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- £2.5-4mRound Size
- 13.08.2021Closing Date
- £25,000Min. Investment
As a result of events such as the Covid pandemic and Brexit, the $68bn global crop picking market has been hugely impacted by a labour crisis with limited movement of people.
Xihelm is a deeptech company that has developed robots to automate the harvesting of fresh produce, providing huge financial and operational benefits to growers. The company is led by founder James Kent, who previously worked at Google developing hardware and software.
The robots pick crops and can operate 24/7 without human interference, all for cheaper than human labour.* Beyond operational efficiency, the technology detects the ripeness of the crop, only harvesting when optimum and reporting early signs of crop disease.
Automation in many parts of the economy is already accelerating and the use of robots in food production is an inevitability, driven by strong demand from the grower community. They have had several successful trials with growers in the UK and Netherlands that are now in contract negotiations. The costs of robots are expected to halve in the next 2 years, to provide greater savings and huge financial and operational benefits to farmers.
The company is focused initially on picking tomatoes in greenhouse environments. Longer-term, it plans to expand to other fresh produce grown in greenhouses such as cucumbers, peppers, aubergines and chillies, and then to outdoor orchards, crops, and berries.
For Oxford Capital, Xihelm fits in the portfolio as a high potential company. Part of our focus is on deeptech investments that can play a transformative impact on the industry in which they operate. Such investments can often be pre-revenue for longer than other businesses, and ultimate value can be derived from its technology and commercial potential.
New capital invested in this round has an expected range of 6-19x returns.
While effectively still pre-revenue, the potential of Xihelm and its proximity to commercial growth is now clearer and possibly more realisable due to technical progress.
*Comparative to the cost of UK/European labour
- $68bn global crop picking labour market (Cuesta Roble International Greenhouse Vegetable Production - Statistics, (2018 and 2019))
- Xihelm robots cheaper than human labour to pick crops (comparative to UK/European labour), and can operate 24/7 without interference, providing huge financial and operational benefits to growers
- Several successful trials with growers in the UK and Netherlands that are now negotiating contract
- Costs of robots expected to halve in next 2 years, to provide greater savings for farmers
- New capital invested in this round has an expected range of 6-19x returns (not guaranteed)
The 2019 World Greenhouse Growers by Cuesta Roble is a list of the 1,455 largest greenhouse producers, listed by both greenhouse area and country.
By multiplying greenhouse hectares by an assumed picking wage for each country and a picking intensity, one can estimate the addressable labour market size for these growers.
The analysis does not include planned expansions and its coverage of China and Russia is limited.
Total area: 28,766 hectares
Pickers per hectare: 3 (just for harvesting)
Country Salary: Based on the salary picker database, varies from about $30 per hour in Switzerland to $1 in Egypt. The average annual wage for picking and packing is $21,366pa
Total Addressable Labour: $1,843,899,144
Estimated total global greenhouse area: 496,800 hectares
The total market value of greenhouse produce: $340bn growing at 14%pa
Assuming labour at 20% of revenue: global addressable labour spend in greenhouse agriculture is $68bn
Use of funds
James is the founder and leader in the business. His key strength lies in developing the technology behind the world-class robots that Xihelmhas developed. He has attracted some excellent talent to solve highly complex software and hardware issues to reach the point where the robots are now commercially viable. Like many highly technical founders, James requires support in Business Development. Until Q1 2021, he has taken on responsibility for engaging with growers and negotiated pilots and the use of free testing facilities for harvesting tomatoes.
Besides his PhD, Ingo has that rare quality: the ability to apply his extensive knowledge of software engineering, artificial intelligence and robotics knowledge to real-world problems. Joining Xihelm in April 2020, Ingo’s gift for ‘translating’ lab science into practical field applications has been invaluable in maximising the company’s R&D output.
With more than fifteen years of experience in developing complex, full-stack software solutions, one of Ingo’s previous achievements while a research associate at Heriot-Watt University was the creation of a robot with socially expressive behaviour, improving the workplace experience of people with autism.
“Designing Xihelm’s innovative approach to agricultural robotics is a great opportunity to create cutting-edge technology that will transform the way we produce food efficiently at scale.”
Anthony keeps us honest: he’s responsible for delivering business and operational insights, not only to the team but to our external stakeholders too.
Overseeing the field experiments and R&D operations across our partner grower sites across the UK and Netherlands, Anthony and his team also test new feature rollouts and generate critical operational data for our harvesting robots.
A self-confessed database explorer and computer networker, Anthony’s a veteran of various start-ups in London and New York.
“Robotic harvesting is undeniably the future of glasshouse farming."
A graduate of the Wroclaw University of Science and Technology, Michal joined Xihelm in 2018. Michal has a strong background in control theory, especially robotic arms. While studying for his Master’s degree in Control engineering and Robotics, Michal contributed to the development of a monocular camera-based collision-avoidance system for unmanned aerial vehicles (UAVs) – subsequently explored in his thesis.
“It’s not enough to understand what needs doing, instead it’s about getting things done while minimising bureaucracy and maximising quality.”
James has been appointed to the board following an introduction from Oxford Capital. He is working 2 days a month (or half a day a week) to support the commercial development of the business, assist with negotiations, make introductions and generally bring commercial support for the CEO.
He brings deep experience from the fresh produce and greenhouse technology market. For over 10 years, he served as Managing Director and Group Commercial Director at Haygrove, an international grower of berries and provider of technology to greenhouse operators.
He joined the board in March 2021 and has quickly settled in, visited customers, seen the robots in action.
James sees big potential in the business and has confirmed the high level of demand for automated solutions from fresh produce growers in the UK and internationally.
We are seeing a rise in the number of Agritech deals globally. E,g, Root.AI, Boston based startup, was acquired in April 2021 for $60m by AppHarvest.
Xihelms deeptech focus may attract the attention of major tech companies involved in AI, Data, Machine Learning.
For full exit strategy, including exit scenarios, please see the investment presentation.
Standard Co-Investor Circle fees are applicable as below:
Oxford Capital Access Fee – 2%
Annual Service Charge – 1%
Oxford Capital Profit Share – 20%
Please refer to the Co-Investor Circle IM for full details of the fees and custodian charges.
Commercialisation Risk: The business has not yet secured any long-term commercial contracts
Competition Risk: Competitors may develop the technology quicker
Talent Risk: The software and hardware are extremely complicated which means that the team are all required to be highly skilled
Limited Market Risk: The technology has been designed specifically for tomatoes and it is not proven if this is transferrable to other perishable fruits
Profitability Risk: The company needs to establish long term contracts to reach profitability
Dilution Risk: The company will require further funding to scale up and there is expected to be another round at the end of 2022
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