Technologies to monetise or prevent waste could present opportunities for investors banking on agtech to meet rising global demand for food.
Investors at the World Agri Tech Summit in San Francisco told Agri Investor that amid the excitement surrounding biotech and precision agriculture, food waste represents an under-appreciated opportunity .
“A third of all food that is produced is wasted, whether it’s in the farm field or in a white tablecloth restaurant,” said Andy Ziolkowski, managing director of Cultivian Sandbox Ventures. “If you can take that and convert it into something [productive] it’s an opportunity.”
“It’s only waste because nobody’s figured out a good use for it yet,” added Cultivian Sandbox managing director Rob Meeusen.
Anterra Capital managing partner Adam Anders said his firm is looking at technology that prevents waste from occurring in the first place. Anterra has investments in two companies, Bluwrap and Food Freshness Technology, that specialise in extending the shelf life of food products.
“I think decreasing waste, not by recycling it after it’s been grown, packaged, transported and then converted back to energy relatively inefficiently, is very interesting,” said Anders. “[We’re interested] in addressing it more at the source: extending the shelf life, optimising the way fresh produce is handled and sold. I think that’s a very exciting area.”
For non-profit investment group Sustainable America, investing in waste reduction drives positive environmental impacts and generates financial returns for investors. Sustainable America’s director of investment David Brentlinger told Agri Investor waste can be monetised by finding new markets for items formerly considered unsaleable, like selling otherwise wholesome produce with odd shapes or colouration at a discounted price. Another way to boost revenues is to shorten or improve supply chains.
“In transportation of food, you have loss or spoilage that occurs,” said Brentlinger. “[You can monetise supply chain efficiencies] because you wind up with more product at the end.”
For most investors, positive environmental impacts remain a secondary benefit, rather than a driver of strategy. But consumers are becoming increasingly concerned with sustainability when choosing which products they buy.
“You couldn’t imagine a new grocery store chain opening up and saying we have really cheap food but it’s bad for you and bad for the environment,” said Andy Wheeler, general partner at Google Ventures. “All those companies that had that strategy in the 2oth century are suffering.”
Anterra Capital was founded in 2013 as a spin out of Dutch food and agri bank Rabobank’s food and agriculture venture capital arm. The firm launched its food and agriculture technology fund that year, which reached a final close on $125 million in March. The fund is backed by Rabobank and Eight Roads, the property investment arm of Fidelity International Limited.
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.