and how much to irrigate. Over time, we managed to help our customers save 50 percent of the water they otherwise would have used and to simultaneously increase their yields by up to 20 percent. We have had outstanding results in that regard. We also stepped into nutrient management in an effort to achieve similar efficiencies with fertilizer application. We also provide automation—not just providing prescriptions, but actually controlling irrigation systems, including center-pivot systems.

On the hardware side, the sensor has compelling advantages for farmers and ranchers. It’s a 100 percent doit-yourself system. Other sensor brands require installation technicians to bring the probes and connect them to the telemetry unit, the solar panels, the cables, and the other system components. That could take a half a day. With CropX, farmers deal with just one device that can be installed by themselves in 5 minutes, works out of the box, and requires zero configuration. It’s the only system that can really scale. Unlike the products of many of our competitors, which have to have a large local presence to do all the necessary hand holding with their customers, the CropX system can be delivered and be up and running almost immediately. Thus, in less than 3 years of commercialization, CropX is already deployed in over 40 countries worldwide. It’s the do-it-yourself capabilities that allowed us to deploy so widely and expedite our business so rapidly.

Irrigation Leader: Would you tell us about CropX’s new acquisitions and the new capabilities they’ve provided the company?

Tomer Tzach: We acquired CropMetrics at the beginning of 2020. That acquisition strengthened our data play and data insights. CropMetrics has been in the market for over a decade and has accumulated a significant amount of data that we have fed into our system. That made our system much smarter and stronger. CropMetrics is a robust brand in Nebraska and Kansas—it’s essentially the leading brand there—and its sales and distribution network in this region has been the key to its success. We’re very happy with the acquisition, and the postmerger integration has gone very well. Our customers now receive a much better product because they receive the combination of what CropMetrics and CropX bring to the table.

More recently, in September 2020, CropX acquired New Zealand–based ReGen, which is a cloud-based precision effluent and irrigation decision-support tool company. In addition to gaining ReGen’s customers, access to the New Zealand market, and a team in New Zealand, we obtained additional capabilities. Now, we have an effluent irrigation product that’s well tailored to dairy farmers and helps them prevent nitrogen runoff and leaching. We’re now able to take that product to places that have similar issues around their dairy industries, such as Ireland, ultimately helping them be more sustainable.

Irrigation Leader: Are the customers of CropMetrics and ReGen able to start using CropX’s hardware as well?

Tomer Tzach: That’s one of the advantages of these acquisitions. Often, the CropX system is superior to the system these customers had before. Whether it’s better hardware, a less expensive system, or stronger software, it’s an easy transition for the customer as well as for us. The idea is to yield a win-win across the board for both parties.

A user installs a CropX soil probe.

Irrigation Leader: Please tell us about your new partnership with Reinke.

Tomer Tzach: The idea behind this venture is for CropX to provide an agronomic layer to Reinke’s customers, essentially to provide irrigation scheduling and pivot automation. In that respect, it’s a perfect fit. We’ve been in discussions with Reinke for quite a while now. The collaboration and relationship between the two companies is strong, and product integration has gone very well so far, introducing a compelling product for the 2021 season.

Irrigation Leader: How did you integrate your software with Reinke’s existing software?

Tomer Tzach: We’ve been spending the last several months integrating, testing, and adjusting to ensure everything is prepared for the 2021 growing season. CropX has powerful variable rate irrigation (VRI) capabilities, which are now applied to a Reinke pivot system.

Irrigation Leader: What will change for farmers who already use the Reinke system as a result of this partnership?

Tomer Tzach: They can purchase the CropX system, install several sensors on the pivot, and download the software that connects them to the Reinke controller. It’s a seamless combination. From that point on, they get irrigation prescriptions for their field sent directly to the pivot, which ultimately provides them with major efficiencies through full VRI.

An irrigation prescription provided by CropX’s software.

Irrigation Leader: Do you have other partnerships in the works?

Tomer Tzach: There are a few partnerships that have been publicly disclosed already. One of them is with FarmAgro, a significant agribusiness in Costa Rica. Now, we’re deploying in that country. It’s been a successful partnership. It’s an interesting experience for us, because over the years, we have gained a lot of experience with alfalfa, potatoes, soybeans, and wheat, but Costa Rica grows pineapple, cocoa, coffee, and other crops that are distinctive to that region.

We’ve also announced a partnership with Growers Edge in the United States, which is essentially a crop insurance use case.

Lastly, we recently announced a partnership with NASA Harvest to provide unprecedented soil insights for its global agricultural monitoring efforts. We aim to assist NASA Harvest with its mission to improve food security and advance sustainable agriculture, supporting farmer productivity while preserving natural resources in the United States and worldwide through the use of satellite data. There are quite a few additional partnerships in the works that we hope to be able to announce soon, but naturally, I cannot speak about them just yet!

Irrigation Leader: How much has CropX grown over the last few years with these new partnerships?

Tomer Tzach: The growth has been significant, especially in the last 2 years, despite the COVID‐19 pandemic. I think that’s the best testimony to the scalability and the do-it-yourself capabilities of the system. During this time, many of our competitors were forced to stop selling, because they require technicians to go into the field to install their systems and meet customers. Because our system can be installed by the end users themselves, we’ve installed in places that we couldn’t have imagined, like Belize, Japan, Senegal, Thailand, Uruguay, and more, all during the COVID‐19 crisis.

Irrigation Leader: What are your plans for the next 1–2 years?

Tomer Tzach: First of all, I am a strong believer in partnerships, and I think we’ll see many more of those as we move forward. I’m also a believer in consolidation in the ag-tech space, so I’m hopeful that we will see more of that as well. I think there’s a lot of opportunity there. This space is already definitely consolidating, and I think CropX is well positioned to continue to be one of those consolidators.

Tomer Tzach is the CEO of CropX. He can be contacted at tomer@cropx.com.