Twynam: From Australian Agricultural Producer to Agtech Venture Capital Investor

Twynam Agricultural Group is a family-owned cropping and livestock producer in New South Wales, Australia. The company, which has been owned and operated by the family since the 1970s, farms across approximately 50,000 hectares of land in the Riverina and the Southern Highlands region. It raises sheep and cattle, produces cotton, grains, oilseed, corn and oranges on both dry and irrigated land.

The group has also recently started investing in and testing agriculture technologies on its land. AgFunderNews caught up with Johnny Kahlbetzer, the family member who is leading the agtech investment initiative and is the group’s director, at the World Agri-Tech Investment Summit to discuss this side of the business further.

There seems to be an increase in the number of agricultural producers investing into agriculture technology capital raising rounds, and Twynam is one of them. What’s going on?

We are a producer in Australia. We have downsized our land ownership in Australia and we are very much into ag. Our family also has large land holdings in South America. We believe that to deal with where the world is going in both population growth and in demographics in agriculture, there need to be significant improvements in tech to get to an end result which the world needs. So, for us we are interested in looking at the biological side of ag, seed treatments, seed breeding and genomics, and then from the farm management side, how robotics and automation can help the inform management.

Why do you think agriculture producers are valuable agtech investors?

Because we can test the technologies on our land in both Australia and Argentina, we are able to give technologies credibility. At the moment we have a number of different trials happened with a number of different products and we’re looking to increase that number. We can see which technologies perform better in particular environments, and which are worth continuing to look at from a very strict commercial farming point of view. Also the holistic issues of farming systems and soil health.

Which tech have you invested in so far?

We are already involved in a South African company called AgriProtein, which is creating animal feed from insects, which feed off waste. That could be considered food waste technology or agtech and it’s been an interesting journey for us. We are currently investing into a biological company and on the automation side of things, we’ve knocked on a few doors, but haven’t committed to anything yet.

How long can you hold investments, what stake do you look for, and what stage do you invest at?

We don’t have a view that we need to exit within 3-5 years unlike most venture investors. Some businesses are inherently logical to turn over in that sort of timeframe, but for others we don’t believe in that logic and we are happy to hold a stake for the long term.

We tend to want to hold a 10 percent + stake to make it of interest, which may come through a phased investment plan.

The company needs to be the right fit regardless of the stage it’s at, but we will invest across seed to growth stage, for deal sizes of between A$800k and A$10 million. It has to be a business that can grow into something big. We aren’t interested in a business that isn’t making a quantum change to how things are currently done. And we don’t have a set allocation to this; we will just invest when and where it makes sense at the time.

How do you source deals and how important is it for you to be co-investing alongside venture capital firms?

AgriProtein we came across in an article in the Australian agriculture press a few years ago when they were first starting off. We touched base with them and then 18 months after that, they came and told us they were looking for funding and we became an investor. We have also come across some deals on AgFunder and in other press.

We don’t really need to invest alongside VCs. Depending on the size of a raise, we will, of course, co-invest, but we’re also happy to invest alongside other types of investors like family offices such as in AgriProtein. Co-investing does have its benefits as there are other people contributing their views on how to grow the companies, but it’s not essential for us.

What is your background?

I don’t have a venture capital background. I am a family member of Twynam and did ag economics and a masters and have worked with the family all my life. We have over the years been investors in some R&D projects in Australia, had some involvement with CSIRO and research centers, and have always been interested in the leading edge of what is happening in agriculture such as early adopters of controlled traffic and we have been leaders in taking new crops to different areas including the extension of cotton into Southern New South Wales.

Do you think the expertise needed to manage farmland assets is very different to that needed to manage venture capital assets?

We don’t think you have to be one or the other. Any business needs core business skills to be successful. Success in running an agriculture business should give you similar skills to be successful in technologies. Sure, there’s some marketing skills and some scaling skills, but some producers will start off with 100 hectares and grow to 100,000 hectares, so you’ve seen some of these similar entrepreneur skills in the industry already. But of course there are some agriculture producers who won’t be suitable to invest in and manage a startup business.

Do you get favorable investment terms because you are offering a testing ground for companies?

I am not sure that we are. But I think we offer a different perspective and hence that is of interest to the company and can help conclude deals more quickly.

You’re here looking for deals in London and the US, but what about opportunities from Australia?

We are not seeing any companies coming to us from Australia. We don’t have the resources to assess, nor the requirement to have, a large number of opportunities that a fund may have. So we just see what comes along through various media.

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Image: Flickr: Arrivée de Paquerette à Forville, André Mouraux

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