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12.4.2014

Ag-tech investors eye bumper harvest

by Toby Lewis for Global Corporate Venturing

Recent investment activity in the sector has been eye-catching, with deals by Intel Capital, Kleiner Perkins Caufield & Byers and a large exit to Monsanto.

Farmers often predict the quality of harvests based on weather conditions and other external factors, similarly, looking at recent investment seeding activity, the portents look good for the harvest from agricultural technology investing. The hope the sector can be lucrative is partly due to the recognition the food supply chain needs significant investment to meet the challenges of feeding the 9 billion-strong world population projected in 2050.

Most notably there is a growing group of external investors moving into the sector, joining incumbents such as large agricultural businesses Monsanto and Syngenta, which both have corporate venturing units.

Recent investment activity in the sector has been eye-catching. Earlier this month Intel Capital, the corporate venturing unit of the US-based technology company, backed PrecisionHawk, an agricultural drone company, and Kleiner Perkins Caufield & Byers backed Farmers Edge, a Canada-based data management company for agriculture. At Global Corporate Venturing’s annual Symposium this year we made agriculture a special theme and Farmers Edge was one of the invited start-ups, suggested by one of our sponsors, Canada-based venture firm Bioenterprise.

Ernest Earon, president of PrecisionHawk, said, while speaking on the sidelines of the Intel Capital Global Summit this month, that agriculture was where much of the early adoption for drone technology was taking place. He said: “The great early success story for drones is going to be agriculture. It is a data hungry industry, which has not been historically well-served, and drones are really well poised to improve that, assuming they do it well.”

Rob Trice, a well-known corporate venturing executive, who runs the Corporate Innovators Huddle, a network of executives, has left Swisscom Ventures, to pursue angel investing in the sector through Better Food Ventures and also run a conference dedicated to the business called the Mixing Bowl Hub.

According to Trice, the sector drew interest from Sand Hill Road VCs, adding to a mixed group of early investors, because of a banner exit in the sector, the sale of Climate Corporation to Monsanto. He said: “The big Sand Hill Road VCs have been reluctant to step into agriculture for many reasons, including skepticism about the potential size of exits. Yet this has changed with Monsanto buying Climate Corporation for $930m.” Climate Corporation had been corporate venturing-backed by Google Ventures.

There are other signs early stage investing in ag-tech is thriving. Last week US-based yoghurt producer Chobani launched an incubator that will assist entrepreneurs aiming to disrupt the food industry and Flextronics’s accelerator Lab IX and Innovation Endeavors, a venture firm which manages funds for Google chairman Eric Schmidt, teamed on Farm 2050, an early stage agriculture technology organisation.

Samantha Wei, at Innovation Endeavours, explained what Farm 2050 was. She said: “For startups and entrepreneurs in the agriculture space that are selected, we are offering a suite of resources that they can access -- everything from capital to test farms to mentorship to manufacturing and industrial design capacity, etc. For our partner companies, we hope to offer them the opportunity to be at the leading edge of innovation in this space, the opportunity to invest in these technologies, the opportunity to collaborate with these companies early on and find synergies with their businesses, and good PR / affiliation with a top notch group of companies.”

Others are targeting the sector in niche geographies. Netherlands-based food and agriculture venture firm SHIFT Invest is looking to raise an additional €20m to  €30m, and has held a first close on its fund with multiple investors including Rabobank and Netherlands-based health insurer Menzis, according to SHIFT executive Bram Ledeboer.