June 4, 2015

Gideon Soesman

Co-Founder & Managing Partner

GreenSoil Investments

By Sarah Day Levesque

Gideon Soesman has a busy summer ahead of him as GreenSoil Investments, the company he co-founded along with Alan Greenberg, strive to raise capital for the first close on their third ag and food tech fund.

Soesman is no stranger to venture capital. He spent years working for Royal Philips Electronics where he was responsible for all global merger and acquisition activities for a major divisionand also served as Director of Corporate Strategy & Venturing, with overall responsibility for Philips’ business development and investments in Israel. It was this experience and his experience as founder and manager of a boutique investment bank, GMS Capital, that led him to the realization that smaller deals are more fun. So together with Greenberg he started GreenSoil Investments – a company focused on venture capital and private equity investments for smart and efficient resource utilization targeting the agriculture, food and real estate sectors.

Initially, GreenSoil’s focus was solely on ag and food in Israel because of its enormously robust ecosystem for both hi-tech and food and ag. However, when they started GreenSoil four years ago, the hi-tech and ag and food opportunities did not align and there was no real investment in the space, presenting a valuable opportunity. They started by setting up a fund around a bunch of deals and invested money themselves, then brought in external LPs. They then set up a second small fund and today have about $32 million under management in Israel, have invested in five companies and will do number six within a month.

In GreenSoil’s second stage of development, the company has expanded in two directions. The first is the addition of second vertical – building innovation, which is a fund that invests in innovation relevant for building and managing real estate. Something Soesmand says is not very different from ag and food – it’s a sector that has a leg of innovation and huge demand because of growing population and lacks resources – in this case mostly energy. Through this fund, which is managed in Toronto, GreenSoil can invest in technologies such as materials and energy management. The fund had its first close two weeks ago with $25 million and GreenSoil hopes to grow it to $80-100 million.

The second direction for GreenSoil in this second stage of development is a third ag and fund with a new focus and strategy. Soesman sat down with Global AgInvesting to discuss the details of this fund and his positive outlook for agtech. Here’s what he had to say:

What is the focus of the new fund?

We are focusing on food and ag technologies, however, we are growing beyond Israel only and our next regional focus is in Europe, especially the Netherlands. Like Israel, Netherlands has a huge hub of innovation in ag and food tech.

We have opened an office in Amsterdam, recruited people, already building quite a nice deal flow and eventually will invest 50% Israel and 50% in and around the Netherlands but are also looking at deals in Scandinavia and seeing deals in UK and Germany.

Because most of the capital in the sector is focused in North America, we will be able to cover two very important hubs, Israel and Netherlands as a base into Europe. This will give us access to a lot of good deals out of these hubs because we are one of the only funds but will also position us to be an interesting co-investor and partner for American funds that maybe want to deals outside of the United States. As an example, the next deal we are doing is with two North American investors.

Do you see agtech in the Netherlands/Europe trailing behind or is it on par with agtech in the US and Israel?

The Netherlands and other countries in Europe have a lot to offer technology wise. If you google 100 best universities in the world – UC Davis is number one or number two – the second is Wageningen University in the Netherlands. There is a lot in food tech and several places for innovation – including a place in Holland where there is a lot of milk technology, there is a seed technology valley and a food tech valley.

Where Europe is behind is more the connection from innovation to entrepreneurship. What do you do with the tech how do you build successful companies? How do you find the entrepreneurs that really have fire in their eyes going after the tech and creating a successful company? That will be a challenge. However, there is a lot of change going on in Netherlands and Europe and a lot of support coming out of the government.

Because this is such an important area, not only for national governments in Holland but also for provinces we get lot of support and are received with open arms to start activities in Netherlands including capital we will get from governments and semi-governments hopefully.

We are stepping in Holland where we stepped in in Israel four years ago. When I started in Israel 4 years ago most of my friends were laughing at me. Today we find ourselves within this ecosystem as the number one fund in Israel – not because I am so extremely smart but because it was good timing.

We’re now seeing in Holland folks asking are you sure? I mean nice technology but is there enough entrepreneurship? I mean sure it is a challenge but I think that time wise this may be the same good timing as 4 years ago in Israel.

Will bringing more capital encourage entrepreneurship in the Netherlands and Europe?

Definitely, it’s a closed circle – there is a leg of entrepreneurship and a leg of capital. The more entrepreneurship the more capital you attract, the more capital the more people will be willing to take risks and start becoming entrepreneurs.

What is the capital target and when do you hope to have your first close?

$50-70 million. We would like to reach 50% of this by our first closing, which we would like to do by the end of summer.

Who are the fund’s potential investors?

We have our own investors that are excited and those will come in and we have provincial money from the Netherlands – already bringing us close to first closing.

The third circle is strategic family offices – those with a strong link to ag and food, and then we have some corporate interest from strategic corporates and last we have some smaller institutional investors – we’re still too small for the big institutional investors but smaller ones are interested.

What role does GreenSoil plan to play in the fund’s eventual investments?

We’d like to see ourselves with a significant minority stake: 15-40% is our sweet spot. We always take a board seat and we want to help the company by being actively involved, leveraging our advisory boards with really fantastic people out of the food and ag industry in Israel and out of academics in Israel and Europe. We also want to leverage the network we have built over the past four years – whether it is with other funds in North America that may want to do a follow on investment or with strategic corporates that may want to cooperate with the start-ups or whether it is strategic corporates that may want to buy the company. That network and our own active involvement is really helping companies to achieve their goals and create more value.

Do you see the conditions for agtech investing differing across regions? 

Regional differences are big. For example in Israel we see huge advantage because the ag and food tech area is embedded in the middle of a conventional start-up nation, so you see a big over flow of technologies from other areas. Whether it is sensor technologies or software technologies, its very easy to see the spillover of tech into ag and food tech. It’s also very easy to attract management talents from people that have done it already before – these people are around the corner. Those are the advantages of Israel.

The advantage of North America is that there is more capital available. Also, overall there are more exciting start-ups available especially in California and the Midwest. So the supply is still much bigger even though the supply of capital is also much bigger.

In Europe, we see a lot of food tech relative to agtech when compared to other regions. Also in Europe ag and food tech is all starting. We are trailing but scientifically there is a lot available with great universities. There is a real opportunity to be part of the group that is building that eco-system. So yes there are fewer deals available today but there’s also less competition and I think that relatively we will see enormous growth in ag and food technology in the next 5-10 years. I hope we are going to be well positioned to enjoy that growth.

What makes you so positive about agtech investment overall?

I am positive because I see a growing market. I see a sector that is exciting. I am positive because I think we are working with great people both within my own team in Netherland and Toronto but also great companies. We attract more and more people that come out of other sectors – people who have already been in companies and who are looking to do some thing more meaningful with their life. They can do that by helping to solve food problems through start-ups.

I’m also very positive because I think our sector is a really nice sector – maybe because there are not so many funds. I have a feeling that we are one big family of people that tend to cooperate on different deals. There is less of a competitive atmosphere that is in other venture capital segments. So that all together really makes nice work atmosphere.

And of course that we all do something meaningful – solving a huge issue for the world population – adds to that.