Tomer Tzach, CEO, CropX. Image credit: CropX
“The company I joined back in 2017 did irrigation management, and only irrigation management,” observes CropX CEO Tomer Tzach. “But what we realized early on is that while water is important, it is probably not going to be enough for us to build a venture-backed company that would get to a meaningful size.
“At that point our customers were asking for fertilizer management, crop protection, crop reporting, scouting and a bunch of other activities. So we said, OK, where it makes sense, let’s buy and integrate. And that’s how the M&A strategy started.”
What followed was one of the most high-profile buying sprees in agriculture, with seven acquisitions in five years taking CropX from a precision irrigation startup to a broad “digital agronomy” platform with a “playbook for PMI” (post-merger integration) that sells mostly to enterprise customers.
But CropX is not a holding company with a rollup strategy to vacuum up distressed startups, says Tzach, who says in each case, the rule is to fully integrate the tech stack, back-office systems, CRM, and—critically—the teams, before moving on.
According to Tzach: “Most of the companies we acquired were profitable. Out of our seven companies, only one was in distress. They came to CropX because they knew that together we could grow better and faster: one plus one equals three.”
But PMI isn’t easy, he says. “It takes a long time to learn how to do it right. You get a lot of scars on your back. We made many mistakes with our first acquisition, but since then, we’ve learned how to do this. I would even say that we’re M&A machine.
“At this point. It’s a rinse-repeat process. It’s very professionalized. Every single management member knows what they need to do, both in the due diligence phase and, more importantly, in the PMI phase.”
As for the acquisition strategy, says, Tzach, CropX is acquiring tech, customers, market access, data, and talent.
“People always ask what are you looking for? Technology? Customers? Revenues? And the answer is yes, yes, and yes. We also have examples where we get great teams that join us, so it’s an acqui-hire, and we’ve also had acquisitions where we got great data sets out of which we then developed new products.
“Acquisitions have also brought in b2b leads that we then turn into our own customers [to whom CropX can upsell into its broader platform], and that even turn into investors later on.
“And many times we acquire with shares, so we increase our investor network on the cap table [founders and existing investors of the acquired company become CropX shareholders].”
CropX is an “ecosystem of measurement devices, software, and analytics,” says chief revenue officer John Gates. Image credit: CropX
So what exactly is CropX building as it scoops up more digital ag players, and is it competing with big tech platforms such as Syngenta’s Cropwise, Bayer’s Climate FieldView, John Deere Operations Center and Corteva’s Catalyst?