Finally I got my prototype fully functional. Its agritech device, mushroom growing chamber. You can find similar things in biological labs called incubator,a more generalized name is CEA or building precision HVAC. The differences is size,cost, modularity, (hw components are compatible with industrial components), easy to reconfigure/use/ re-programing of software ( graphical programming), resizable, refit into container or building, economically viable . Details with numbers are in this post. There were few posts in this sub trying do the same but there is a huge difference in size, cost and unit economics. (their size is as big as CRT TV, My prototype is as big as 2000L refridgerator and mvp is 3 time bigger but the BOM cost is same same) ( I’d like to post pictures of device+graphical codes but it seems its not allowed in this sub).
I’ll start by telling my story how i decided to built it, follow is markets analysis: sizes, structures of the markets, markets strategy, a foray into future, also a lot of numbers.
Key markets: cordyceps / psychedelics mushroom (extract). possible extent to adjacent markets: Saas for machines, Software defined PLC, other agritech devices. Backbone of of my analysis is Zero to One, Paul Graham BL and Sequoia market thesis.
Please, criticize what ever you like, my first steps is very simple I’ll bootstrap, build a mini cordyceps millitaris farm indoor, I’ll try to be ramen profit from my first sale, ROI and margin is very high ( theoretically). But I’m very confused how to scale, funding or not funding, which is main market or adjacent market, in contrast with other fellows in this sub I think I have more choices and all seem to be good.
Long story short, I tried to build mushroom growing chamber for my neighbors as a act of kindness (edible mushroom of course). Requirement: must be economical viable minimum 300USD profit/months also low capex. I tried to cut cost with whatever i can, arduino HAT, Pi HAT chinese components etc… diy wood/alu frames, welding etc. It sound simple but its not, I ended up theoretically with some thing cost about 700USD BOM, 200USD profit (tax is zero), but I didn’t feel right. Desperately I tried opposite way, to ggl the most expensive mushrooms to grow and I found magic mushroom and cordyceps millitaris. Dig deeper and the concepts seem to be economically viable and I took it as my own.
Main markets : (all numbers are from googling).
Psychedelics market is tricky due to legal restrictions. There are scientific researches evidences to approve it is effective again MDD, usage is allowed with restriction or decriminalized in some states and Canada. From National Health Inst. : there are 20M life long users. Its seem like it will follow the path of medicinal cannabis industry. Just copy some business models and strategies from cannabis industry then let imagination run wild to get the picture. Only problem is its out of my reach for now plus timing.
Cordyceps sinesis is some thing well know in Asia as energy booster and for it expensive price. Its impossible to cultivate it at scale and economically, may be in the lab (recently somewhere in China). Commercial growers grow Cordyceps militaris instead, only recently (10+ y) scientist can grow it successfully in its nature form ( fruiting body). Key bioactive compound is cordycepin. There are great number of scientific research to confirm what it is good for. In USA people its used to increase libido, gym-er and athlete use it to increase endurance some people use it as coffee alternative. In Asia biggest customer segment are elders.
Total cordyceps market size is ~ 1B USD CAGR ~10%. USA ~275M, Asia Pacific ~600M. Retail price depend on quality but US grower charge ~2200-3300USD per kg dry 0.2%-0.3% cordycepin. wholesale price ~1100USD. To make 1kg cordyceps dry we need ~10 kg brown rice. substrate material cost ~11kg brown rice. In SEA for 0.6%( 6mg/g) cordycepin quality, retail price ~ 2500USD. It look expensive but daily usage for a adult is ~1-3mg cordycepin or 1-2USD perday, cheaper than Starbuck.
Market of the my device ?: When I found out what cordyceps can do, I want to built the device for myself for following key reasons:
- I don’t want to destroy my room or building structure
- quality of the mushroom very widely depend on how you control environment. By nature cordyceps militaris yield very low cordycepin concentration (0.02%-0.08%). In CEA lab its high as 2% (20mg/g). It solve both scalbility +quality vs capital at once. Local growers have problems with scalability vs quality vs CAPEX.
- lower CAPEX and OPEX (need less high skill labors)
- Direct to consumer marketing and trust.
Using alternative like Babylon-microfarm and Freight-Farm I think there is demand for the device but I can’t estimate how big it is => my strategy is to grow and sell the mushroom first.
Leverage Control software as SAAS*?* It idea is long…long shot and I have zero idea it can take off or not. When I built the device, I know what to control and how but can’t figure out how many of them and where, because my knowledge about HVAC or CEA is ZERO. I expect there is a lot of hw changes so I write my software as a browser and control algorithm like mark up language ( I use yaml). From control diagram ( like a labview or FCB) I create text file in yaml. Runtime will interprete text file as brower inteprete html. This design also enable me to do otherthing -> I can easily modified my controller soft+hard for other things like cannabis mini farm or green house or hydroponic, refit in to container or any CEA things, create alternative to freight-farm and babylon-microfarm. The key is low cost in reprogramming and redesigning controller IO. Other hardware just knock off. It enable me to control my devices like a SAAS. It also behave like a Software defined PLC. I can break a program into parts and run it separately in container or on difference Pi/cluster, like a distributed system. If one process is down other continue to function. I can add more process when other are running. I can have multiple controllers in one Pi working separately or together etc. But I don’t know whether its good business concept or not, whether other people want it. I wrote it for my own use. From business point view, it is not validated hypothesis, product-market fit or any real customer*. Only me need the features and I only used some of them for now.*
Business models.
The first one is very simple: build cordyceps micofarm. Market is validated,margin is high**.** Here are numbers. My MVP has size 0.8m*4.4m*2m, BOM cost ~1200USD designed for low volume manufacturing. Output ~5kg dried fruting body in 2 month = 11000USD revenue. 2 devices occupied 10sqm including space => revenue 550USD/sqm/month. Electricity cost is ~100USD max per device/month or 20USD/sqm/month (average is %50 of it) in USA its 3 time => 60USD/sqm/month. Labor cost 500-1000USD month. Rent 6USD/sqm/month.
scale the farm up
scale business like Uber for x. selling device +supply substrate to every one wanting make extra money but don’t have time. collect mushroom back and sell. Organization must be upgrade accordingly. One potential customer segment are empty office building. ( I chatted with one).
This model ease me from getting MVP user experience right at the first time, there are things need to tweak. All I need is functionality.
The second business model is like babylon-microfarm. Selling to office. every 2 month one device can supply ~5-10 thousand cups of alternative /energy booster for their employees. babylon sell their device for ~15KUSD so do I. ( US only)
The third business model is like freight-farm. Retrofit in container clone business model. The revenue and margin of cordyceps are higher than green. they sell their device for 150K USD so do I. (US only).
Thank you every one who had patience read through all this. My next step is remake the prototype into MVP and lunch microfarm ( bootstrap). Any input is appreciated I am confused about how to scale and to which direction, I’m in SEA now ,is it possible to expand to NA market (I’m Canadian)? Please help with your knowledge and opinions.
Thank you.
The only thing I can think of is that you’re not necessarily going to crack the market that they’re selling to if their product can be carried through a doorway by one person and yours needs two people or a hand-truck (and potentially a larger vehicle to transport if they need to).
The overall idea seems OK, but you may wish to have a variant product of the exact size that the market is already used to. Or even two of that size, bracketing the existing product(s) with one that has all the same (or marginally better) specs with a noticeably lower price, and one that has significantly better specs for just a few dollars more than theirs. That way people who are looking to spend less will go for the former, and people looking for the most bang for about the same price level will go for the latter, creating a pincer move on the existing product range. Plus, of course, you’ll then have your 2000L model available both as a fully compatible upgrade for individuals who want more growing area than the current smaller sizes, and as a drop-in solution for business-level and microfarm customers.
You are correct about CRT size version, their target seem to by hobbyist segment. With this CRT TV size they can only control heating and humidity not cooling. In US/Europe its ok because cold weather.
FYI Hobbyist growers there using just a cheap tent in basement + central HVAC to control temperature adding cheap humidity controller to control humidity they reduce the cost to just couple of hundred. Other just drill a hole into refrigerator and added a pc fan as controller and voila. But the system require attentions and for living room you are limited to certain kind of mushroom.
Cordyceps need 18-20 Celsius not suitable for their system but some psychedelics +edible thrive well in 23-28 Celsius so I think there segment and my are different.
Also FYI to force cordyceps producing higher content cordycepin you need 23-25 Celsius+lighting which is not good for body grow. 18-20 Celsius good for grow but not good for cordycepin production. So local top grower all have their farm in mountain area.
You are also correct about the size. Its first challenge i have to tackle. I designed it as IKEA, you will assemble it once you get things in the door. For bigger version I can use eps panel + off the self hw hvac+ low cost cnc. But for smaller (400L) version I need to out source to chinese /local manufacturing in bigger volume. So for now I trying to make MVP for my self first/ refining it before actual selling. Smaller version only in cad file for now. From eps frame to mini farm/container or bigger farm is very straight but inversely is very hard.