Growth Capital Firm Makes First Agtech Investment in Mature European Precision Ag Company

After about five years researching the sector, a Swiss growth capital fund has made its first investment into agtech, selecting a rare, mature precision agriculture company from Austria called Pessl Instruments.

Growth capital investment firm Mountain Cleantech made the investment out of the €43 million ($48 million) sustainability-focused Mountain Cleantech Fund II. And the firm expects to make agriculture one of five key focus areas for Fund III when it launches next year, according to Juergen Habichler, managing partner at the firm.

“We have been following the trends for five years and had spoken to a lot of companies but didn’t really see any take up until the last two years,” he told AgFunderNews. “Now the trends have come together — private usage of smartphones and tablets has boomed and farmers are using these tools for their professional work.”

Pessl Instruments has been going for over 30 years after introducing its first device, the Metos Electronic Disease Predictor, in 1984. The company went on to build weather stations under the Metos brand and now has 15,000 in the field. Other Metos products include soil moisture monitoring devices, irrigation automation controllers, electronic insect traps, remote crop monitoring systems and localized weather forecasts.

But in 2004, Pessl made its “most important step”, according to its website, and took Metos online with Fieldclimate.com, a real-time software platform. This platform enables farmers to access and evaluate data generated by its various monitoring hardware systems to help them increase crop yields, and to save energy, water, and fertilizer costs. It also aims to improve rural connectivity in emerging markets.

This move made Pessl one of the longest standing IoT-focused agtech companies, especially in Europe, according to Habichler.

“What I like very much is that they have integrated solutions; hardware and software. Many companies in the US claim to, but really it’s only software that takes past data and makes forecasts based on models,” he said.

Combining both hardware and software is something that North American precision ag startups FarmLogs and Farmers’ Edge also boast.

Pessl was a rare find in Europe, according to Habichler, who says that other precision agriculture offerings are very early stage or under the radar. Mountain Cleantech only invests in companies with $5 million in revenue already, which need growth capital to build partnerships, expand overseas, add second level management talent, and increase brand awareness.

“We want to see market proof. We are not so much on the cutting edge of technologies,” he said. “Pessl is a local beauty. They have done a great job at internationalizing their product with offices in the US and Brazil.”

Mountain Cleantech’s undisclosed investment will help Pessl to strengthen its presence in overseas markets like the Americas and Africa and support the development of new products such as onsite soil nutrition devices and animal behavior analysis.

“Our financing will help the company to further cement its strong market position in its existing focus markets such as the Americas and Africa. The funding will also support the development of additional product classes such as onsite soil nutrient– and animal behavior analysis.” 

Habichler and his colleagues met Gottfried Pessl, the founder and CEO, at a tech trade fair in Germany called Agritechnica.

Mountain Cleantech Fund I is an evergreen fund invested into pure clean tech sectors such as solar and recycling risk management, but Fund II has pursued different sectors of sustainability and has made five investments. It exited one of those after two and a half years — Gruenspar, a Software-as-a-solution company — in July this year to Germany’s fifth largest utility company EWE. The exit achieved an internal rate of return of 67 percent.

Fund II is now left with four investments, including Pessl, and is likely to make two more investments this year, but not in agtech, according to Habichler.

“Agtech will be one of five top themes for Fund III, however,” he added.

Mountain Cleantech’s investors include strategic players such as Ikea GreenTech, the sustainability investment arm of the furniture giant Ikea, and the Austrian Government, through its partner called aws. Family offices, pension funds, insurance companies and the fund’s management are all investors too.