When you think about the venture capital firms pursuing the global agtech sector, you are most likely to think about the U.S. than other parts of the world. But a relatively new, Paris-based venture capital firm has been hard at work over the past 16 months to build a substantial agtech investment portfolio and is putting some of its U.S. counterparts to shame.
CapAgro Innovation Fund, the brainchild of Jean-Baptiste Cuisinier, a food and agribusiness veteran, and Groupe Avril, the vegetable oil and protein agribusiness, was launched after Cuisinier realized that there were few, if any, VCs supporting a huge amount of growing innovation in Europe’s different agro-industrial sectors.
Sponsored by Groupe Avril’s finance arm Sofiproteol and agriculture cooperative Tereos, CapAgro raised €42 million ($47 million) from its sponsors and a group of French institutions: Bpifrance, a subsidiary of Caisse des Dépôts and the French government, CACIF, a subsidiary of Crédit Agricole and two insurance groups AG2R LA MONDIALE and Groupama.
After launching in April 2014, it didn’t take long for the fund to make its first investment in July 2014 and it soon deployed €12 million across eight investments up-to July 9, 2015. The firm has since made another investment at the end of July into Yooji, an organic baby food producer, and it’s now exceeded its goal of investing in four companies a year over five years.
“We are well ahead of target in the pace of our investing,” Jerome Samson, managing director at CapAgro, tells AgFunderNews. “We might slow down now as we focus on the deals we have already done.”
Proclaiming CapAgro to be “the first venture capital fund dedicated to innovation in the French and European agro-industrial sectors”, Samson and Cuisinier put the pace of investment down to a huge need for investment in the sector, which saw CapAgro receive 200 applications from innovation companies seeking to raise capital.
“These figures confirm the role and legitimacy of a fund such as CapAgro Innovation in France, and testify not only to the dynamism of innovation in French and European agroindustrial sectors but also to a lack of financial partners who can support their long-term development,” said Cuisinier in a statement last month.
The fund was also shown a lot of deals by its LPs which have “very long arms in the market”, according to Jerome. And there are a number of local accelerators producing high quality leads, he added.
What makes CapAgro’s achievements really stand out is the small size of the team; Samson and Cuisinier are the firm’s only full time employees.
“Jean-Baptise raised the fund and organized it before I was hired to help him run it,” says Samson. Cuisinier has 40 years of experience in the food and agriculture market including working in the French government’s Agriculture Ministry and at consumer-facing firms like Pernot-Ricard.
“He has worked with and launched startups in different fields so he has that experience too. Around four years ago he had the vision that there would be a lot of innovation in France and Europe in agriculture, but with very little venture capital available, so he gained the support of partners he had in his address book and the fund was launched,” says Samson.
Samson, meanwhile, has 10 years of venture capital experience in France, working at firms such as Seventure Partners and Sofinnova Partners. He also has a PhD and a range of masters degrees in biology, which are helpful for the role, he tells AgFunderNews.
The size of the team limits its reach outside France, although the firm plans to invest around 30 percent of the fund into other parts of Europe.
And while CapAgro has made headway into France and Europe’s agtech sector, there is still a large amount of investment needed, according to Cuisinier.
“[Our] financial support is already bearing fruit… within just one year, but this is still insufficient in France when we look at the potential of all the projects submitted to us,” he said in a statement. “For this reason, we are even more keen to pursue our fund-raising and contribute to making up the investment deficit faced by young companies and start-ups in our country.”
To this end, CapAgro is currently in talks with new potential investors to raise the fund size to €60 million before the end of the year.
The deals it has done so far average at around €1.5 million each, but the fund will invest anywhere between €1 million and €5 million, according to Samson, as long as the companies are already making revenues or are very close to.
So what else is the fund looking for? CapAgro splits its interest into three segments: upstream agricultural production, where it looks at technologies and services aiming to save energy, water and nutrients; downstream companies producing healthier food for consumers; and energy efficiency innovations in the agro-industrial sector.
Here are some of its investments across segments: Force-A, a precision agriculture technology company, VitamFero, a veterinary health business; Olygose, an innovative and natural ingredients producer; Nutresia, a healthy ready made meals company; eProvenance, a wine temperature technology; and Lineazen, a cross-laminated timber producer for construction.
“The fund supports projects related to the societal challenges that are central to the farming world, the development of sustainable agricultural production and the challenges of quality and nutrition faced by the food industry, as well as focusing on how biomass can replace fossil resources in a sustainable manner and be exploited by agriculture or industry within the framework of a circular economy,” according to a press release.
With another €18 million expected in LP commitments before the end of the year, it will be interesting to see how the fund develops from here, and whether its thesis is echoed by other venture capital firms in the region.
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