Salinas, California-based AgTech Insight has launched a new agriculture-focused tech fund called AgTech Growers Alliance (ATGA). Aaron Magenheim, chief executive of the fund’s parent company AgTech Insight, told attendees at the fund’s launch at the Monterey County Agriculture Center in Salinas that the fund was established to address the inability of large scale Silicon Valley venture capitalists to understand the particular needs of farmers, reports the Monterey Herald.
“The Silicon Valley tech investment community doesn’t understand getting their boots dirty,” said Magenheim. “It doesn’t understand what farmers do every day.”
One aspect to the ATGA framework that will set it apart from other funds is that it will be ‘grower-advised’. Farmers will not only assist with evaluating potential startups based on their ability to offer technologies that are useful to the industry, they will also be investors interested in a startup’s ability to generate returns. Instead of investing in risky startups that could potentially be the source of the ‘next big thing’, ATGA’s mission will be to focus on slightly more established, and more successful ventures that report returns of between $20 million and $30 million. Investors will see return on investment through ATGA’s exit strategy of either a portfolio company’s IPO or acquisition rather than a building of scale.
The fund plans to commit to first round investments of between $100,000 to $300,000 with full investments remaining below $1 million per company, with an exit timeline of between five to seven years, according to Seana Day Hull, director of business development and strategy for ATGA. Additionally, investors are expected to see return on investment averaging 4.7 times their original investment.
ATGA is only one arm of AgTech Insight’s overall plan however. The firm is also planning to offer startup companies a range of services under an ‘incubator model’ that include technical assistance and accounting service, along with financing. In addition, the ATGA fund has confirmed to the Monterey Herald that it is in talks with Western Growers, which launched its own $4 million agtech fund in 2015, on possible future investment collaboration.