November 16, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Bits x Bites, China’s first agrifood tech-focused VC fund, has announced the final close of its second fund, oversubscribed at $100 million. 

China has rapidly undergone a significant shift from being largely rural and agrarian to a more urban and market-engaged society. This overarching evolution has brought food production away from fragmented smallholders into the reality of commercially-scaled industrial agricultural production.

And although this has resulted in a rising of the standard of living in the country, it has also given birth to a system fraught with challenges to be addressed including food safety, environmental contamination, and standards of animal husbandry.

Managed by  general partners Matilda Ho and Joseph Zhou, Shanghai-based Bits x Bites works to answer these particular challenges by focusing on the underserved subsegments of the Chinese food supply chain, backing early stage Chinese and international innovators advancing bioscience, data science, and processing technologies across precision agriculture, crop and animal health, alternative proteins, and nutrition.

Backing Bits x Bites in its mission are some of the world’s most prestigious LPs representing global industrial footprints across both biosciences and food, including Syngenta Group Ventures, animal nutrition company Adisseo, Esco Lifesciences, Cavallo Ventures, the venture capital unit of Wilbur-Ellis, along with global investment company Temasek, and government-backed investment arms such as DisruptAD, the venture platform of Abu Dhabi-based ADQ, and other leading financial institutions and family offices.

It was one year ago, in November 2020, that Bits x Bites announced the first close of this fund at $30 million. At the time, a target was in place to raise $70 million for investing in transformative technologies with the potential to create a more sustainable and resilient food supply chain. 

At the time, the new fund made its first investment in Mojia Bio – a Chinese industrial company that produces essential nutrients using a proprietary bio-manufacturing process that increases yield and reduces the environmental and by-product-related pollution often experienced with conventional synthesis.

It also deployed follow-on investments in previous portfolio companies – UK-based CRISPR gene editing company Tropic Biosciences, and Israel-based chickpea protein concentrate producer InnovoPro.

With a focus on Series A and Series B commitments, Bits x Bites screens nearly 1,200 startups per year, of which half are local Chinese companies. To help in this endeavor, and to support its growing Chinese pipeline and portfolio, Bits x Bites announced that Liu Shi, executive vice president at Chinese agricultural conglomerate Dabeinong Technology Group, has joined the team as a new senior advisor.

Since its first close, Bits x Bites has made seven investments driving advancements in everything from agricultural inputs to farm automation and alternative proteins. Of this total, four are Chinese companies. The first is the aforementioned Mojia Bio, and the next three are:

~ EAVision – an agricultural drone company specializing in autonomous crop protection – particularly in mountainous and other complex terrains. These conditions are widely present in China where mountainous farming accounts for 34 percent of its cultivated land growing a vast variety of nuts, fruits, and tea. Now, EAVision’s platform makes it possible for farmers in these locations to benefit from potential  productivity gains despite geographical constraints that had impeded them in the past. Bits x Bites co-led the investment alongside Temasek and Chinese state-backed CITIC. 

~ A precision agriculture company currently in stealth mode that has developed crop simulation models to help farmers boost yields, optimize inputs, and increase profits. This company is the first in China with a commercial crop growth model – a key step to increase production efficiency in agriculture.

~ A precision fermentation startup currently in stealth mode that is developing microbial protein for dairy and meat alternative applications. Bits x Bites stated that it selected this company for investment due to the ability of its production technology to reduce product and environmental costs as well as its knowledge in downstream applications. 

“The appeal of agrifood investing for the Chinese market goes beyond its mammoth role in the global supply chain or its vibrant tech activities in AI/ML and biotech,” said Matilda Ho, founder and managing director, Bits x Bites. “What is often overlooked is this tech ecosystem’s relentless drive toward cost-based innovations, building solutions to fuel efficiency and to make sustainable and healthy ingredient options more affordable.”

She continued, “We believe there has never been a better time to be investing in agrifood for China, and we couldn’t be more pleased with our LPs’ support for our strategy.” 

Alongside these Chinese investments, Bits x Bites has also made several international investments that include Singapore-based Next Gen, the company behind TiNDLE plant-based chicken; and two herbicide discovery companies – UK-based MoA; and U.S.-based Enko Chem, both of which are combating the resistance and overuse of existing agricultural chemical inputs – two broad challenges in China’s agricultural sector.

Jacqueline Heard, CEO, Enko Chem explained to GAI News in a previous interview, “The industry problems of the past define how we move forward with safe and trusted products for the future that catalyze new value beyond the 1:1 product replacement. We need to move beyond the ‘spray and pray’ approach of the past to meet the safety and sustainability needs of today’s farmers, consumers, and regulators by building in safety measures at the very start of the development cycle to stay ahead of future needs.”

Heard continued, “The key difference is our hyper-efficient and targeted technological approach. DNA-encoded libraries represent a disruptive technology in drug discovery, providing significantly greater chemical library diversity (billions not millions), speed of screening (days not months), and depth of screening (billions not hundreds of thousands tested). The scale and speed at which Enko can create new and novel starting points for safe, differentiated ag-ready products is orders of magnitude ahead of where the industry is today.”

“We are more than a VC because we are vested as strategic partners with deep industry access and real resources across the supply chain to help our startups succeed,” stated Bit x Bites on its website. 

This thesis is more than words, and is being proven out by Bits x Bites’ portfolio companies, which have raised in excess of $460 million to-date after initial investments.

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.