Agtech-focused venture capital firm Cultivian Sandbox has deployed more than half of the $125 million it collected for its second fund, which closed in February 2015. The firm is likely to launch a Fund III this year.
The firm plans to make three to four more investments from Fund II, bringing it to full deployment this year. They are likely to follow deployment with a third fund, also focused on early-stage agtech companies. A target for a next fund has not yet been decided, executives told Agri Investor, although they did hint at an interest in food-tracing technology.
Cultivian Sandbox was formed from venture capital firms Cultivian Ventures and Sandbox Industries in 2013. The partnership’s two funds have since invested in 20 agtech and biotech companies creating soil, plant and livestock health applications, as well as data, pest control, biofuel and robotic farming products.
Cultivian Sandbox managing directors Ron Meeusen and Andy Ziolski said they have seen a flood of newcomers looking to invest in agtech startups since Cultivian Ventures was first launched in 2008, but the space is not yet overcrowded.
“We’re seeing more funds getting interested in the area,” said Meeusen. “We’re seeing more people out there trying to raise funds. So far it hasn’t translated to competition for term sheets or valuations going up. I imagine at some point it will, but we haven’t seen that yet.”
Meeusen and Ziolkowski said they do see an “overweighting of interest” in software- or data-related opportunities in agriculture. Meanwhile, “less sexy” opportunities in areas like food processing technology have gone overlooked.
An area where Cultivian Sandbox sees significant potential is in technologies that improve traceability in the food supply chain. An increasingly globalised market for agricultural goods, coupled with concerns about food safety and sustainability, mean technology that ensures consumers know exactly where their food products come from will be an important part of the next round of agtech start-ups, Meeusen and Ziolkowski said.
“How do you know your Washington State apples come from Washington State?” asked Ziolkowski. “Right now, the orchards put these little paper tags on them. People can very easily put those tags on apples that are sourced from other parts of the world. And that is in fact being done. So those issues and challenges are opportunities for us, we think, to look more closely at food and where it comes from around the world.”