Agtech’s growing appeal

Farmland investors should have exposure to venture projects in the agriculture industry, particularly on the technology side, as a means to balance their portfolios, according to Mark Kahn, a founding partner at Mumbai-based venture capital fund Omnivore Partners.

“Land investors should hedge their portfolios with venture capital because in a sense it is the opposite bet to land investment,” he said. “Land is an attractive asset in value terms based on its perpetual scarcity but venture capitalists are by nature optimists, obsessed with technology and will try to shatter that land thesis. We will find ways to feed the world for years to come with the current amount of [viable] farmland.”

Developments in agriculture and food technology are creating a lot of excitement in Silicon Valley and in the wake of some exciting deals, such as Monsanto’s acquisition of Climate Corporation, a weather data technology provider in October, venture capitalists see increasing potential in the sector, according to Rob Leclerc, founder and CEO of AgFunder, an online agriculture project fundraising platform.

Monsanto, the sustainable agriculture product company, estimated that the agriculture data market would represent $20 billion by 2020.

“Agriculture is a space largely untouched by software technology,” added Leclerc who is currently marketing a $400,000 convertible note for OnFarm, a data integration software provider, on the AgFunder platform. OnFarm has raised $230,000 so far.

Omnivore’s first fund, an eight-year fund with a two year extension, closed at Rs2.6bn ($42.7 million; €31 million) in 2009. It is currently 40 percent deployed across eight investments into agriculture and food technology companies. Omnivore officials aim to deploy all the capital within six years. Its investor base includes strategic investors, financial institutions and a variety of very large to small high net worth individuals that are “big believers” in the cause, according to Kahn.

Kahn hopes to announce a new deployment by the fund within the next two months and is considering launching a second fund in late 2015.

Its investments to date include Skymet Weather Services, a weather forecasting and agriculture risks solutions company, Khedut Agro Engineering, an automatic seed drill and innovative planting machinery manufacturer and FrontalRain Technologies, cloud-based supply chain software company.