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Framing the Ag Opportunity for Non-Ag Investors at the Kauffman Fellows Reunion

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The Kauffman Foundation hosted more than 200 investors from five continents last month in Kansas City for the Kauffman Fellows Reunion VC Summit. Fellows attended an invite-only gala and day of discussion on global trends in venture capital, with a focus on the explosive growth of the Midwest startup scene. Keith Harrington, founding partner Fulcrum Global Capital, an ag and healthcare-focused fund based in Kansas City, and himself a Kauffman Fellow (Class 20), organized presentations ranging from building a lasting company in the Midwest to accelerating innovation ecosystems outside major VC hubs. Speakers included Steve Case, co-founder of AOL and CEO of Revolution, and Brad Feld, managing partner of the Foundry Group.

For the first time at a Kauffman Fellows event, a plenary panel was held to discuss the state of agtech innovation and investment. The panel included:

  • Jenny Rooke (moderator), founder and managing director of 5 Prime Ventures, venture partner at Anterra Capital (Kauffman Fellows Class 11)
  • Ron LeMay, co-founder and managing director of OpenAir Equity Partners, CEO of FarmLink & Machinery Link, and founding CEO of Sprint.
  • Andras Forgacs, co-founder and CEO of Modern Meadow, previously co-founder of Organovo (Kauffman Fellows Class 14)
  • Matt Crisp, co-founder and CEO of Benson Hill Biosystems, previously founding president of the ag biotechnology division at Intrexon Corporation

Here, Rooke and Crisp present the main takeaways from the event.


Agriculture took center stage position at the Kauffman Fellows 20-year reunion. This speaks to the exciting changes and enormous potential of the sector, not just for traditional ag players, but for the broader innovation and investment community. Participants on this panel shared what they have learned working in this space, what they are excited about, and made comparisons with other industries.

Why Agriculture?

Everyone on the panel came to the ag sector from different tech and life sciences background, and they discussed why they decided to engage in the ag sector. A common theme across the panel was the idea of convergence.

Each panelist had realized a possible intersection of a traditionally non-agriculture discipline with ag, such as communications, synthetic biology, genomics, or consumer goods. Some of the greatest innovations in history have come not from within existing players or models of innovation, but from new and often adjacent entrants, such as advancements in semiconductors driving massive changes in telecommunications products and the industry’s structure.

Each panelist emphasized that the agriculture industry is undergoing a sea-change at every level, from technologies to business models to regulations and global market structure. The result will be an industry that is propelled forward in the next decade creating abundant opportunities for disintermediation and disruption.

Data streams play a big role in that opportunity, and Ron highlighted learnings from the communications industry around the value of data acquisition and analytics. While data and analytics have been a very active area the last few years for on-farm precision agriculture – as evidenced by the explosion of investment into this category – the application of big data and analytics to agricultural biology and biotech has lagged. This gap is now closing as innovative players gain traction with tools such as gene editing, genomics, and other platform technologies throughout the food and agriculture value chains.

The panel noted that very few venture investors have ever invested in agriculture as a category to date, but with the acquisition of Climate Corp and the dramatic growth of start-ups the space, more are looking at the expanding dealflow pipeline. Most investors focus on making their early forays into ag consistent with their historical investment profile (e.g., big data or life sciences). The time is ripe to leverage technology from other industries where those VCs have a track record and expert insights.

Why now?

Innovation in agriculture has lagged relative to other adjacent industries. Ron likened the category to the communications industry in the 1980’s where very large companies had the ability to govern the pace of innovation and did so to maintain their market dominance. While there have been advances in recent years in areas like precision agriculture and biologics, ag innovation has been predominantly confined to a few large companies with massive R&D budgets. Combine this with the historical pace of the industry and, as Ron put it, take the least fast-paced industry you know and divide that by two or three, that is as fast as the ag industry moves.

That inertia is partially because innovation has been built almost exclusively within the traditional models for value creation and capture, and within existing regimes that haven’t changed in decades. But the food/ag value chain is complex with inefficiencies throughout, creating pressure for large incumbents in the middle of the value chain to get more innovative and integrated. Given the current commodity down-cycle, over the next few years we can expect larger companies and new entrants alike to place even more importance on technology for achieving higher yields and greater efficiencies. Incumbents are likely to make acquisitions as a way to access innovations created outside their organizations. 

The timeliness for ag investing is also driven by current market forces and shifting consumer demand and preferences. For the communications industry, the government stepped in to address excessive consolidation and effectively enable the broader industry to reset the pace of innovation and competition. Within ag, it is market forces that are driving a similar effect. Commodity pressures and consumer preferences, coupled with angst across the value chain over the most current round of big-ag consolidation, is driving interest in fresh, more nimble approaches. This will result in more choices and better product offerings for growers and consumers, and layers of opportunity for investors willing to get comfortable with a rapidly evolving industry where they are unlikely to have prior investments.

Andras, whose company’s thesis centers on addressing shifts in consumer demand in the retail space, noted that whether the business model is B2B or B2C, all companies need to ultimately target the consumer and tailor their value proposition to that stakeholder. Whether the product is synthetic leather by Modern Meadow or enhanced nutrition by a food company or greater sustainability up and down the value chain, demand shifts are creating new expectations and new opportunities. 

Why not?

As excited as the panel was about the convergence of opportunities between ag and other industries, each of the panelists had also experienced unique challenges and risks in agtech that investors need to have on their radar. Unlike closed systems and models of tightly-controlled product development that are standard for some industries (especially tech), plant and animal biology is messy. Innovation and product development takes time and requires patience. Trials and test sites can be significantly impacted by weather and other variables outside a company’s control. Given that agtech is a relatively young space, investors need to get comfortable investing in an area with additional risks and without a long track record of success if they want big rewards.

Finding ways to get educated about the space can help investors gain confidence. Many VCs are interested in ag and are looking to deals as a means to become more educated. At the same time, entrepreneurs want to understand a potential investor’s thesis in ag and how it aligns with their company’s value proposition. The panel emphasized that given the complexity of the food/ag value chain, it benefits investors and entrepreneurs alike to have real clarity about where they each fit. VCs are wise to gain guidance from those with a record of investing in ag-related spaces to assess how opportunities and theses from different industries hold up in the context of the ag risk/reward profile.

The panel closed with the question of how to attract capital to take advantage of the great convergence opportunity in ag, despite the inertia, relative lack of experienced investors, and additional risk that ag investing can pose. Fostering relationships with a broad array of investors was widely recognized as a critical approach to cultivating a sizable and later stage investment for companies in convergent spaces.  Identifying investors with interdisciplinary expertise that can act as a lead versus a follower in a convergence space can be a real challenge. But VCs willing to step (partially) outside of their comfort zone sooner rather than later will enjoy outsized economic returns in industries like agriculture that are ripe for disruption.

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