Every partner at DCA has been a C-level executive , he says , which means they know what it ’ s like to be on the other side of the table . They use a traditional approach to valuation , which considers growth rates , margins and cash flow . The pandemic has , without a doubt , impacted valuation whether entrepreneurs admit it or not .
“ A lot of business owners want to ignore the fact that 2020 and most of 2021 have been lost years ,” Mills says . “ They are basically treating the last 18 months as if they didn ’ t happen and pegging their valuation expectation on 2019 performance . Obviously , there is some tension between investors and business owners in that regard .”
2018 , the Davis-based startup raised $ 2 million in its seed equity round ( from Catapult Ventures in the Silicon Valley and Impact Venture Capital based in Sacramento ) for the development of robotic tractors that harvest strawberries . Series A funding brought in another $ 7.5 million , led by Yamaha Motor Ventures and Laboratory Silicon Valley with additional investments from
Kubota Corporation . After growing from 12 to 40 people , this summer Advanced Farm Technologies raised $ 25 million in a Series B round to support the creation of apple-picking robots .
“ It ’ s been a wild world in general , but we ’ ve been fortunate to be in a sector that hasn ’ t stopped working ,” says Kyle Cobb , president , CFO and cofounder of Advanced Farm Technologies .
Power shift
Valuation isn ’ t the only source of tension . When a company raises a VC round , a lead investor of the round often takes a board seat and influences the direction of the company via his or her vote and veto power . These days , bargaining power has tilted away from investors toward founders and entrepreneurs who have more choices in where to get funds .
Everybody wants a piece of the VC pie : private equity firms , corporate VC , even mutual and hedge funds — which traditionally invest in companies that have already gone public — are joining the VC bandwagon . This surge fuels the market even more because with more money available , companies can stay private for longer .
“ For a long time , VCs had a lot of bargaining power ,” Yasuda says . “ But this trend is still accelerating and I see more and more founders negotiating and declining offers from even top VC firms in order to retain more of , not just the money , but the decision-making power within the company .”
In the Capital Region , the ag-tech sector within the VC market has been a real success story , gaining traction throughout the pandemic as other industries stalled . One example in the Capital Region is Advanced Farm Technologies , which already had momentum heading into 2020 . In
Hemant Sikaria ( right ) launched Sibros , a technology startup to help improve the safety and reliability of vehicles , in 2018 and found an early investor in Folsombased Moneta Ventures , of which his brother Lokesh Sikaria ( left ) is a founding partner . Moneta Ventures invested about $ 1 million in the startup ’ s seed round . PHOTO BY WES DAVIS
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