Generally, a venture capital fund’s primary purpose is to find good investments that lead to solid returns.
Innova Memphis’ latest fund is one such exception to the rule.
Capitalized at $31 million, the new Ag Innovation Fund IV focuses on investments geared toward innovating the business of farming.
“This can range from novel seed technologies, to smart irrigation technologies, to innovations in harvesting, as well as novel food production and nutrition extraction technologies,” said Jan Bouten, Innova Memphis partner.
The Memphis Bioworks Foundation launched Innova in late 2007. Its goal was to support startups with capital. Around that time, Bioworks started investigating entrepreneurship in agriculture, too.
Pete Nelson, Director of AgLaunch, lead the early effort.
Since Innova and Nelson had previously worked together on several projects, they decided to raise a new fund focused on AgTech under the U.S. Department of Agriculture umbrella program, Rural Business Investment Company.
Three years working on the proposal, and two years earning federal approval, the 10-year old venture fund announced the launch of the new Innova Ag Innovation fund on May 15, 2017.
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AgLaunch is an accelerator that chooses up to six startups annually to receive pre-seed investment of $50,000 as well as a strong support program and access to farmers, investors and strategic partners.
Innova’s history of early stage investment, knowledge of the sector, and commitment to rural communities were considerations for USDA approval. The Ag Innovation Fund is the fourth fund for Innova.
“We are very excited to start investing and look forward to meeting with founders and network partners to identify investment opportunities,” said Bouten.
“The fund will make that often critical initial investment to assist promising startups on their path toward commercialization and scalable growth, all while creating opportunities and jobs in rural America," he added.
As an early stage venture capital fund, the Ag Innovation Fund is will provide investments for entrepreneurs and startups bringing innovations to farmers.
To receive funding, an idea can range from conceptual to more fleshed out with early customer deployments checks written in the $50,000 to $1 million range.
The belief is that everybody will benefit from thoughtful innovation in the food supply chain. As the global population continues to grow, current farming methods will not keep pace with future demands.
“We believe that much of the innovation required will take place on and around farms in rural America before being adopted across the globe,” said Bouten.
The belief is that everybody will benefit from thoughtful innovation in the food supply chain. As the global population continues to grow, current farming methods will not keep pace with future demands.
While Fund IV is Tennessee-based, it will draw on local areas of expertise under the Memphis Bioworks umbrella, including AgLaunch. It will have a broad geographic focus by working with various national farm organizations and other partners. Together, these entrepreneur support organizations plan to identify, enable and accelerate companies with high growth potential in the agriculture technology sector.
They plan on investing in AgTech companies coming out of accelerators using AgLaunch’s own program as a model.
AgLaunch is a venture development organization, accelerator and farmer network organization focused on a farm-centric commercialization model for agricultural innovation. Investment comes from Farm Credit institutions across the country, so it will have a national scope.
Investors include Farm Credit Mid-America, AgriBank, AgStar Financial Services, CoBank, Farm Credit Bank of Texas, Farm Credit Mid-America, Farm Credit Services of America, FCS Financial, and Farm Credit of Western Arkansas.
“I believe I can speak for all the investment partners in the fund when I say that we’re looking forward to working with the Innova team as they bring to market new and exciting technologies that directly impact our nation’s farmers,” said Paul Bruce, senior vice president of financial operations of Farm Credit Mid-America.
While the Ag Innovation Fund will be seeking the best opportunities available, Innova’s connections in the Volunteer State and the Mid-South present opportunities regionally.
Enhancing rural economic development has been a key issue for several years. Gov. Bill Haslam’s “Rural Task Force” issued a report about 19 months ago where those needs are highlighted.
“Besides directly benefiting entrepreneurs with innovative business ideas, we believe that being in the heart of the Delta region, there will be processing and shipping opportunities that will benefit existing or new local companies,” said Bouten.