January 25, 2018

Open Prairies’s Open Prairie Rural Opportunities Fund has secured its license from the U.S. Department of Agriculture (USDA) to operate as a Rural Business Investment Company (RBIC).

Founded in 1997 and headquartered in Effingham, Illinois, and with offices in Champaign, Illinois, Kalamazoo, Michigan, and Olathe, Kansas, Open Prairie is a private equity management firm that has aimed to increase the availability of capital for the U.S. Midwest. Under its management, this newest RBIC will invest in small agricultural enterprises engaged in agricultural production, crop protection, processing, precision agriculture, and information and data management.

Upon the fund’s launch in 2016, Open Prairie partner and vice president Jason Wrone said in a USDA press release “We live, breathe and believe strongly in rural America and are pleased to be working with USDA, the Farm Credit System, and other entities that share our passion for building successful companies that have a meaningful impact on their respective business sectors and the communities in which they do business.”

Concurrently, the fund has also announced a successful first close on $55 million in commitments led by institutions within the Farm Credit System, family offices, commercial and community banks, farm organizations, and individual agricultural investors. Of this total, CoBank has committed $7.5 million. 

“Compeer Financial, along with our Farm Credit Associations and partners, is committed to growth of agribusinesses, jobs and new innovations in agriculture and rural America,” said John Monson, chief mission and marketing officer, Compeer Financial. “We’re excited to partner with Open Prairie, 11 banking institutions and other investor partners to provide leadership, expertise and expand rural networks through the USDA’s Rural Business Investment Program.”

The launch of the fund was originally announced in May 2016 by then U.S. Secretary of Agriculture Tom Vilsack. At the time Vilsack said, “What excites me about this particular fund is (that) one of its focuses is on precision agriculture and data management. As we become more sophisticated in agriculture, we need to become more precise, and we need information and data to be collected and analyzed properly.”

Structured as a balanced private equity fund offering debt and equity capital of between $2 million and $10 million to growth and later-sarge companies within the food and agribusiness value chain, the Open Prairie Rural Opportunities Fund was established as a vehicle geared to capitalize upon projected world population growth to 9 billion; a 70 percent increase in caloric demand; and crop demand growth of more than 100 percent by 2050.

“Open Prairie has worked closely with its lead investors to establish the Open Prairie Rural Opportunities Fund as an investment vehicle uniquely positioned to capitalize on the challenges facing today’s agriculture environment,” said Jim Shultz, founder and managing partner, Open Prairie.

The first RBIC announced April 2014 as part of the Obama Administration’s ‘Made in Rural America’ exports and investment initiative was the $154 million Advantage Capital Agribusiness Fund. Other funds created under the USDA’s Rural Business Investment Program (RBIP) include the  $25 million Innova Ag Innovation and the $100 million Meritus Kirchner Ventures funds launched  in 2015; and the $100 million McLarty Capital Partners (MCP) Rural Investment Fund launched in 2016.

In April 2015, upon the launch of the Meritus Kirchner RBIC II and the $25 million Innova Ag Innovation Fund, prior Secretary Vilsack said in an interview with the New York Times that there existed “‘tremendous demand” for ag-related investments from entrepreneurs, venture capitalists, endowments, and pension funds, adding, “There is a growing awareness of opportunity there and a lot of demand from the pension side.” The strength in this observation continues to be reflected in the ongoing licensing and backing of RBICs.

-Lynda Kiernan