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10 private investment groups in agritech

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The world’s land and water resources are being exploited at “unprecedented rates” according to a newly-published IPCC report for the United Nations, which warns mankind’s ability to feed itself is at risk.

Half a billion people now live in places turning into desert and soil is being degraded far faster than it is being enriched. Climate change will make the problem even worse, as floods, droughts and storms endanger crops.

This is challenging news for those families, which cultivate 90% of the world’s farmland, according to a United Nations report. 

Some farming families are wealthy and successful. Others are poor relations, incapable of farming successfully.  Although they manage 90% of farmland, families only produce 80% of the world’s food, the UN adds. In emerging markets, farming often takes place at subsistence levels, where farmers rising with the sun can only grow enough food to feed their families.

According to the IPCC report, farmers now need to overhaul their approach to minimise carbon dioxide emissions and prevent soil degradation. They need to farm more efficiently, plant forests, change their crop mix and reduce cattle rearing.  

Fiercer state targets are on the way. In its latest five-year plan, China has set out goals for forestation, water savings and limits on fertiliser use. 

Family farmers studying the IPCC report would be forgiven for feeling a sense of exhaustion. Paying for a green revolution and putting it into action would require an unprecedented expenditure of time and money. Not least because farming is a low-margin business, squeezed by the weather, equipment suppliers and crop buyers determined to keep prices as low as possible. 

In this new world for farming, institutions, corporates, family offices and private equity will surely play a bigger role in cultivation, supported by modern technology and smart financial packages, including green bonds and micro-finance. For better, or worse, state development agencies may end up getting involved. 

Sustainable agriculture funds have been put together by ADM, the venture capital arm of Archer Daniels Midland food services and Triodos Bank, an ethical finance group from the Netherlands. Family office businesses, such as the Rockefeller Foundation and Grosvenor Estate are well-positioned to play a big role.

Social impact groups are being attracted to farming on a more micro level, because they are prepared to accept a lower financial return for the good of society.

According to a recent Global Impact Investing Network survey, 63% of impact investors want to raise investment in farming. Impact specialists like Arabella Advisors, RSF Social Finance and SLM Partners have participated in deals, sometimes tapping finance from family offices and expertise from farming families. 

Family offices are already being attracted to companies, such as Beyond Meat, Sustainable Bioproducts and Impossible Foods which have a decent chance of generating high margins by using plant material for substitute meat products. 

Family Capital has compiled a list of ten family offices/foundations and wealthy investors working on different ways to make agriculture fit for the challenges of the 21st Century.

 

CPT Capital

Private equity entrepreneur Jeremy Coller’s investment office London-based CPT Capital is a big investor in food and agriculture tech groups. CPT Capital backed the hugely successful Beyond Meat before it went public earlier this year. It has also invested in other breakthrough biomimicry companies like Impossible Food, Memphis Meats and Good Catch.

Coller also started a foundation in 2002 to back educational causes and campaign against factory farming. The Jeremy Coller Foundation believes it is inhumane to animals and damages human health by profligate use of scarce antibiotics. It reduces the quality of food production and causes environmental damage. It is campaigning against the practice, on every level, saying the risks which factory farming poses to health and welfare make it an inappropriate source of investment return. 

 

The Gates Foundation

The Bill and Melinda Gates Foundation is investing in ways to boost agriculture in emerging market countries, particularly in Asia and Africa. It wants to boost resources for smallholders, improve the strain of seeds, facilitate crop productivity, improve diets and put technology to work. It wants “to ensure food security through clean, safe and sustainable agriculture.”

It has teamed up with the Chinese Academy of Agricultural Sciences to deliver farming efficiency and high-yielding rice strains across emerging markets. Elsewhere, Bill Gates has invested breeding crops which remove carbon dioxide from the atmosphere through efficient photo-synthesis. And, of course, Gates was an earlier investor in Beyond Meat. 

 

Grantham Institute – Climate Change and Environment 

The institute, supported by Imperial College, London, is not directly involved in farming, but its research plays a leading role in bolstering concern over climate change and environmental degradation.  According to founder Jeremy Grantham, co-founder of US asset manager GMO,  “Agriculture is the real underlying problem produced by climate change,” noting that 1% of topsoil is disappearing every year and good harvests are reducing in number. 

Many low-lying rice fields are set to disappear under the waves. Grantham argues we are now paying the price for benefiting from cheap energy from a “carbon bubble” over the last 250 years. Jeremy Grantham, and his wife Hannelore, have pledged 98% of his wealth, at least $1 billion, to fight back, and sustainable agriculture will surely figure in the mix. Grantham says: “I don’t view it as philanthropy, but a necessary defence action for my children.”

 

The Grosvenor Estate

Led by the UK’s Duke of Westminster, the Grosvenor family tree, can be traced back 1,000 years when its founder was huntsman to William the Conqueror. Enriched through marriage, the family developed London’s Mayfair and continues to run broad tracts of farmland and commercial property. The Grosvenor Estate’s experience in farming puts it in a strong position to offer a sustainable approach. 

Its Wheatsheaf subsidiary sets out to make agriculture efficient and adaptable while reducing reliance on antibiotics, chemicals and fossil fuels. It is has made several niche acquisitions. The appointment of Katrin Burt (ex-Syngenta Ventures) and Stephan Dolezalek (ex-VantagePoint Capital Partners) as executive directors, suggesting more deals are on the way. Dolezalek is chairman of AeroFarms, a pioneer of indoor vertical farming on shelves, backed by Wheatsheaf in 2015.

 

Kilara Capital

Australia is a developed world country which is badly exposed to the stresses of climate change. Two Australian family offices have joined forces to invest in agricultural solutions, with a focus on soil, water and energy technologies which can deliver environmental and economic returns.

One of the family offices is 5 Pillars Capital, owned and operated by members of the Liberman and Smorgon families, two of Australia’s wealthiest. The other is Colindale owned by the Cosh family, which inherited money from agribusinesses and invests in green impact projects.  Kilara’s projects include Pacific Bio, which purifies wastewater with algae to create nutrition plants and animals, and 8F which produces pure water for salmon farming.

 

Kimbal Musk

While Elon Musk has been developing Tesla cars, batteries, solar power and space transport, his brother Kimbal has been quietly developing expertise in food production and farming. He lobbies hard for a responsible approach to food production, local sourcing, arguing that food is robbed of its goodness when it is transported thousands of miles to get to his destination.

He owns the Kitchen Restaurant Group, a chain of community restaurant concepts in the US, whose products are directly sourced from local farmers. He has also developed a tech-enabled urban farming community called Square Roots, currently growing herbs on racks in artificially-lit containers in Brooklyn for local purchase. 

 

Omidyar Network

Omidyar Network, the impact investment group owned by Pierre and Pam Omidyar, is committed to backing entrepreneurs committed to achieving social good.  Agriculture is in the mix, and Omidyar has backed Pula Advisors which uses technology, including satellites, to conduct risk analysis for crop insurers operating in emerging markets, to provide a better service for farmers. 

Omidyar has campaigned for a fairer system of land ownership in India, and the application of technology across social classes, including farming. Its ethos is to back improvement to society at the broadest possible level, which targets specific opportunities.

 

The Rockefeller Foundation

Over the decades, the foundation has been active in supporting nourishing, and sustainable, food systems for the world. Rockefeller backed Norman Borlaug’s development of prolific strains of grain, which saved a billion people from starvation in the 1960s. The work continues and the foundation strongly supports the UN’s stance on agriculture and livestock rearing. 

It has put together the YieldWise Food Loss and Yieldwise Food Waste, campaigns which are out to halve levels of waste.  The Alliance for Green Revolution, launched in 2006, is focused on doubling yield and income for African farmers.

According to its corporate statement: “We have to fundamentally rethink the way the world provides protein to a growing and ever wealthier global population.”

 

Tao Capital Partners

This family investment group, co-founded by Nicholas Pritzker, is clear that sustainable food and agriculture make up one of the eight sectors it wants to back. Joby Pritzker has been managing director of investments since 2014.

It has made 14 investments in the sector which include Apeel Sciences, which applies an organic coating to preserve food in transit; GreenLight Bio, which improved crop strains; Midwestern BioAg, which revives soil through carbon-based technology; Benson Hill BioSystems, which improves and strengthens crops through breeding and gene editing, and Digg Inn, whose restaurants serve local food.

 

Tedder Office

Tedder of Hong Kong was co-founded by Constant Tedder, former chief executive of computer games company, Jagex. It backs not-for-profit organisation Earth.Org which sets out to raise awareness of the loss of biodiversity and deteriorating ecosystems across the world. It owns the Petrarolo Estate, Puglia, Italy where farmers produce organic olive oil, lavender and honey. Tedder backs a FlyFarm venture in Hong Kong developing a process to replace fishmeal made out of wild anchovies and salmon with insects. Tedder is also involved in renewable energy, co-working and waste disposal. Its Honey Capital venture capital arm seeks partners which share its eclectic vision. 

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