New Sumitomo unit to hunt ag VC investments

Sumitomo's Corporate Venture and Innovation Office will also explore investments in healthcare, environment, and information and communication technology.

Precision farming, traceability and breeding technology are the likely focus of future ag-related investments from a new office established by Sumitomo Chemical America, says its president and chief executive.

Cambridge, Massachusetts-based Corporate Venturing and Innovation launched in April and made its first investment through a commitment of an undisclosed size into Cultivian Sandbox Ventures’ Fund III, which closed on $130 million the same month.

Speaking with Agri Investor, Sumitomo Chemical America president and chief executive Scott Mitchell said that in addition to food and ag, Sumitomo’s three-year plan calls for CVI to also explore investments in the healthcare, energy and environmental technology, and information and communication sectors.

“We’re hoping to really focus on things that the business sectors themselves may miss or that we can build a future business on or that are overlapping businesses,” he said.

Mitchell declined to disclose the size of potential future commitments, but said they would vary and continue to be executed in three-year increments. Yosuke Nakashima, a CVI manager, added that the unit’s budget is drawn from the $1.5 billion the broader Sumitomo Chemical spends on research and development annually.

“We will probably hit our manpower constraint before we meet our fund constraint,” added Mitchell. “If we see the right thing, we will jump in with both feet.”

‘Still some room to go’

Creation of the CVI unit is part of Sumitomo’s effort to become more active outside its home market of Japan. By locating the unit near Boston, Mitchell said, CVI will be well-positioned to keep informed on developments in agtech, as well as other relevant sectors, like healthcare.

The broader Sumitomo Chemical Company contains units specializing in everything from seed treatments to post-harvest products, both traditional and organic. “Most people don’t know, but you know that waxy coating that you have on an apple? A lot of times, that is our material” said Mitchell.

While Sumitomo’s health and crop sciences unit already focuses on potential acquisitions in areas of the market where it is most active, CVI’s investments are designed to be more forward-looking, Mitchell said.

“We think that there is still some room to go on how we enhance through breeding – both traditional and non-traditional – traits to feed the world,” he said.

Any future investment in food traceability or ID preservation will function as an add-on to Sumitomo’s existing post-harvest businesses. “Being able to track the identity of that fruit from start to finish – and also prevent future loss as it goes through the channel – we think is a pretty key area,” Mitchell said. “Anything that would make agriculture sustainable – and profitable – is something that we are interested in.”