VCJ Cover Story: Betting on the Farm

When Ron Meeusen and Andy Ziolkowski decided to launch a venture fund focused on the agriculture industry, they knew it would be a lonely path.

Still, the two paired up in 2008 to launch MidPoint Food & Ag Fund (now called Cultivian Ventures), a Carmel, Ind.-based firm that seeks out deals in such areas as animal health, food safety, pest control and biomass-based fuel.

Limited partners weren’t exactly lining up with cash. The fund closed in December 2008, one of the most difficult venture fundraising years on record, with a modest $28 million in capital commitments.

Nevertheless, the two partners proceeded to make about a half dozen investments and got their first hit earlier this year when Monsanto bought portfolio company Divergence, a developer of genomic methods for controlling crop-attacking parasitic nematodes.

Divergence was one of a handful of profitable exits recently in the agriculture space. Others include Athenix, a supplier of seeds and transgenic organisms for the chemical and feed industries, which sold to Bayer CropScience for $400 million; and Gevo, a developer of facilities to convert agricultural waste into fuel, which raised $96 million in a February initial public offering.

The question remains: Is investment momentum growing in the ag space?

As they await agriculture’s blockbuster IPO moment, Meeusen and Ziolkowski say they’re still seeing a shortage of capital directed to the industry, particularly for companies in regions with few active venture firms. That’s why agriculture is one of the rare areas where active VCs might actually welcome more competition, Meeusen says.

“We estimate the North American market could accommodate four or five funds like ours before we start stepping on each other’s toes,” Meeusen tells Venture Capital Journal reporter Joanna Glasner in the current issue of VCJ.

“There aren’t many venture capitalists and never have been who are that interested in agriculture, so if you want to start an ag-based company, it’s tough,” says David McGee, executive director of U.C. Davis InnovationAccess, the university’s tech transfer division.

VCJ Subscribers can read the full story about the VCs laying down bets on the agricultural sector here. The story also contains a list of recent exits and deals in the ag space.

Not a VCJ subscriber? Click here for a free trial.

And if you want to talk more about venture activity in cleantech or some other hot sector of interest, send an email to VCJ Editor-in-Charge Alastair Goldfisher at [email protected].

Find new deal opportunities, super-charge your fundraising efforts and track top managers with VCJ. Get your FREE trial! Or subscribe now!