Anika Begay
Heavy equipment maker CNH Industrial has a long history of mergers and acquisitions, sometimes overseeing legendary brands like Ferrari. But five years ago, as agtech was booming, the global giant was struggling to break into the startup scene.
The conglomerate turned to one of its longest-serving executives, a daring Italian entrepreneur named Michele Lombardi.
Lombardi had grown up in CNH’s business development group, part of what he describes as a “black belt team” that forged corporate alliances at the highest levels. When the company approached him in 2019 with this new role, he was essentially starting a new chapter “from scratch.”
“They stalled and couldn’t build a successful deal pipeline,” Lombardi told TechCrunch. “When we started, we knew we had very limited reach. We didn’t have a network.”
The way to build one? Just start talking, Lombardi said. In particular, he reached out directly to venture capital firms, knowing that many would be looking for exits for their investments in startups building things like autonomous farm equipment or precision agriculture data.
Those conversations led to more connections, and within a few years, his growing team, now around 14 employees, created that missing pipeline to interesting startups and founders.
That work has led to 12 deals over the past five years, split between six acquisitions and six mostly minority investments. They span the entire technology spectrum, from farm management software to AI-powered drone imaging to satellite navigation and even tractor companies.
Lombardi’s team’s success has come at a time when, like many other sectors, venture capital investment in agtech has been hard to come by. Valuations, total invested amounts and exits are all down from their highs of a few years ago, according to PitchBook data.
This drought has proved to be a prime opportunity for companies like CNH, sparking a kind of arms race of investment and acquisitions in an attempt to corner the market for new technologies.
“Now is a really good time” to be in corporate venture capital, he said. “Now is when you can really help, where you can really come in and be a good partner. There’s phenomenal opportunity out there, a lot of concerned entrepreneurs. And it’s a great time to identify good ideas that are maybe more accessible.”
Similar to other sectors, Lombardi said agtech went through “a euphoric phase” three or four years ago, which he said inflated valuations “a little too much.”
“This recession will be painful, but we will do some cleaning up [of] the landscape both from investors who maybe don’t have the knowledge and experience to be in this space, and from startups who probably never had a sufficiently nuanced idea, or something that would end up being a competitive advantage that would make them a viable business,” he said. “The entire landscape is going to come out of this much, much stronger. And I think it’s going to be great to be in that space with the experience that we’ve developed over this period.”
A career he was built for
To expand his network, Lombardi drew on his two decades of experience at CNH, where he managed various parts of the multinational’s vast agricultural and construction equipment business.
He joined the company at a time when it was undergoing a massive restructuring that included the merger of the Case and New Holland companies (hence the modern consolidated name). His early days were spent inside CNH’s business development group in Italy, which he describes as a holding company that sat atop a wild cornucopia of companies that included Fiat, Ferrari, and even a newspaper.
Over the next 20 years, he managed parts of CNH’s operations in Switzerland, Thailand, China, Australia and New Zealand. With each assignment, Lombardi acquired new skills. While in Thailand, for example, he oversaw all of the conglomerate’s operations in Southeast Asia as it grew from a $40 million business to a $400 million business.
This breadth of experience has directly influenced the work he has done since 2019, when he said he was “surreptitiously called” to Chicago to lead CNH’s M&A and investment team.
On the investing side, Lombardi stresses the fundamental difference between being a VC and running a corporate venture shop. “Our job is not to just make the investment and get a return,” he explained, bouncing around a bit at his standing desk. “My lens is different, right? I invest in companies when I think they can accelerate my technology roadmap.”
Lombardi can focus less on returns because CNH has brought in about $20 billion in revenue in each of the past three years. That allows him to think more strategically about who his team hands over money, something other investors might not have the luxury of, especially now that the funding market has dried up.
As for M&A, Lombardi says he likes to involve people from all the different organizations at CNH when he evaluates a startup. These are the employees who will tell him, “Yeah, I like that technology team, I like their solution, I like the product, we think it’s going to make a difference in our industry,” he says.
Lombardi says his team often goes beyond investments and M&A as they seek to enhance CNH’s capabilities. And they use the company’s global reach to track developments in all sorts of different markets.
“We have a mapping of existing startups at different maturity levels before an advisor comes to us and proposes something, and we spontaneously reach out to the entrepreneurs and chat with them, understand what they’re doing,” he said. “We often create opportunities for collaboration that don’t necessarily lead to investment, but they help the startup, they help our industry around us develop more confidently, and they educate us.”
Lombardi likes to look these entrepreneurs in the eye, so he prefers in-person or video calls when possible. Lombardi said he needs to look someone in the eye, and watch how they answer questions, to determine if he wants to work with that person.
“I learned a lot from this, more than the speech,” he reflected. “Entrepreneurs are very, very good at giving me a 10-minute speech. I don’t really care. I mean, I can sell you anything. That’s not what I want. I’m not going to learn anything from this. I’m not going to know if I can help you.”
He added that for him it is more important to see the person, how he reacts, if he opens up and shows his vulnerabilities.
“And then through that I build that sense of whether I want to spend more time with that person or not,” he said. “I mean, super important. And there’s so many out there, right? So how do you select? I select from the smart people I see and how open they are to collaboration.”
