Pontifax AgTech has closed its newest fund with $302 million raised, making it one of the world’s largest agrifood-dedicated investment vehicles to date.
The Los Angeles-based VC firm had initially targeted $250 million for its second fund, with AFN exclusively revealing Fund II’s first close at $140 million almost exactly one year ago.
It’s almost three times bigger than the firm’s debut Fund I, which closed on $105 million back in 2017. Taking limited partner (LP) commitments across both funds — as well as direct LP co-investments — into account, Pontifax AgTech now has a total of $465 million in assets under management.
Co-founder and managing partner Phil Erlanger told AFN that about 15% of the capital invested in Fund II came from non-US investors, compared with 10% for Fund I. Institutional investors accounted for approximately 60% of Fund II ‘s LP capital – double Fund I’s 30%. Among that investor base are financial institutions, state and municipal pension funds, university endowments, foundations, large-scale growers, and family offices.
Erlanger said he expects Fund II to back “eight to 12 companies in total, with commitments ranging from $25 million to $50 million over the course of the fund’s holding period.”
This aligns with Pontifax AgTech’s broader approach as an agrifood VC focused on growth-stage investments, typically targeting companies at Series B stage and later.
Given this, the fact that Pontifax has been able to secure such a significant commitment — particularly from an even more diverse and sophisticated set of LPs than previously — is indicative that investors view agrifoodtech as an increasingly mature field; a realistic option for diversifying portfolios, presenting long-term growth opportunity.
“Investment capital is increasingly flowing into the sector based on strong, uncorrelated growth fundamentals and the compelling sustainability benefits associated with the sector,” Erlanger said.
“Fund II’s growth capital investment strategy — focused on scaling commercially established businesses — is particularly timely, given a scarcity of sector-focused growth capital investors, coupled with the challenges and opportunities created by Covid-19 and the macro tailwinds driving the sector.”
The portfolio built out of Fund I includes ag biotech companies such as AgBiome, Anuvia, Caribou Biosciences, Concentric, and Tropic Biosciences; farm management software provider Conservis; traceability and tracking platform; FoodLogiq, and flower delivery startup Bouqs.
Consistent with its predecessor, Fund II will focus on investing in disruptive tech providers in food and agriculture production, health and nutrition, life sciences, and the post-harvest supply chain, according to co-founder and managing partner Ben Belldegrun.
The firm sees “particularly exciting opportunities in biological crop inputs, trait development, biotech, automation, food distribution, foodservice, and supply chain efficiency” going forward, he told AFN.
Fund II’s maiden investment was in Santa Monica-based Provivi, which has developed biological plant protection tech that enables the production of pheromones which disrupt the mating patterns of pest insects affecting broad-acreage crops. AFN broke news of Provivi’s $85 million Pontifax AgTech-led Series C round last October.
“Food and agriculture technology is a vibrant investment sector, driven by increasing pressures on the food and agriculture supply chain to become more sustainable, efficient, and profitable,” Belldegrun said.
“The sector needs to feed a growing global population that is consuming increased calories and protein per capita, in the face of global warming, increasing resource constraints, and growing scrutiny from consumers and regulators. Food and agriculture is the third-largest and second-fastest growing industrial sector globally, but among the least penetrated by technology.”
That’s where Pontifax AgTech and its LPs will be hoping it can make a lasting change.
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