Deep pocket investors 'ready to play' in ag tech
“When entities like Fidelity and Novo Holdings start paying attention to crop science, animal health and nutrition, that is a sign that the sector is on the cusp of transformation. These investors have the depth of pocket to really drive a transition. They have done it before in human health,” Adam Anders, managing partner of food and agriculture Venture Capitalist (VC) firm Anterra Capital, told this publication.
“We are seeing a growing volume of funding being injected into food and ag tech companies. The ones that are going to succeed have now got backers that go well past Anterra’s entry point – investors who will back them all the way to the point at which they disrupt aspects of our food system,” he added.
Food and ag tech investment trails other sectors
Compared with many other industries, food and ag tech is a latecomer to the VC funding party.
When Anterra launched its first fund in 2013, it was one of just a handful of food and ag tech funds globally, and data available at the time suggested that there was just $300m VC funding across the sector.
“This was next to nothing in a $100bn plus VC community,” said Anders.
Since then, the amount of investment has grown “exponentially”.
Anders said that last year in excess of $15bn was invested in food and ag tech, and of that, about $3-4bn was at the agricultural end of the spectrum.
But according to Anders, the real game-changer of the last couple of years has been the caliber of investors who are now “ready to play” in food and ag tech.
"Historically, food and ag tech funds were small, not really able to support entrepreneurs all the way through their journeys, and the co-investors were food and agricultural corporates – not the experienced investors who have transformed other sectors.
“That capital was essential, but what we are seeing now is the mature investors, the $1bn plus human health biotech funds that have transformed other sectors, turning their attention to food and ag tech; and we are seeing the round sizes getting bigger. So these companies are attracting enough capital to disrupt what is a conservative sector,” said Anders.
The seed has been sown
But he emphasized that this disruption will not happen overnight.
“The first big shot of capital was only planted about two and a half years ago. Those companies are now doing later stage rounds, but big rounds – $100m, $200m – and the next step is that they are fully mature. Then they are ready to start disrupting the status quo,” he said.
Anterra’s role in the transformation of the category is as an early stage investor in biotech and digital innovation across crop science, animal health and animal nutrition.
“We invest in technology companies that are going to improve our food systems for the future. It is a statistical certainty that we will need innovation to feed a growing global population and food needs to be more nutritious, sustainable and affordable,” said Anders.
“From a technology perspective we chose digital and biotech innovation, reflecting how VC backed entrepreneurs in these two technology areas have already disrupted every other major GDP sector. The animal protein sector is basically 20 years late to that, so there is an opportunity to introduce what is now a very mature, technology-focused VC sector to food, feed, plant science and animal nutrition. This is Anterra’s broad ambition,” said Anders.
Anterra targets $230m in second fund
In pursuit of this ambition, at the end of June Anterra announced the first closing of its second food and agriculture technology fund, Anterra F&A Ventures II, at $175m. Anders confirmed that Anterra is still raising investment for that fund, which will be capped at $230m, and anticipates a final closing in the third quarter of 2021.
The latest investors to commit to the fund include Novo Holdings, a global life sciences investor based out of Denmark, and Tattarang, one of Austria’s largest private investment groups. They join long-term investors Eight Roads Ventures, backed by Fidelity, and Rabo Investments, the captive investment arm of Rabobank.
Anterra’s investment portfolio currently includes five animal health businesses, three of which it has incubated. One of these is Animol, whose focus is on training machine learning algorithms to expedite and improve the screening and discovery process of small molecules for veterinary drugs. Another is Invetx, a pioneer in protein-based therapeutics for animal health that has partnered AbCellera, Twist Bioscience and WuXi Biologics to develop monoclonal antibodies (mABs) for veterinary use.
In crop science, Anterra has incubated a company called Enko, which is advancing new modes of action for novel small molecule solutions with the aim of developing sustainable crop protection alternatives to conventional pesticides and herbicides. It has also invested in Vesteron Corporation, whose bioinsecticide SPEAR represents a breakthrough in the use of peptide technology for pest control.
