Anterra Capital was founded in 2013 from the spin-out of Dutch food and agri bank, Rabobank’s food and agriculture venture capital arm. The firm’s Rabobank and Eight Roads-backed food and agriculture technology fund reached a final close on $125 million this March. Anterra’s managing partner, Adam Anders, spoke to Agri Investor about the firm’s investment strategy at the World Agri Tech Summit in San Francisco shortly after the close was announced.
What is your investment focus with the food and agriculture technology fund?
[We’re investing] anywhere across the value chain. We’ve invested in a couple of biological ag input companies. We’ve done deals further in big data, for example in a high throughput digital phenotyping company called LemnaTec. Further along the value chain was Farmobile, which is focused on big data and decision making on the farm. We’ve extended shelf life through Bluwrap and It’s Fresh.
Are you looking specifically at any geographic region in particular?
We predominantly invest in Europe. Our [main] office is in Amsterdam. But we’re now also doing deals in North America with the recent opening of our Boston office. We’ll also work closely with the Fidelity technology and life science funds that have offices in Boston, Shanghai, Beijing, Hong Kong, Tokyo, Delhi and London. But I don’t think we’d immediately step out and lead an investment in those other regions. Investing with strong partners is a model that appeals to us and hopefully will appeal to our future portfolio companies.
Is there a reason the fund tends to focus on minority rather than controlling stakes in its portfolio companies?
When talking about innovative agtech companies there’s a lot of heavy lifting. There’s a period of not being at break-even and there’s a lot of skill-sets required at the table, both in terms of understanding and helping that technology find its feet and successfully mature; but also in terms of addressing a global marketplace. A lot of agtech startups step into a global marketplace almost immediately. There’s also going to be new skill-sets required that come from outside agriculture to create winners.
How has the investment environment in agtech changed since you first began?
The agtech world has changed a lot since we kicked off within Rabobank, when we first pitched the idea in the beginning of 2009. Back then agtech venture capital investment was $300 million to $400 million per annum globally. So we were pitching a theory: there’s a big problem to be solved in terms of supply and demand dynamics and pressures on the supply chain, be it climate change, resistance to traditional ag-chem products or environmentally damaging nature of some practices introduced during another green revolution.
We were pitching an investment proposal that transformative change was due and that entrepreneurs would play a role. And now, we’re looking back at three years in a row of $800 million, $2.4 billion and now $4.6 billion invested in agtech.
What sort of lessons did you learn during that early stage of investing in agtech?
I think from our first round of investments we found that just interviewing large food and agriculture corporates about a transformative technology was very different from getting them to actually adopt it.
We’ve tried to move from theory into practice and really work with potential customers on solving a problem rather than a hypothetical “yes” or “no”. I think that was important. And we have learned that there’s certain pressure points in the value chain where people are more open to change.
Has the downward trend in commodities prices changed your investment approach?
When we launched in 2013, we were still in the heydays. You can see that certain value propositions are more challenged in the current environment. But part of investing in agtech is backing technologies that save costs so that even in a down cycle they work.
There’s still a fundamental macroeconomic challenge to solve. There are also significant changes in consumer taste. So I think that companies with a strong value proposition that help transform the food and agriculture business are going to create value in an up or a down cycle. Our challenge is to find those winning propositions.