Grains VC fund aims to foster Australian agtech ecosystem

Sydney-based Artesian Venture Partners has launched its A$50m GrainInnovate VC fund with backing from the Grains Research and Development Corporation.

A new A$50 million ($35 million; €31 million) venture capital fund backed by the Grains Research and Development Corporation aims to “build an ecosystem” around food-focused agtech in Australia, the fund’s manager, Artesian Venture Partners, has said.

The launch of the GrainInnovate fund was announced by Artesian and GRDC late last month, with the grains body committing A$25 million and the remaining capital coming from Artesian itself and its institutional investors.

The fund promises to invest in start-ups developing new software, hardware or business models that could benefit Australia’s grains industry.

“The fund is globally focused. We will look at start-ups anywhere in the world that will have a benefit to the Australian grains industry,” Artesian managing partner Jeremy Colless told Agri Investor.

“Our core mission is to promote the Australian space, [so] we’re really interested in any Australian start-ups operating in the space. But we also recognise that, because the cost of starting up is so low now, it’s really democratized where innovation is occurring.

“So you don’t just look in the US or Europe anymore for agtech opportunities – we’re [looking at] emerging markets like Brazil and Southeast Asia.”

Artesian will begin to draw down the capital in April and will be ready to make investments then, partnering with accelerators, incubators and research institutions to source opportunities. The fund will invest in start-ups from the seed to growth stages.

The firm is still open to new co-investment partners despite already having the A$50 million fund in place, Colless said.

“We will take extra money and invest alongside all of the investments,” he said. “We’ve already had some interest from some other corporate ag players to either partner with us, to co-invest or invest into the fund. That’s another mission for the fund, to act as something to attract capital into the market.”

These corporates include both local and international firms with a vested interest in developing agtech opportunities with a view to future M&A activities, Colless said, because they might be adjacent to a firm’s core competencies or in an area of technology it is interested in pursuing.

On deal pipeline, Colless emphasised that the fund would also look outside the agtech vertical for opportunities.

“We’re a number of groups who are not necessarily agtech specialists, but who see either agtech start-ups coming through their programmes, or start-ups with technology or ideas that perhaps are adaptable to the agtech space. Often some of the really interesting innovation that’s going on, perhaps in a business model, is occurring in other spaces first,” he said.

A report published by the University of Sydney’s United States Studies Centre in October 2018, found that total venture capital deployment in Australian agtech from Q1 2010 to Q2 2017 was $60 million. It said that Australia was lagging far behind other countries like the US in this regard, but that this represented an opportunity for savvy investors.