Agriculture-focused venture capital investor Omnivore Partners has returned to market for its third fund, seeking to raise $130 million.
Launched in March, the Omnivore Agritech & Climate Sustainability Fund will follow largely the same strategy as the firm’s previous two funds, focusing exclusively on early-stage agri-food investments, typically in the Seed, Pre-Series A and Series A rounds.
The firm invests across six agtech themes: farmer platforms and fintech; precision agriculture; agrifood life sciences; farm-to-consumer brands; post-harvest technologies; and B2B agri marketplaces.
Omnivore co-founder and managing partner Mark Kahn said the firm is targeting a $65 million first close by around October this year, with a final close to follow around 12 months after that.
The firm’s second fund, which closed in 2019 on $92 million, is now around 80 percent deployed, he added.
Kahn said that India’s decentralized agriculture sector was presenting opportunities for digital-led agtech investments.
“Indian ag has 130 million smallholder farmers, yet that incredible desegregation aggregates some of the largest crop and livestock production numbers in the world. India is the largest producer of milk, pulses, spices and cotton, and the second-largest producer of sugar, fruit and vegetables,” he said.
“It’s an interesting system, and alongside that there are millions of retailers, traders and middlemen, so people are making investments that are building a digital layer over that hyper-fragmented, decentralized agricultural economy. Whether you call those farmer platforms, embedded fintech plays, or digital marketplaces – that’s a lot of what is going on.
An Omnivore investor presentation shared with Agri Investor identifies multiple structural challenges with Indian agriculture: low farmer incomes; a water crisis with less than 50 percent of the country’s cropped area irrigated; weak productivity, with yields 35 percent to 60 percent lower than global benchmarks; fragmented supply chains; poor infrastructure, with farm mechanization levels below 50 percent; and a lack of institutional credit that leaves many relying on informal moneylenders, whose borrowing rates can exceed 35 percent per year.
“That’s why I think Indian agtech is more interesting than agtech in most other places. We are meaningfully building something that doesn’t exist, and the upside potential for Indian farmers is much higher than in other geographies where maybe you’ll improve things by 10 percent or 20 percent if you’re lucky,” Khan said.
Omnivore was launched as a corporate VC fund in 2011 by Godrej Agrovet, a leading Indian diversified agribusiness, becoming fully independent in 2016 prior to the launch of its second fund.