When data meets agriculture: Monsanto to buy Climate Corp. for $930M

Monsanto, (s mon) the giant agricultural company, says it will acquire data analytics firm the Climate Corp. in a cash deal valued at $930 million. This deal is an obvious extension of data analytics into the world of big agriculture, but it’s also a perfect example of how the combo of data and the internet of things is going to disrupt established industries in a way that traditional computing never could.

Climate Corp offered targeted insurance policies to farmers that incorporated all sorts of data about historical and current agriculture and weather. Among the data the system knows are the shape of every single of the 20 million crop lands in the United States, what is grown on each every year, what the crop yields were, and the water-holding capacity of the soil. Each predictive simulation analyzes 5 trillion data points.

Climate Corporation's policies are based on some incredible data science.

Climate Corporation’s policies are based on some incredible data science.

And as climate change disrupts historical weather patterns, this boosts the risks to farmers that weather events might destroy crops, but it also changes the types of crops they should plant. Thus the data analysis that Climate Corp. offers is not only valuable to farmers today, but also to Monsanto as it tries to create crops that will thrive as the climate changes.

From Monsanto’s release:

The acquisition of The Climate Corporation represents a natural extension of Monsanto’s vision to increase crop productivity, conserve more of our planet’s natural resources and improve the lives of people around the world. It will also greatly expand The Climate Corporation’s capabilities in data science, agriculture’s next major growth frontier, an area that represents a potential opportunity of $20 billion beyond Monsanto’s core focus today. The companies estimate the majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields, and they believe that advancements in data science can help further unlock that additional value for the farm.

This intersection of data and agriculture has excited venture capitalists and startups alike. Venture firms poured more than $110 million into Climate Corp. since it’s founding in 2006. Investors include Google Ventures, Khosla Ventures, NEA, Index Ventures, Allen & Company, Atomico, and First Round Capital. I’m sure they are pleased with the exit.

But this acquisition could also be boon to a later generation of startups that are gearing up to offer sensors and connected devices to farmers. These sensors can offer more information and even real-time information to Climate Corp.’s models and can help farmers build out automated irrigation schedules and even determine the best time to spray pesticides when they would be most effective.

While many may picture farming as a bucolic endeavor, in corporate and large-scale farms, that level of automation and computing is already in place. Adding a layer of data analytics and then deeper layers of sensing isn’t all that crazy. And given Monsanto views this as a key to unlock $20 billion in revenue, it’s clear that better data is going to remake a lot of industries that remained less visibly touched by the previous generation of computing advancements.