25 Jan Defining the Lewis & Clark Ventures’ AgTech Sweet Spot
Lewis & Clark Ventures (LACV) invests in transformative technologies across many different industries. With nearly half of the United States’ crop production and 80% of corn and soy acreage located within a 500 mile radius of St. Louis, innovation in agriculture is of particular importance to us. In fact, Lewis & Clark Ventures has a fully dedicated $25M AgTech fund to ensure the entrepreneurs “cropping up” in our backyard have a local source for growth capital. Given the breadth of what the term “AgTech” can mean, however, founders justifiably ask us to narrow down our definition for them. In this blogpost, we hope to clarify our primary interest areas, “sweet spots” for company stage and check size, and other basic deal dynamics.
Technology: St. Louis is home to the highest number of plant scientists in the world, the Donald Danforth Plant Science Center, and the 39 North AgTech and Plant Science Innovation District. It is only logical that we leverage these unique aspects of our city and region and focus on plant-based agriculture. At the Lewis & Clark Ventures’ AgTech fund, we focus on technologies that 1) improve plant productivity, 2) improve farm productivity, or 3) improve the supply chain efficiency from farm to table. Importantly, for items 2 and 3, we define “farms” as land used for row or specialty crop production.
Check size: The $25M Lewis & Clark Ventures AgTech fund is a sidecar to the main fund, meaning the main fund can participate in AgTech deals that meet the main fund’s requirements. As a result, we have a very broad total check size, ranging from $500K-$1.5M if just the AgTech fund participates, up to $5M if both funds participate. It should also be noted that this is an initial check size and that we reserve significant capital for follow-on funding.
Company Stage: In general, the AgTech fund invests in Seed to Series B rounds. As a result, we are comfortable being the first institutional capital into a company. We have no hard and fast rules on round size, but we prefer to be the lead investors, and thus are looking to write the biggest check into a round.
Lead or Follow? As stated above, we prefer to lead the rounds in which we invest. As the lead investor, we write the biggest check into the round, set the round’s price, and take a board seat post-investment. Because we spend time on the board of every company in which we invest, we look for deals where our expertise adds significant value above and beyond just the dollars invested. Benson Hill Biosystems’ $25M Series B round was the AgTech fund’s first lead investment.
Revenue and Regulation: Broadly, the technologies underlying our portfolio companies can be put into two categories, regulatory-heavy and regulatory-light. Regulatory-heavy companies-defined as those that will need FDA, EPA, or USDA approval to operate- do not typically have a revenue requirement for investment. We do spend significant time understanding the regulatory timeline and cost during due diligence, however. For regulatory-light companies-those that can sell their products immediately- we look for a launched product and “meaningful” revenue by the time a company reaches Series A. Our definition of “meaningful revenue” varies by market and stage, but generally, we look for several customers and hundreds of thousands in booked revenue for companies beyond the Seed stage. In our current portfolio, only FarmLead is in the regulatory-light category.
Geography: Modern agribusiness is a global endeavor, and we are willing to invest in companies headquartered throughout the world. Our team’s expertise and network is strongest in the U.S., however. As a result, a company needs to either have a presence in the U.S. or a plan to establish one to be a good fit.
Our next AgTech Blog post will narrow down the specific technological verticals of interest for the fund.