Exclusive: Acre Venture Partners closes $140m agrifoodtech fund, places bets on ag robotics, AI/ML

• California-essentially based mostly endeavor capital company Acre Venture Partners has closed a $140 million fund (Fund III) to make investments in agrifoodtech startups.
• Fund III will make investments from pre-seed stage up to series B, with cash reserved for note on investments.
• As much as now, Fund III has invested in six startups: Bonsai Robotics and farm-ng (ag robotics), Highlight (in-house product testing platform), Of us Science (clinical research platform), Arado (agribusiness marketplace), and Swap Bioworks (ag biologicals/biofertilizer).
• Lynda Deakin (from make & innovation co IDEO) and Chef David Chang possess taken on working accomplice roles.

‘We’re a local weather fund using food and agriculture as our mode of motion’

Fund III is backed by fresh and returning customers, “with one existing investor becoming great better,” managing accomplice Lucas Mann tells AgFunderNews.

“It’s determined that here is a worldly second to lift cash for both corporations and funds, but we’re nearly 10 years used, and so I judge that has given us the opportunity to possess mini-cycles or patterns and not produce the errors that fresh entrants to the house would possibly well produce. I’m not saying we haven’t made errors within the previous, but we’ve realized from them.”

As for areas of focal point, he says, Acre Venture Partners is “a local weather fund using food and agriculture as our mode of motion. For Fund III, we’re not taking something else off the table; we’re most effective inserting fresh areas on. So moderately quite of our pipeline has moved into the more used local weather house. And that implies that customers we work with would possibly well stare things which would possibly well be presumably outside of food and ag, but we’re willing to play with that to possess [their potential impact] on agricultural methods.”

One space he is “very serious about” is “sizable knowledge methods, and the capabilities of both machine discovering out and synthetic intelligence on those knowledge methods to expose incumbent corporations,” says Mann.

“So on the food aspect, [Acre portco] Highlight is a SaaS firm that does user testing for sizable CPG corporations. We’re working with them to possess how customers locate at local weather so they would possibly be able to exercise that to assist mammoth corporations integrate local weather racy foods and ag into their portfolios.”

On the ag aspect, he says, “We’ve seen corporations like [gene editing startup and Acre portco] Inari in actuality become reliant on machine discovering out.”

Ag robotics now within the remit

As a fund Acre Venture Partners has “persistently taken the stance that there are determined technologies that we don’t wish to make investments in on story of of the build we sit down within the capital stack or their vogue over time or whatever it is miles going to be,” says Mann, who has invested in the whole lot from ag biologicals to corporations organising probiotics for infants. “Nevertheless we’re furthermore willing to trade our thesis.”

One example of here is ag robotics, an space which the company has historically avoided but is now carefully through investments in corporations comparable to Bonsai Robotics and farm-ng, he says.

“Product functionality on this house has caught up to what we know about the cost curve. Both corporations [Bonsai and fam-ng] exercise AI SLAM [artificial intelligence simultaneous location and mapping]. That know-how, which has near to this point in newest years, has allowed a possibility for the retrofitting of existing machines to produce them self sustaining, so you don’t have to make exercise of all this capital to originate a machine.

“Nevertheless we’ve been patient on this house, as we possess got been on different protein[Acremosteffectivehasoneinvestmentonthishousefungi-fueledstartup[Acreonlyhasoneinvestmentinthisspacefungi-fueledstartupMeati]. We didn’t catch enraged by different protein within the important and even the second wave.”

Meanwhile, Acre has not invested in cultivated meat, says Mann, despite the real fact that he hasn’t written it off. “I judge in the end corporations will determine [how to scale the tech cost-effectively]. It’ll catch sooner, much less costly and more delectable, but we aren’t going to participate in those early innings.”

Navigating the funding winter

As for the evolving funding environment, he says, “It’s time to focal point on kinetic [as opposed to potential] vitality as speedily as that you also can imagine, significantly as pertains to attracting high of the vary customers within the note on rounds. That has become something startups in actuality have to locate at. How are they going to charm to later stage customers? We possess 10 years of skills with an complete fluctuate of note-on customers.”

On exits, he says, “I judge it’s dazzling to command that in agriculture, there were relatively few exits. I judge heaps of that pertains to the persona of the firms and how great time it takes to catch a product to market. Inari is a immense example of that, but that doesn’t indicate we’re not serious about the opportunity.”

In classic, he says, “there were more exits on the food aspect, indubitably within the user house, despite the real fact that we don’t lift heaps of bets there[oneexceptionisguthealthimpress[oneexceptionisguthealthbrandSupergut].

“The macro environment will clearly possess an impress on what the exits locate like, and we’re not on high of things of that. Some are better candidates for an IPO; some are better candidates for M&A.”

‘We’ve been in a dwelling to search out some in actuality excessive margin agencies’

Nevertheless is agrifoodtech a staunch fit for endeavor capital, which is not presumably the most patient roughly cash? The ‘tech’ piece notwithstanding, food isn’t machine, startups are facing unpredictable biological methods, they’d well need need costly bodily infrastructure and distribution methods, and as well they’re working in a complex and each so generally annoying regulatory environment, acknowledges Mann.

“I judge it’s persistently been laborious, but we’ve been successful on story of we’ve had an right standpoint on what qualifies as a endeavor investment and what doesn’t. And or not it is miles a have to have to in truth realize the machine in present to preserve out so, which is why fresh entrants fight and why just a few of the generalists possess left the sphere.

“Nevertheless we’ve been in a dwelling to search out some in actuality excessive margin agencies. As an example [Saas startup] Source, which is indubitably one of our corporations, uses synthetic intelligence to govern greenhouses, and it is miles doing incredibly successfully. [In-home product testing platform] Highlight is a machine industrial and Of us Science is a factual SaaS industrial, so I judge you also can safe those alternatives whereas you’re patient and whereas you know the [needs of] incumbents in agriculture.”

‘The chance will proceed for a whereas’

Despite the persevered decline in agrifoodtech investment (down 49.2% in 2023 vs 2022 per AgFunder knowledge), says Mann, “I’m easy immense bullish about this house and the usual and quantity [of dealflow] continues to lengthen. I judge most of the chance we’ve seen in these final months is the implications of the mispricing of gives at some point of that 2021 window [where valuations went through the roof].

“I hear folks recount the sky is falling in and funding is down and yes, I judge the chance will proceed for a whereas as gives that aren’t performing are worth corrected. As for the generalists, many of them will steer determined except alternatives reemerge. The onus is on the sphere to expose that corporations are of rate and that will happen within the impending years. Nevertheless here is a time to navigate fastidiously.”

To enhance its crew, Acre Venture Partners has introduced in ragged IDEO accomplice Lynda Deakin and Chef David Chang as working companions, says Mann.

“Lynda is not a identical old rent for a endeavor fund of our dimension. She is spectacular, she embeds inner corporations and does the total things that IDEO does so she’s a swish asset. And this three hundred and sixty five days we possess got her stout time.

“David Chang is most effective-identified as a chef at[heessentiallybasedexcessive-finishrestaurantchain[hefoundedhigh-endrestaurantchainMomofuku], but he furthermore has a in actuality successful CPG impress doing mammoth numbers, so he’s a in actuality immense asset for our founders.”

“Since joining Acre, I in actuality possess collaborated carefully with our portfolio corporations, serving to them possess modern products, organising and honing their strategic impress foundations, gathering deep user and customer insights, and sharpening their sales and advertising and marketing suggestions.” Lynda Deakin, working accomplice, Acre Venture Partners