Rabobank has dedicated an additional €80 million to its strategic investing arm to support expansion of its agtech and fintech-focused investments into new markets like San Francisco, Singapore and Tel Aviv.
Officially launched at the beginning of last year as a €60 million fund focused on high-potential, early-stage fintech and agtech investments, the Rabo Frontier Ventures fund now has committed capital totaling €150 million.
The 10 investments from the vehicle to date have included both independent startups and companies developed through Rabobank’s internal accelerator program. The RFV fund’s investments have included commodities-focused blockchain platform komgo, automated accounting services application provider Tellow and, most recently, Produce Pay, a Los Angeles-headquartered startup providing short-term financing to farmers.
While most investments from the RFV fund have been concentrated in Europe, the vehicle’s managing partner, Harrie Vollaard, told Agri Investor that expanding Rabobank’s networks within key hubs of agriculture and finance innovation like San Francisco, Israel and Singapore will be a focus of the parent’s €80 million infusion into the fund.
Rather than open proprietary offices in those cities or others, Vollaard explained, Rabobank has opted to instead focus on establishing partnerships with investors already active within those markets. It is especially focused, he said, on partnerships with funds already focused on fintech and agtech companies in the seed and Series A stages of their development.
In its investment into Produce Pay, for example, the RFV fund invested alongside Anterra Capital, an ag-tech focused venture capital firm.
“That gives us access to the ecosystem, locally; gives us access to Tier 1 investors, but most important, it gives us access to high-quality dealflow,” Vollaard said.
Generally more developed than the market for agtech, the fintech market is largely focused on innovations first developed in retail banking before being used in commercial banking and then more specialized industry-specific applications. The market for fintech investment has grown quickly in recent years, Vollaard said, estimating its growth from a total of about $10 billion in annual investment a few years ago to about $45 billion last year.
Whereas a few years ago the most relevant investors were generalist funds or software specialists, more recently, Vollard has seen the growth of specialized VC funds specifically focused on fintech.
Corporate-backed venture capital firms have also played a key role in fintech, said Vollaard, who estimated that such investments likely account for about a quarter of overall market activity. Banks and agricultural institutions have followed suit and are increasingly setting up their own corporate venture arms to investigate fintech investments.
Vollaard has been surprised by some of the high valuations fintech companies have fetched, highlighting Softbank’s recent $440 million investment in OakNorth, a British property and business lending startup that was valued at about $2.8 billion.
“It’s definitely a unicorn,” said Vollaard.
Given its connection to Rabobank, Vollaard said, the RFV fund is particularly focused on investments that can benefit from a cross-over between fintech and agtech. To illustrate, he described an application that uses data gleaned from satellite imagery to help guide farmers improve yields and, in turn, their access to credit.
“A lot of farmers feel they are at a disadvantage. They all know that everyone is going after their data, but they are not protected,” he said. “With that data, you can build up a risk profile and provide working capital to buy inputs, creating yield gains that go hand in hand with financial inclusion.”