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Finistere Fund II to close in June after Oz fundraising – exclusive

Finistere is targeting Australian high net worth individuals and corporates for its Fund II.

Finistere Ventures, the US agtech venture capital firm, is fundraising for its Finistere Ventures Fund II in Australia before the firm holds a final close.

A source close to the matter said a final close is expected by the end of June. The fund has a target of $150million and a hard-cap of $200 million and targets new technology solutions in agricultural productivity, climate change and food security issues.

Finistere, which is based in San Diego, held a first close for the fund on $37.5 million in February 2015, and a close on a Finistere Ventures II Feeder Fund on $20 million, according to Securities and Exchange Commission (SEC) filings.

Spencer Maughan, a partner at Finistere, told Agri Investor, the firm sees unmet investor interest in agtech in Australia as well as New Zealand.

“We recognise that Australia has a huge history of production in agriculture, which has coincided now with national investment and innovation, as well as a huge interest in investment in land amongst high net worths, family offices, strategics and institutionals.”

He said the firm has already spoken to five groups involving high net worth individuals, plus corporates with alternative asset allocations. Somerset Capital, a boutique corporate advisory and investment firm based in Melbourne, is acting as placement agent for the fundraising.

“In the context of an extremely low yield financial environment globally, there is an increased appetite to search for other asset classes, including alternative assets classes, and that is true in Australia too,” he said, adding that agricultural corporates were also looking to capitalise on agtech as once-closed markets open up further to Australian agriculture.

Bayer CropScience is a founding partner of the fund. Other corporate heavyweights like Monsanto are investing in venture capital agtech not only for returns, but also as part of their research and development strategy.

Talking from Australia, Maughan said institutional appetite was still lagging, both in venture capital and agriculture: “there is still a conservatism around the asset class”.

Finistere is actively looking for investments in Australia, Israel, Canada and the US. It is working with its other Fund II founding investor, the Canadian not-for-profit investment firm AVAC’s agtech arm, Verdex Capital, to target opportunities there.

Maughan said dealflow and investor activity in agtech tend to cluster in the same regions.

“There are a handful of countries that are pretty exceptional around ag innovation. I would probably put the US in there, Australia, New Zealand, the Netherlands, Israel and Canada. Ag is relatively important to their GDP and they have technology. We have investments in Israel and are in talks with a company in the Netherlands.”

He said Australia will also offer good investment opportunities around water: “In Australia, water management is a pretty active area of innovation on the financial side with water trading and in management systems; things like mesh-network-controlled open-channel irrigation, with a lot of sophisticated algorithms for managing water flow.”