By Lynda Kiernan-Stone
Tenacious Ventures, the first and only specialist agrifood tech venture capital firm, announced it has closed its first fund oversubscribed at A$35 million (US$27 million).
Tenacious Ventures Fund I announced its first close in March 2020 at just over A$20 million (US$15.5 million) with cornerstone A$8 million (US$6.2 million) investments from the Australian Government Clean Energy Finance Corporation (CEFC) and Grok Ventures, the personal investment fund of Mike & Annie Cannon-Brookes.
Although Australian innovators have been developing solutions for a variety of challenges facing the country’s growers – including drought, animal management, and disease and pest control – the Australian government has noted that there exists a lack of capital, which is hobbling the advancement of these developments. As recently as 2017, 80 percent of all agtech investments made in Australia were less than $1 million, according to Australian Financial Review, and of these investments, most were in the form of government grants or through accelerators.
The CEFC has been an active investor and co-investor providing on-farm investments to integrate renewable energy, reduce emissions, and to improve efficiency. Its Clean Energy Innovation Fund has access to an investable $200 million for early-stage businesses beyond the R&D stage needing growth capital to advance their technologies.
“Innovation in agriculture is desperately needed across the world to make our planet more sustainable,” said Cannon-Brookes at the time. “It’s fantastic to see the CEFC investing in agrifood tech through this commitment to Tenacious Ventures. Kick-starting this industry in Australia will take guts and expertise, and the CEFC brings both.”
Over the following year, throughout the pandemic, Tenacious made six investments and raised an additional A$15 million (US$11.6 million) from a range of investors including tech and agribusiness executives, family offices, impact investors, and primary producers.
Tenacious was launched by agrifood tech experts Matthew Pryor, the co-founder of agrifood tech startup Observant, and Sarah Nolet, the founder of agrifood tech advisory firm AgThentic, with a mission to invest in early-stage agrifood tech companies with bold founders committed to solving some of our most challenging issues through technology and transformational insight.
As active ecosystem builders, Pryor and Nolet recognized the potential for Australian agtech, but were also frustrated by the lack of conviction seen from investors.
“We saw through our advisory and ecosystem work that Australia has massive potential,” said Nolet. “We have globally recognized agriculture and agricultural research, but we lacked pathways for commercialization.”
“Over the last five years we’ve seen the ecosystem grow and produce world class startups,” she continued, “but many were struggling to attract funding- local investors didn’t understand the space or have the networks to diligence opportunities, and offshore investors were too far away.”
Focusing on early stage Seed and Series A rounds, Tenacious Ventures is an unconditionally registered fund under Australia’s ESVCLP scheme, with 80 percent of its capital being deployed into Australian-domiciled startups. The fund has an eye toward global potential and impact, however, and does not shy away from historically challenging areas such as hardware and biology – as its first investment demonstrated.
Tenacious Ventures’ first investment was made in June 2020, when it co-led an A$8 million Series A with Grok Ventures for Goterra, a waste management startup that uses maggots in robot-automated systems to convert food waste into fertilizer and animal feed.
Goterra was founded by Olympia Yarger who worked with cattle and sheep, and originally had ambitions to break into farming. However, when costs proved prohibitive, she turned to maggots.
Yarger developed a tech-enabled solution, creating a closed-loop system that uses robot-controlled modular capsules to house a fully-automated process by which maggots decompose food waste into high quality fertilizer, while the maggots themselves eventually become high-protein animal feed.
“We know that globally impactful solutions in agriculture will require more than just software, so we’ve built a team at Tenacious with expertise in hardware, supply chains, manufacturing, and more,” said Pryor. “We’re excited about non-traditional innovators and unique, transformational business models- in fact, we believe these are critical to achieve real impact across the food system.”
Since this first investment, Tenacious has built out its portfolio to include SwarmFarm Robotics, an autonomous ag vehicle platform; Nori, a U.S.-based carbon marketplace; Vow, a cellular agriculture company; RapidAIM, a CSIRO spin-out commercializing a digital crop protection platform; and Nowadays, a clean label, sustainable protein company.
“There’s an innate and deep understanding that’s required to guide thinking and strategy for agtech companies… and these guys have it in spades,” said Andrew Bate, co-founder, SwarmFarm. “Sarah and Matthew have helped us grow as founders and linked us up with a community of other agtech startups to share experiences and strategies with.”
Despite operating at the intersection of agriculture and technology – two typically male-dominated spheres – Tenacious also stands apart due to its female representation. Along with co-founder Sarah Nolet, Tenacious Venture’s majority female team oversees a portfolio where four of the six companies have female founders or co-founders at a time when only 20 percent of startups raising their initial capital are female-led.
“Tenacious Ventures backs companies with bright ideas that enable farmers to feed the world sustainably and reduce waste,” said Ben Gust, director, Clean Energy Innovation Fund. “By helping realise the huge commercial potential offered by emerging technologies, they are putting Australia at the forefront of the innovative solutions that will allow agriculture to tackle the challenges of climate change.”
– 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@globalaginvesting.