March 16, 2017

Australian agtech startup accelerator and co-working innovator, SproutX, announced a first close on its SproutX Venture Capital Fund at A$10 million. The backing for the fund, which is managed by Artesian Venture Partners, is being committed by Artesian and from the superannuation fund Hostplus.

This funding will back SproutX’s 2017 accelerator program, which is on pace to launch later this year following SproutX’s pre-accelerator program conducted in 2016 through which 110 startups were able to advance their technologies.

The new 2017 program, which is planned to launch later this year, will accept 10 startups – each of which will receive $40,000 in capital in exchange for an 8 percent equity stake, office space for six months at SproutX’s new hub in Melbourne, mentoring from industry leaders, and access to a national distribution network through Ruralco and Findex – corporate partners of SproutX.

Following the completion of the accelerator program, SproutX told ZD Net that it now has the funds through its agtech fund to commit to follow-on investments in those startups that demonstrate market potential, and that go on to attract additional backing from third-party investors. It is this ability to facilitate distribution that SproutX Accelerator Director Andrew Lai said sets it apart from other programs.

“Nowhere in the world would you find an accelerator program that has teamed up with big institutions like Ruralco and Findex who can give agtech startups immediate access to customers,” Lai told Business News Australia. “Four of our pre-accelerator startup participants are already undergoing in-store trials with Ruralco, Australia’s largest provider of agricultural products.”

Capital and Demand

In February of this year Artesian announced that it had received an investment of $85 million from superannuation fund, Hostplus, bringing the funds under management for Artesian’s venture capital platform to more than $150 million.

From this $85 million, a portion of funds have been allocated for deployment into the SproutX agtech fund.

Spun out of ANZ Banking Group’s capital markets business in 2004, Artesian Venture Capital partners with accelerators, incubators, angel groups, and university programs to spotlight early-stage startups with the potential to need investments at a later stage.

“Artesian has seen strong interest from domestic and international high net worth institutional and corporate investors in accessing a pipeline of the best Australian agtech startups,” Tim Heasley, COO of Artesian, told ZD Net.

This swell in interest in agtech follows the release of Powering Growth: Realizing the Potential of AgTech for Australia, a report commissioned by StartupAUS, KPMG, Commonwealth Bank, and the Queensland government that determines that agtech is a critical factor in Australia’s agricultural sector reaching its goal of becoming a $100 billion industry by 2030. However, the report goes on to state that there is a dire lack of investment, national strategy, and domestic opportunity.

“Accelerator programs such as SproutX can provide more specialised [sic] support for agtech start-ups, which can have a different and often longer product development cycle compared to straight tech start-ups,” Sarah Last, co-founder of agtech startup MimicTec, told AFR

Indeed, the launch of the 2017 accelerator program by SproutX and the employment of its agtech fund can be steps toward fulfilling StartupAUS’ recommendations that the country strive to attract more investors into agtech and increase opportunity for technology development.

Tim Heasley, chief operating officer of Artesian, expressed to Business News Australia what attributes the country can capitalize upon in order to realize its potential and spark greater investment, saying, “Australia has a competitive advantage in agriculture, including brand recognition, world-leading research, diverse climatic regions, and a history of agricultural innovation.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.