Canadian ag robotics startup 4AG Robotics has closed a CAD 40 million ($29 million) series B round to accelerate the adoption of its pioneering autonomous mushroom harvesting technology.
The round was led by Astanor and Cibus Capital with support from new investor Voyager Capital and existing investors InBC, Emmertech, BDC Industrial Innovation Fund, Jim Richardson Family Office, and Stray Dog Capital.
It will enable 4AG to expand its customer support team and increase production at its facility in Salmon Arm, British Columbia to meet growing demand for its picking, trimming, and packing ‘bots, which are already operational in leading mushroom farms in Canada, Ireland, and Australia, with new deployments coming in the Netherlands and the US.
“This funding helps us leap from a startup proving our product works to a scale-up manufacturer trying to keep pace with demand,” said CEO Sean O’Connor. “In just two and a half years, we’ve gone from asking farms to trial our technology to having deposits for over 40 additional robots.”
Tech can increase yield and quality as well as slash labor costs
Designed to retrofit into existing Dutch-rack infrastructure, 4AG’s tech deploys computer vision, precision suction grippers, and advanced motion control to pick, trim, and pack mushrooms around the clock. This slashes labor costs in an industry where harvesting accounts for up to 50% of production, improves quality and yield, and provides a wealth of data that growers can use to further optimize operations, O’Connor told AgFunderNews.
And given the highly consolidated nature of the mushroom industry, with the bulk of the market dominated by a handful of players, “You can grow fairly quickly with a small number of customers,” noted O’Connor. “We’re sold out into February of next year, so this [new funding] is going to allow us to expand production and increase a lot of efficiencies in our manufacturing capacity.”
Unlike many crops, where labor needs can fluctuate wildly over the course of a year, mushrooms grow year-round and double in size every day, he explained.
“But knowing when to pick each mushroom is a complicated game of checkers that you’re playing with the mushroom bed. If I pick a mushroom at four o’clock in the afternoon but the right time to pick that mushroom is four o’clock in the morning the next day, those extra 12 hours could mean 48% more growth, which means 48% more weight, which can turn into 48% more revenue.
“But wait too long, and the mushrooms start to bump into each other, and they can become misshapen and turn into a lower value product or a waste product and you lose a bunch of money. So knowing how and when to pick a mushroom is incredibly complicated.”
Precision ag
To determine the optimum time to pick, which will maximize yield and optimize quality, he said, “We use computer vision, we have a global map of every single mushroom on the bed every 30-90 minutes. We understand their growth rate and how they’re competing for space and nutrients with their neighboring mushrooms.
“And then we work with the farm: what is the product your customer wants to sell? Are we picking within those parameters? So they help annotate images for their growing practices. And then that trains the robots to use AI to pick the way they want them to pick. And then with each mushroom, when we pick it, we see the size and weight of the mushroom, and from then we train the robots to continuously optimize.”
As a result, 4AG can implement new learnings on a weekly basis and given the rapid growth cycles of mushrooms, has “a rate of learning that’s unique in agriculture,” argued O’Connor.
“We also have some models on disease detection and contamination detection and notifications if growth rates in part of the rooms are abnormal.”
‘The next wave of consolidation, it’s going to come through automation’
When it comes to adoption, he said, “We’ve got big early adopters and then we have more skeptical farms who are saying, you know, I’d rather watch it for a year or two before I come in. The only challenge there is that it’s a highly competitive industry. If you have the advantage of being able to use robots to decrease your costs while increasing your revenue, that will be the next driver of mass consolidation in the mushroom industry.
“If you look at Ireland, back in the 1980s, it had over 1,200 mushroom farms. Today, it’s somewhere in the mid-20s. If you think about the next wave of consolidation, it’s going to come through automation.”
Typically, he said, growers can expect payback “within about 18 to 30 months, depending on the cost of labor in your country.”
He added: “We sell the robots up front and then have a recurring revenue portion of the business alongside that. The entrance point for these farms is they usually buy eight to 12 robots to start, and then they look to scale from there.”
Tariffs: ‘We’re not beholden to the US’
Asked about how tariffs imposed on goods coming into the US from Canada might impact the business, O’Connor noted that 4AG Robotics has significant demand from multiple countries beyond the US and that it makes sense for the time being to continue to manufacture in Canada.
“I don’t want to have to spend hours every day trying to figure out what the future trade between the US and Canada is going to look like. We’re proud to be neighbors and work with US companies and excited to go live with a farm in the US, but we’re not beholden to the US.”
Ongoing support and maintenance
As for ongoing support and maintenance, it’s a key part of 4AG’s service, says O’Connor.
“If a farm is 100% automated, you need to trust that our robots will work, and we have service level agreements in place that allow for them to have that confidence. Because when you go from 1,000 human pickers down to 20 or zero, you can’t all of a sudden go find 1,000 pickers overnight. The training process alone takes 10-12 weeks.”
What’s next?
Asked whether 4AG’s tech can apply to a broader range of delicate crops, he said: “[COO] Chris [Payne] and I talk about this all the time. We’ve been successful so far because we’ve been relentlessly focused on solving this one problem… and so we fear distractions. But I’d be lying if I didn’t say that one day we want to look at other items.”
He added: “There’s very few companies in the world that have replaced a human hand picking a produce item and taking it to the grocery store. We’re quite proud to be in that small group of companies and we think that we have the expertise and ability to look at other crops down the road.”
Further reading:
Chef Robotics raises $43m Series A to scale AI-enabled robotics in meal assembly
What’s driving ag robotics innovation? ‘Labor, labor, labor,’ say FIRA USA 2024 attendees
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