Fulcrum Global Capital has reached a $44 million first close on its second agtech venture fund after drawing commitments from family office investors, including many involved in agricultural production.
Managing partner and chief executive Duane Cantrell told Agri Investor that the vehicle does not have a formal target, but that the firm expects it will ultimately be at least two times larger than Fulcrum’s first fund, which closed on $35 million in 2020.
He said that although there have been exceptions, Fulcrum generally solicited minimum investments of $1 million. Returning investors to the second fund increased commitments by an average of 30 percent, he added.
About 70 percent of the Kansas City, Missouri-headquartered Fulcrum’s LP base is made up of US-based ag producers. The group includes participants in industry segments such as ag banking, ethanol and irrigation providers, as well as beef, poultry, pork and crop producers.
Cantrell said Fulcrum’s investors included the largest provider of beef to Tyson Foods and National Beef, former John Deere and Butterball Turkey executives, and the former chief executive of a railroad that is one of the largest ag carriers in the US.
Cantrell explained that in addition to strategic input to help the firm identify about five investments from a pool of about 400 examined annually, Fulcrum’s LPs assist in directly evaluating cutting-edge ag-related technologies. Some investors, he said, have allowed use of their fields and facilities to test new products from Fulcrum’s portfolio companies and the start-ups it is considering for investment.
Fulcrum’s first fund invested in companies including grain storage software provider TeleSense; St Louis-headquartered CoverCress, which is developing high-protein pennycress as a cover crop; and WeedOUT, an Israeli bioherbicide start-up. Cantrell said that although Fulcrum’s second fund will follow essentially the same upstream agtech-focused strategy as its predecessor, it plans to put more emphasis on areas such as supply chain logistics and tools to support regenerative ag.
Investments designed to help advance scientific developments that improve animal health and the efficiency of food production, he added, will prove vital in meeting global food demand.
The first investment from Fulcrum’s second fund is participation in a $13.2 million Series A for Vytelle, a Kansas City-headquartered “precision livestock” company developing cattle genetics that increase efficiency. Its joint second investment is in an unnamed ag biotech company (set to be announced later this month) and a microbiome genomics company Resilient Biotics, which was among the investments from Fulcrum’s first vehicle.
“A lot of funds chase agtech, and that is terrific, but there are not as many funds chasing biotech,” said Cantrell. “If we don’t get into things like the biome, if we don’t get into genomics and genetics and other areas of opportunity, we are not going to change the amount of [global food] supply that’s coming to us.”
Fulcrum’s co-investors have included Syngenta, The Andersons, Bunge, Maersk, Wheatsheaf and others. Cantrell explained that the firm is seeking opportunities to collaborate with established strategic investors in and around the ag industry, many of which are often unlikely to invest in the early-stage funding rounds that Fulcrum focuses on.
“We begin to think about who those strategics would likely be as we mature the business,” he said. “We look to our bridge round, or B round investors, that oftentimes come as strategic or corporates alongside us as we bring these companies along to an exit.”