May 21, 2019

By Michelle Pelletier Marshall, GAI media

San Diego-based acceleration fund Radicle Growth made its maiden investment just two years ago in Full Harvest, a San Francisco-based agtech platform designed to mitigate food waste at the farm level. Since that time, the company has committed funding to 15 investments in nine companies in the food and ag sector, most recently contributing to the $1.5 million Seed round for Augean Robotics of Philadelphia.

Leading the way in accelerating these disruptive early-stage ag and foodtech startups is Kirk Haney, CEO and managing partner at Radicle Growth, a $15 million market leader that lists industry giants Corteva, Finistere Ventures, Bayer Crop Science, and OurCrowd among its backers.

An entrepreneur himself, Haney has raised over $200 million in venture capital, private equity, and corporate capital, and has had three successful exits. He’s served as president and CEO of an agricultural biotechnology company, as well as president of Green Millennium where he raised more than $120 million in venture and private equity to develop, plant, and manage sustainable reforestation programs in Central America.

GAI News sat down with Haney to talk more about his passion for food, health, and sustainability.

1.) Your company’s vision is to transform the speed of innovation in agtech through a number of proven supports – how does this work?

When we talk about transforming the speed of innovation, we look at what has worked for early stage innovation in other industries and apply that to ag and food. We have three strengths in speeding innovation: first, a dedicated pool of capital. This helps attract the best entrepreneurs anywhere in the world. The second piece is our platform to support entrepreneurs, both pre- and post-funding. We have surrounded ourselves with more than 20 venture partners, as well as corporate partners and other entrepreneurs who have deep domain expertise in building startups.

The third is our ecosystem of experts with a network of contacts throughout the ag value chain that help incoming entrepreneurs understand what potential acquirers think and what they expect. Our contacts and relationships across the ag value chain, like Corteva and Bayer – who are not only LPs in our fund, they frequently help with technical diligence opportunities – give us leverage to speed up the process for the startups just coming into the sector.

We put these three things together: a dedicated venture fund, the Radicle Platform, and our ecosystem, to transform the speed of innovation. We believe our novel approach to company-building with the people and partners around the table are what is driving our success.

2.) Radicle Growth was a lead investor in several recent funding rounds, such as in Augean Robotics’ $1.5 million Seed round last month. Can you tell us about your due diligence process for selecting investments to fund?

We rely on our ecosystem to tell us the biggest pain points they have, which in turn drives our investment thesis. We also look at megatrends, but we primarily focus on near-term macro trends in our sector, and we only engage in ag and food tech investments so we are laser focused on these two categories of the food value chain. Organized agriculture is over 10,000 years old and it’s global – there’s no Silicon Valley for ag – so you have to have global reach, which we have made it a point to have.

How do we do our due diligence? We invest locally but we have a global perspective. We have over 150 incubators worldwide that send us deal flow. Forty-five percent of our portfolio is international, and 50 percent of our deal flow is international. We feel that by having our global reach, we find the best entrepreneurs with the best ideas and the best chance for success, and we fund them. We have invested in New Zealand, Brazil, Ireland, Canada and will be announcing more soon.

We have over 1,000 deals coming our way a year with 92 percent of those in the early-stage category – and we made four investments last year, so it’s a 250:1 ratio. We are driving a big deal flow pipeline and are truly picking the best global entrepreneurs and global technologies. We bring in a lot of innovative tools to evaluate and automate the process to vet our entrepreneurs thoroughly, both quantitatively and qualitatively, and get the deals to our analysts quickly for review. And since I have been an entrepreneur, I understand this process, I’ve been in the chair, I’ve been a founder twice, I’ve been a part of two M&A’s, and I’ve made mistakes; this is the experience that has been hugely advantageous for us as we leverage this expertise to help find the right entrepreneurs to support.

We are excited about the speed at which the technology is being adopted and farmers are able to make better risk-adjusted decisions. And we are driving both the financial and strategic returns with our platform. One hundred percent of our portfolio companies have been able to raise follow-on capital – that is unheard of at seed stage. If you are the top seed fund in Silicon Valley, it’s about 71 percent. The reason for that is we are not a passive venture capital investor or an active venture capital investor. We are a company-building platform, and we are able to do things that our peers are not able to do because of how we use technology ourselves.

3.) You have talked of seed-stage investing as the “whitespace” of ag and foodtech investing. Can you please explain this?

We believe that seed-stage is the “whitespace” – the place to invest in food and agtech today. Traditionally a lot of VC funds have stayed away from ag and food tech investments because they say it takes too long [to get a return], and they are right. But I don’t make investments in a rearview mirror, I look forward, and having been through the digital revolution in the enterprise supply chain in the 1990s and 2000’s, I see the same exact thing happening in the food value chain, and that’s what I think people are missing. The speed of which new technologies are being integrated is transforming the ag and food supply chain. And it’s not a single issue: you have millennials demanding transparency (and other demographics as well), and according to the World Economic Forum, you have two billion people in the world who are obese, and two billion who are micronutrient deficient. So, we have both a quantity and quality problem and disseminating information is going to help solve those two challenges.

4.) Radicle is passionate about partnering with great ag entrepreneurs to bring disruptive innovations to market. What are some of the new technologies on the horizon that Radicle sees as most promising?

There was approximately $34 billion invested in fintech last year, $23 billion in health tech, and $2.2 billion in agtech, so there’s a lot of room for growth. We want to bring more capital to the sector, so if we can share with the world the areas that we think are ripe for opportunity that brings more capital to the sector, then everyone benefits – entrepreneurs, growers, acquirers, customers, and our co-investors. We are not guarded with this information as other investors are. We publicize the top four to eight deals we are looking at on a regular basis and we have not lost a single deal [by doing this], but we have developed great co-investor relationships with this model.

We look at three primary areas to drive our investment thesis. Number one is we look to technologies that will connect the ag and food value chain. This includes hardware, software, camera vision, and even novel farming systems. The next big bucket we look at is what are technologies that have been successful in other industries that have yet to be applied to the ag sector, and why is that the case and what is the opportunity?

The final category we look at are technologies that didn’t exist just a few years ago that are now available commercially and can be applied to the ag market. When you think about the cost of AI tools or imaging systems just five years ago – this was very hard to do and required a lot of intellectual capital to get those things off the ground. Today, Amazon, Microsoft, and Google give their camera-vision algorithm away for free.

5.) As an accelerator of innovation in ag and foodtech, what do you think of the prediction that we need to double food production by 2050 to feed the world? Can we do this?

I am very confident that because of the application of technology and innovative nature of entrepreneurs worldwide, we will have no issues with food production. We’ve seen what the United States has been able to do with disruptive innovations and disrupting big industries – this is going to continue and expand to emerging markets. Think 5G… compare the connectivity in Salinas, California, for example, with the connectivity in Sub-Saharan Africa, which has about 20 percent the ag productivity of the developed world, and how getting this geography connected can affect food production. Just getting the emerging world to parity with today’s technological ag innovations, you could really increase food production. This means wireless, satellite, fintech, insurance products, all these technologies will reduce risk and increase output. Through global innovation and the proliferation of technology, I believe we are going to meet whatever our food needs are – from a calorie production standpoint and a nutritional production standpoint.

-Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and a regular contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.