New AgTech Venture Capital Fund Forms, Signals Emerging Trend

A new $50 million venture capital fund focused on agriculture technology startups is currently being formed in Davis, California.

Although still fundraising, the main Limited Partner interest in the fund has come from food industry corporate strategics, said John Selep, the fund’s managing partner.

The AgTech Innovation Fund will invest in early-stage food- and agricultural-technology companies in North America and look for innovations from “farm to fork.” Specifically, it will look for solutions to improve farm productivity, increase agricultural sustainability, modernize supply and distribution chains, and create innovative new high-value products. Selep sees some of the biggest investment opportunities in startups focusing on biopesticides, organic fertilizers, and the recycling of agricultural byproducts.

It plans to make investments between $250,000 and $500,000 in initial seed rounds of agricultural technology startups, with the possibility of investing in follow on funding rounds, said Selep.

Selep, who was a senior operations executive at Hewlett Packard and is the Selections Committee Chairman of the Sacramento Angels, is joined in managing the fund by Julie Morris, who was the CFO and founding investor of Marrone Bio Innovations, a Davis-based biotech firm that focuses on natural pesticides and herbicides, which went IPO last August.

While at Sacramento Angels, Selep made investments in Glue Networks, VinPerfect, StoptheHacker, and EcoTensil.

Davis, Calif. is home to several agriculture biotechnology startups, including BioConsortia, which raised $15 million Series B round on April 7 from Khosla Ventures and Otter Capital. BioConsortia uses a proprietary method for the selection of beneficial microbial consortia for crop improvement, including enhanced fertilizers.

And the University of California, Davis, a top ranked agriculture college, provides seed capital for ag startups as part of its Sustainable AgTech Innovation Center. It also helps local AgTech and food-related startups raise venture capital during its pitch contest, called AgStart, which its hosts with the Sacramento Regional Technology Alliance (SARTA.)

Other New AgTech and Food-Focused Funds

Chicago-based Cultivian Ventures, a venture fund focused on food and AgTech, has raised $70 million on its way to a total $150 million target fundraising for its Cultivian Sandbox Food and Agriculture Fund II fund, which launched last August. According to the fund managers, it will focus on “technologies that are enhancing yield from a crop perspective and improving the health of animals,” and the fund will likely take a close look at technology related to food safety, food security, and aqua-culture.

Cultivian’s most recent investment was in Sample 6, which raised $11 million Series B funding in October 2013. It creates synthetic-biology based bacteria diagnostic system capable of enrichment-free detection that detects harmful and unwanted bacteria in food production and healthcare.

San Diego-based life sciences venture capital firm, Finistere Ventures, is currently raising a new fund, the Finistere II Fund, to invest in agricultural technology startups that focus on food, energy and sustainability.

Greensoil Investments, a Canadian venture fund dedicated to investing in Israeli food and agriculture startups, launched its second fund in February 2013. The fund invested in Phenome Networks in December 2013, a company that sells the world’s leading cloud-based system for plant breeding management and analytics.

And new agriculture-focused crowdfunding website AgFunder, which launched in September 2013, put up its first campaign in April that raised $800,000 for Fresno, Calif.-based OnFarm, a provider of data and analytics for farmers.

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