Mandalay Venture Partners hits A$21m close on first agtech fund

Mandalay Venture Partners has reached a first close of more than A$21 million ($14.6 million; €13.9 million) on its inaugural agriculture and food technology venture fund.

The fund manager, founded in 2020, is aiming to raise a minimum of A$40 million for Mandalay Fund I, with an upper limit to fundraising of A$50 million.

Australia’s largest mutual organization NRMA has come on board as the fund’s cornerstone investor and other investors include Philip St Baker, co-founder of battery technology company Novonix; and Angus Cameron, chief executive of hedge fund PCS Capital.

The fund will focus on pre-seed to Series A investments in early-stage and growth start-ups covering on-farm efficiencies, supply chain automation, autonomous vehicles, future foods, e-commerce platforms and carbon sequestration, among other areas.

Mandalay is led by four partners: Mark Gustowski, former chief executive of Queensland University of Technology’s Creative Enterprise Australia program; Philippe Ceulen, former head of start-up programs at QUT CEA; Timothy Hui, also a former partner at QUT CEA; and Al Fullerton, fund manager for the Australian Food and Farming Fund.

Gustowski told Agri Investor the QUT CEA program was wound up during the covid-19 pandemic when university funding was badly hit, allowing the three partners who had worked together there to join with Fullerton to launch a new VC fund manager.

“We’re focused on being hands-on investors,” he said. “We’ve got a mandate to invest in farm-to-fork innovation across the whole supply chain.

“We’re looking at companies with valuations of no more than about A$20 million pre-money, which puts them in that early stage where we can really have influence and play a role in supporting their growth.”

The firm will put to work check sizes of between A$150,000 and A$1.5 million, and is able to invest up to 20 percent of its portfolio into foreign-domiciled companies. It aims to make its first investments before the end of June 2022, targeting a final close for the fund in Q2 2023.

“We’re doing a first close now because we’ve got enough dry powder to actually start investing in companies, and we’ve got some wonderful opportunities within our deal room. So we really want to get onto those and not miss the boat, as well as showing the market that this thematic of Australian ag is worthy of investment,” Gustowski said.

He added that the firm has spoken to Australian superannuation funds who “love the thematic” but generally feel the first fund is too small. Most had expressed interest in future funds, which “would be in the hundreds of millions of dollars” in size, he said.

Mandalay’s launch is the latest sign of growth in Australia’s dedicated agtech venture capital sector, following a successful first fundraise from Tenacious Ventures last year.

Gustowski said: “We have tremendous opportunity in Australia from an environmental and sustainability perspective to produce great quantities of food more efficiently. Unfortunately, the challenges that the economy has had [during the pandemic] highlight the importance of further investment in the sector, but it has also shown, from an investor perspective, that it is tremendously lucrative. Australia can take advantage of its clean, sustainable, high-tech brand and take that to the world. Investing families that we’ve spoken to across Europe and Asia have been really interested in that “Brand Australia’.”

On NRMA’s investment in the fund, the mutual’s head of investments Ainsley Lee said in a statement: “We were impressed by the track record of the management team and their approach to getting heavily involved with and supporting the portfolio companies. More broadly, we are highly focused on investing in areas of impact while helping to address sustainability, especially if we can support regional and rural parts of Australia.”