The US growth capital firm, which aims for net IRRs of about 30%, had led Blue River’s $17.5m Series B funding round in 2015.
Pontifax AgTech today announced the sale of Blue River Technology to John Deere in a deal valued at $305 million.
The California-based firm had initially invested in the company when leading its $17.5 million Series B funding round in December 2015, with co-investors including Monsanto Growth Ventures, Syngenta Ventures, Khosla Ventures, Innovation Endeavors and Data Collective.
Blue River makes robotic systems that use computer vision and artificial intelligence to determine and spray optimal inputs, such as fertilizers, to individual plants. Its devices allow for a reduction of up to 90 percent in chemical use, according to Pontifax.
When the firm originally backed Blue River, the company supplied its services to about 10 percent of all lettuce being produced in the US. “They were proven in a small market – lettuce – and they did a great job at showing the value proposition to growers,” Ben Belldegrun, managing partner of Pontifax, told Agri Investor.
After the firm’s investment, Blue River rolled out the technology to other vegetables and then started to focus on row crops, before making a first move into the cotton market. “When you move into row crops, this is when you get the attention of big strategic acquirers,” Belldegrun said.
Pontifax declined to disclose the returns achieved on the sale of Blue River. It is understood that the firm has a net IRR target of about 30 percent, as previously reported by Agri Investor.
Blue River was a portfolio company of the Pontifax Global Food and Agriculture Technology Fund, which the firm is currently raising. The vehicle reached a second close in January, collecting $50 million to $60 million out of a $150 million target.
Belldegrun explained that Blue River Technology had appeared on John Deere’s radar because the improvements in productivity it enables generate cost reductions for farmers, allowing the ag equipment supplier to free up more of their cash for investing in tractors.
“These additional functionalities are very attractive for agricultural equipment makers,” he noted. “Our thesis was always [to find] the type of innovations that are going to be a real necessity for strategics like John Deere to acquire as they start thinking about the next generation of agriculture.”