Arthur Chen is climate-proofing agriculture

The agricultural industry, which generates 134.9 billion (around 6.8%) of Canada's GDP, is an impressive but notoriously difficult space for disruption. The sector lends itself to generational knowledge passed down through ancestral farms, so adopting new technology can be challenging if tech savviness doesn’t run in the family. Pair this with the fact that industrial agriculture continues to be a significant contributor to global greenhouse gas emissions, a leading cause of the loss of biodiversity, as well as an impressive use of water and land resources, and you have a perfect storm ripe for some solutions.

It’s a fascinating problem space that will shape the future of our food system, but when I come across an agtech founder, I can’t help but wonder — why? Why go through all that difficulty in real life and on the ground (literally), when you could build in the metaverse instead?

“We talk with founders of other companies in agriculture as well — we all joke that, ‘Hey, we should just start a Web3 company instead,’” says Arthur Chen, CEO and co-founder of Verdi. Chen and other leaders may poke fun at themselves for choosing this industry, but our conversation made his commitment to the cause clear. At 25 years old, Vancouver-based Chen and his Verdi co-founders have raised CAD $1.3 million in pre-seed funding, have already saved farmers millions of litres of water this year and are eyeing to conserve billions — and Verdi’s just getting started.

Chen isn’t your typical agtech founder in the Lower Mainland. Although he does come from a family of farmers, they grew rice on the other side of the Pacific Ocean, in Taiwan. He was born and raised in the suburbs of Surrey ever since his family immigrated in 1995. Chen eventually studied Engineering Physics at UBC — and it was the intersection of his personal and academic life that led him to start Verdi.

“It was actually kind of a culture shock when I went back to Asia several years ago as a high school student,” he says. For Chen, the trip to Taiwan with his family, and visiting the farms that once were there, was paradigm-changing. “[It] made me realize that agriculture is such a traditional industry that's really ripe for change. A lot of the ways things are being done have been done that way for decades, if not centuries. And so [we’re] really looking at — how can we bring in tech to help solve these problems that farmers are starting to face because of things like climate change?” says Chen.

In the final years of his degree came an opportunity to use his technical skills for an issue that he cared about. “Typically, if you're an engineering student at any college or university, you have to do these capstone projects in your last year,” notes Chen. “But I felt that there was a lack of projects that were solving meaningful problems around the world […] We wanted to work on something that could have an actual impact. So that's why we started reaching out to a number of different companies. And one of the dream companies that we reached out to was Google X.”

Google runs a “‘moonshot factory” called X, to develop ambitious technologies that could drastically shape humanity. The “moonshot” is named for JFK’s promise in 1962 to put a man on the moon by the end of the decade — which did happen, in 1969. At the time that Chen reached out, the company (now known as X Development) had a program focused on computational agriculture called Mineral.

“It really inspired me to try and solve the scalability problems that we're seeing in agriculture, automation, and sustainability,” says Chen, upon discovering X’s focus on bringing software approaches to the industry. It was his capstone team’s persistence — three young, Canadian university students, pestering a multibillion dollar organization over email to give them any attention — that eventually led to a partnership with Mineral for Chen’s capstone project, unintentionally kickstarting his company, Verdi.

Through this research sponsored by Mineral at X, Chen discovered one of agriculture’s biggest pain points: water. Vancouver is no stranger to having too much (see: any typical day in November) or too little (see: our absurd October drought) of this resource. But go beyond Vancouver and into any agricultural landscape, and you’ll see that water threatens not only the health of crops, but the livelihoods which depend on their success.

“When you look around the world, water is running out for agriculture,” says Chen. “It already uses about 70 to 80 percent of the world's [fresh]water resources. And that's quite inefficient already.” He attributes this inefficiency to ancient irrigation infrastructure. “It's quite outdated. It was invented back in the 1950s. And essentially, it uses a spray-and-pray-approach to just dump water and fertilizer on every plant in the field without actually understanding — what are the ground requirements of individual plants?”

What happens when a team of engineering physics students meet agricultural inefficiency? You get Verdi. “We've built proprietary technology that can augment existing and legacy irrigation infrastructure, with capabilities for automation and healthcare at the plant level,” says Chen of his company. “And that's really helping our customers to significantly improve their crop productivity as well as to de-risk themselves from water scarcity.”

Verdi has found significant success with local vineyards in the Okanagan, such as Quails’ Gate and Mission Hill, as well as with larger Canadian wine conglomerate Arterra Wines, responsible for over 1,700 acres of vineyards across the country. However, Verdi also serves massive clients south of the border in California — a state that alone grows nearly half of the USA’s produce, much of which is imported here during our winter months. “We're working with some of the world's largest food companies right now at the Fortune 1000 scale [...] We're working with a lot of the big food brands in wine, tree crops, as well as berries. Some of these are brands that you can find at the grocery store as well.”

Chen isn’t just name dropping here — these customers translate into considerable dollars, cents, and most importantly, litres of water. “We ended last year — we had USD $25,000 in available annual revenue, and USD $1 million in our pipeline. And since then, we're on track this quarter for USD $200,000 in available annual revenue and USD $65 million in our pipeline,” he says. “This year, we're on track to save around seven million liters of water for our growers.”

By the time farmers have talked to Verdi, it’s likely that they’ve already adopted some form of precision agriculture technology on the farm to address their water use. Typically, these are sensing technologies: “Whether that's drone or satellite, [farmers] can analyze that data, or maybe sensors in the field can tell farmers what's happening in the crops,” Chen says.

However, he argues that the abundance of data and devices can often lead to more problems rather than meaningful solutions. “You need hundreds of these smart devices to work together as a whole fleet. And you start getting negative network effects like poor reliability, difficult maintenance, and also, I tend to just say, general overabundance of complexity in the field. And so that's really why existing precision irrigation technologies out there haven't really seen broad scale adoption.”

Chen says that many farmers are at a point where they have lots of data on every plant in the field, but don’t know what to do with it, or don’t have the time to take care of the technology. This is where Verdi comes into the picture. The company offers smart hardware that can sit atop existing irrigation technology, partnering with the third-party data collected by sensing technologies to deliver targeted doses of water and fertilizer. The appeal is that farmers can find it all in one place on Verdi’s platform, and are better able to irrigate precise treatments for their crops. Chen contends that this has contributed to customers uninstalling competitors and replacing them with Verdi instead. “We do have a couple of competitors in the U.S. for that right now. But as far as where our technology has developed, we've been able to get the best-in-class performance today […] We've been able to reach about 95 percent-plus reliability in the field, where other solutions have only been sitting around 50 to 60 percent.”

I first got to know Arthur this past summer at a casual social event for folks in climatetech in the Bay Area. He was in town to meet some customers, and I was in the area thanks to my travels, learning about the local climatetech ecosystem. We bonded over being raised in immigrant families, and how odd it was that we remained interested and invested in the very industry that our parents worked so hard to leave. I asked Arthur why he highlights that his family used to farm in Taiwan, or that one of his co-founders grew up on a vineyard, when talking to potential customers or partners about Verdi. “We want to make sure we communicate that hey, we're not just people who studied engineering and now want to work in agtech,” he says. In more applied industries like agriculture, technical founders who have no apparent farming experience or background can be met with hesitancy. Nonetheless, there were still challenges, just from the difference in training disciplines, he says. “I think for us, coming from engineering backgrounds, the biggest learning curve is — how do you talk to farmers in the first place?”

Chen attributes relationships in research and academia as the starting point for getting farmers to even meet with his company. “Agriculture is notorious for being a very siloed industry [...] We've been able to work with a lot of these big names in the industry from sort of day one, really, through relationships in research and academia,” he says. From there, the technology spoke for itself. “We've been able to build really strong customer satisfaction, which has led to a strong referral network and word of mouth between different customers.”

Verdi’s customers are admittedly Chen’s biggest learning partners. “We're really lucky in that we have customers who are very supportive and able to provide their agronomic expertise — to an extent, that rubs off on us as well,” he says. As the farmers speak to what they see on the ground, Chen and his co-founders can respond with engineering solutions as appropriate. “It's really through working with our customers that we understand, what exactly are we doing on the crop science level that can really impact outcomes for growers?”

Chen and I joked that for ourselves and many peers of our generation — late millennials, early Gen Z — our parents don’t entirely understand what we’re doing with our lives. One contributing factor is likely because so many jobs that exist today didn’t exist even a few years ago, so being a machine learning engineer, for example, is simply… doing stuff with computers. But for Chen, this particularly rings true, despite his parents being entrepreneurs themselves. As immigrants and small-business owners later in their adulthoods, seeing Chen on an entrepreneurial path at a young age is different, to say the least.

Perhaps that’s why he seemed so humble about the work he’s put in to scale a project from a university course into a company that has raised over a million dollars. I asked him how he built the skillset needed to run an agtech startup, and he expressed gratitude for the ecosystem of support for his team: from local advisors and investors found at entrepreneurship@UBC to global accelerators THRIVE and Alchemist for agriculture and early stage ventures.

Of course, there are some things he had to learn on his own. “When you need to do something for the business, you learn as you do it,” Chen says. A most apt lesson when it comes to funding a tech company: “That includes when we need money, because if we don't have money, this is gonna die […] You learn how to raise funding, right? You learn how to do financial projections, things like that.”

That’s not to say Verdi isn’t celebrating its milestones. When I asked Chen what he was excited about next, he started off by outlining Verdi’s success so far, reaching a series of horizons which initially seemed challenging to even approach. The first was the issue of reliably scaling smart farm infrastructure, which they checked off of the list. The second, now, is leading his company to build software that enables automation and tracks sustainability metrics for farmers, on top of the existing farm infrastructure that they’ve enabled.

But once he’s nailed down this goal — mechanizing processes and aligning sustainability with farmer operations on the platform — Chen sees the next horizon as climate-proofing his customers’ farms, beyond water. “How do we [...] build solutions using our data that help farmers adapt to climate change in other areas of their business? So for example, they need financing options to help adopt [other] climatetech and cleantech on the farm, they need to help improve the way that they get insurance for their crops,” he says. Time will tell if Chen can grow Verdi from a precision irrigation company into one that supports financial services for farmers. But if he’s already learned how to succeed alongside farmers, perhaps doing the same with financiers isn’t too far out of line.

Editor's note: this story previously stated that the agricultural industry was valued at USD 12 billion. It has been updated to reflect that the industry generates 134.9 billion (around 6.8%) of Canada's GDP.