Agtech Action | Week of 02.17.24 - 02.23.24
Agtech Action is a weekly newsletter highlighting and commenting on current events in the world of agtech
Ethanol for aviation to get tax credits, lab-grown ‘beef rice’ and FBN names its new CEO. AI hallucinations, Benson Hill divests soy plant, and Santander creates digital platform for agrifood.
It’s time to have a hard conversation: venture capital, in agtech, needs a do-over. The statistics don’t lie; agtech VC needs new structures. These new structures need to have within them buffers that can deal with the reality of scaling agtech. What are those structures? I’ll outline some in this week’s newsletter.
Food and the World:
Farmer asks how to unite a farm divided among multiple families
Biden administration to approve E15 gasoline expansion starting in 2025, sources say
Ethanol for aviation will get tax credits, Vilsack assures industry
Study shows $2.5B impact of potatoes on Michigan's economy
USDA forecasts ‘very, very small growth’ for U.S. meat and poultry
Pivot Bio’s Sustainability Program Pays Farmers $6 Million Over Two Years
U.S. crop sector insulates itself from world market with biofuels, says analyst
Overall tractor sales in January 2024 down compared to last year
Hog farms disappear in latest ag census
What a consumer survey shows about packaged produce purchasing habits
Agriculture industry reacts to EPA’s decision on Midwest E15 petitions
Agtech in the News:
Lab-grown ‘beef rice’ could offer more sustainable protein source, say creators (here we go again!)
RaboResearch publishes its North American Agribusiness Review
Miruku grabs more capital as its plant-based dairy tech reaches proof of concept
Restaurants Can Now Call Themselves ‘Palestinian’ on Google
Three Years to Vertical: How to Convert to Vertical Tillage, and Why You Should
Value of key venture deal types in Africa
FBN Names Diego Casanello as CEO
Australia Approves GM Banana to Combat Global Threat
Ethanol for aviation will get tax credits, Vilsack assures industry
Funding Is Still Flowing Strong to Water-Focused Startups
AgPlenus and Bayer Partner for Crop Protection
Resource Innovation Institute Partners with DOE to Boost Climate-Smart Agriculture
“Sensorial” – Scientists Discover How To Create Different Colors of Cheese
This edible, wriggling robot mimics experience of eating moving food
Digital disruptions transform the poultry industry
FaunaTech’s Rajat Pandya on the quantified cow
Amfora Launches First Commercial Products
Huma Acquires Gro-Power and Expands Team
Fun:
Civil War Sacrifice: Forgotten Farm Boy Was First Soldier Buried At Arlington
Your Mental Health Toolbox: How To Recognize The Warning Signs
Helpful Resources:
Q1 2024 Quantitative Perspectives: US Market Insights
Q1 2024 PitchBook Analyst Note: Estimating US VC First-Time Manager Dropouts
Q4 2023 Supply Chain Tech Report
2023 Annual European VC Valuations Report
Interesting Reads:
Comprehensive Study Evaluates Cereal Rye as a Winter Cover Crop Across the US
Pan-African payment system signs up Tunisian central bank
Which State Tops the List For Precision Ag Use?
Watch out for ‘laziness risk’ as tech revolution continues (interesting way of framing tech adoption)
Tribal nations want more control over their food supply
The Women at the Cutting Edge of Butchery
Animal welfare, religion not a good mix when producing food
Is CRISPR/Cas9-based multi-trait enhancement of wheat forthcoming?
Israel’s Aleph Farms Partners with Thailand’s First Cultivated Meat Manufacturing Facility
Farmers Don’t Want to Throw Away Food
When Prisoners Perform Farm Work, Who Benefits?
You may not be getting the fish you paid for. Here’s how to spot seafood fraud.
Why Farmers Are Protesting in Europe
Regeneration of strawberries from gene-edited single cells successfully complete
Reflections On 2023 Food and Agriculture Supply Chain Trends
Can generative AI jump-start hardware VC investment?
Have You Heard of Scope 3? It Offers Opportunity for Agriculture
Finance:
PE firms need to double down on adding value
WeedOUT Raises $8.1M Series A To Combat Weed Resistance
New Forests’ TAFF2 makes first investment in Thai peat swamp forest
Seviora Capital sees ‘compelling environment’ for agtech as it partners with Temasek
Phycom Receives €1.75M To Further Strengthen Growth
Pacifico Biolabs emerges from stealth with fermentation process for alternative seafood
Big LPs secure increasingly bespoke terms amid tight fundraising
Annual investment in Ag R&D holds firm at $2.3 billion (Australia)
Interview: Fiera Comex CEO on Australian farmland and thinking long-term
Nature Has Value. Could We Literally Invest in It?
WovenEarth Ventures Announces Close of $152M Climate Tech Fund
Eastwood Forests acquires 92k acre NY forestry asset
Oat Milk Co. Settles Greenwashing Investor Suit For $9.25M
Trace Genomics Raises $10.5M in Series B Funding to Enhance Soil DNA Intelligence
Gresham House launches $380M biodiversity fund
Spacegoods Raises €2.9M for Mushroom-Based Wellness Expansion in Europe
Forestry’s role in the energy transition is all about byproduct
Australian forestry manager finds solution for waste in e-fuels
Theme of the Agtech Week: Structures
The statistics are alarming:
New PitchBook data estimates that of the 667 first-time venture managers that closed their funds between 2019 and 2021, over 247 of them won't be able to raise a second one
In 2023, 75.3% of capital went to established managers (those that have opened at least four funds) — marking the second consecutive year they've attracted more than 70% of total capital committed
"Another side effect could be founders determining that the cost-effective standards of living, wages, and other incentives typical of smaller market do not outweigh the value of being based in flourish tech hubs with enduring capital sources."
These argue that more established fund managers continue to get the bulk of venture capital and that experience is the key to VC success, and it is. But the tough capital markets will extend to more experienced fund managers if we don’t get real about fund structures. It’s clear to me that the 10-year fund model is not a one-sized fits all model for agtech. Why?
Scaling agtech can, and likely, takes much longer than 10-years.
10-year fund structure fits a more software, churn type of business. Very few agtechs, especially those with deep tech, fit this category.
The history behind the 10-year fund structure was for the early days of the semiconductor industry and chip manufacturing.
Let’s propose some solutions to this structure problem. How would new structures for venture investment work?
Funds that are more permanent in nature, namely they don’t have a fixed timeline (10-year) with a pre-determined liquidity event.
A structure that takes a large, or majority, stake in an operating company that generates cash flows. This creates a golden goose that continues to lay eggs, eggs that your investors will get (dividends) throughout the fund.
That operating company serves as a venture studio (platform). A studio where you can test and pilot early stage technologies, evaluate which ones actually work; and use those golden eggs to invest in the most promising ones, making strategic and calculated bets.
This structure solves the key issues that plague agtech venture capital, which are
Lack of returns (and there are agribusinesses that can generate returns)
Truly testing agtech in real time settings and operations
Flexible in timeframe needed for agtech to scale and grow
This is one of many different structures that are worth exploring but I happen to like this one. There are no guarantees that it will work but I am going to take a shot at it. Let’s see how it goes! Feel free to reach out if you are curious to learn more or want to share ideas. This does not constitute financial advice.
Thanks for reading and have a great weekend!
BD
Brandon Day is the Chief Operating Officer of The Yield Lab Institute, the global agtech think-tank, ecosystem builder, non-profit arm of The Yield Lab global network of venture capital funds. The views, opinions and commentary expressed are solely those of Brandon Day.