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Legal Cannabis, Alternative Protein or Pre-Seed Stage Deals? Vote on AgFunder’s First Focus Fund

February 11, 2019

AgFunder is an online Venture Capital Platform investing in the bold and exceptional entrepreneurs transforming our food and agriculture system through a series of Co-Investment Funds.

Why a Focus Fund?

Since we started offering our Co-Investment Funds to investors last year, we’ve been getting requests for funds with more specific investment themes. Keeping with our mission to democratize venture capital, we’d like your input on three Focus Fund strategies we’re considering. By completing a 30-second survey, you’ll be given early investor access, as allocations will be limited. And if you have some particularly relevant expertise with respect to these funds, please let us know as we’ll be putting together an advisory board of investors for the fund.

(A) Farm Bill Fund / Federally Legal Cannabis [Vote Now]

In December 2018, the U.S. Government announced a new farm bill (“Agriculture Improvement Act of 2018”) that officially removed cannabis fiber products containing less than 0.3% tetrahydrocannabinol (THC) from the Controlled Substances Act. For nearly 50 years prior to the passage this bill, all cannabis products were treated as Schedule I controlled substances at the federal level, a policy that severely limited the application of modern science and technology to the development of cannabis-based medicines and consumer products. Cannabinoids are a class of molecule that interact with the human endocannabinoid system through cannabinoid receptors. While CBD may be one of the most well known of the 113 cannabinoids, there’s an emerging body of research into how other cannabinoids may have beneficial physical and mental effects on the human body.

A Farm Bill Fund would seek to take advantage of the new regulatory era, focusing on venture capital investments into startups pioneering development of non-recreational (medicinal / industrial) applications for cannabis materials and cannabinoids. Potential categories include genetics / bioinformatics, pharmaceuticals, consumer health / personal care products, hemp materials, and “picks and shovels” technologies that will build this new industry. The fund would strictly avoid marijuana-related investments in the U.S. until a legal pathway is established at the federal level.

(B) Alternative Protein Fund [Vote Now]

You’ve heard the buzz words: plant-based protein, clean meat, cellular agriculture,  insect protein, etc. Some of the early leaders include Beyond Meat which will IPO this year, Impossible Foods, and Just, all purportedly valued at over $1 billion. An alternative protein fund would seek to make 6-12 investments in Seed to Series C companies that are building the next generation industry leading alternative protein companies. The key sector-wide risks for this fund include technical scale-up challenges particularly with fermentation and insect production; generally a more asset-heavy business; concerns about the cost curves for growth media in cellular agriculture; market risk; and price competitiveness with animal-based products. Accepting those risks while focusing on top startups that have a solid plan to try to mitigate those risks, we believe we have a very strong pipeline of deals.

(C) Pre-Seed Fund [Vote Now]

Our flagship funds focus on Seed to Series B and we pass on a lot of companies because they’re simply too early and we need to see more traction. A Pre-Seed fund would look to make the first institutional investment in a company at the earliest stages where a small check can give us the greatest ownership. These would generally be companies with valuations <$5M where the upside potential is the highest, but so is the risk. We would be looking to make 10-20 relatively small bets, depending on the size of the fund. Our focus would be on entrepreneurs with a track record of significant academic or professional exceptionalism. In pre-seed, diligence is necessarily limited and investment decisions are often made on experience and gut instinct. You are really betting on the jockey, not the horse. Specifically we’d be looking for those founders with prior successful exits and entrepreneurs who are at their very earliest stages of company development but who share the qualities of the founders of companies like Indigo, Blue River, Planet Labs, Plenty, Granular, Impossible Foods, FBN (and if you’ve met these founders you’ll know what we’re talking about). Again, the risk is highest at pre-seed, but it’s also where the upside can be the highest since 10x exits are possible even with $50M exits.

Vote Now – 30-second survey

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Disclaimer: Not an offer to sell or the solicitation of an offer to buy securities. Such an offer may only be made through the Offering Materials available through the AgFunder platform. All investments involve the risk of loss.

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