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The Yield Lab Latam Team. Image credit: YLL

Exclusive: The Yield Lab Latam raises $20m from Grupo Bimbo, IDB Lab, others for third fund

May 4, 2023

  • The Yield Lab Latam (YLL) has completed the second close of its third fund on more than $20 million to invest in early-stage Latin America agrifoodtech startups.
  • YLL, which is headquartered out of Buenos Aires, Argentina but has offices across the region, aims to close on $50 million by the end of the year.
  • The fund’s investors include Grupo Bimbo, the largest bread producer in the world, IDB Lab, the innovation arm of the Inter-American Development Bank, and Chilean chemicals company SQM.
  • YLL will use the fund to invest in 30 Latin American agrifoodtech startups over the next four years.

Why it matters

Latin America is home to nearly one-third of the world’s arable land and freshwater, and is a leading exporter of soybean, poultry, beef, maize, animal feed, coffee and other commodities that are important staples around the world.

At the same time, the region faces major challenges, YLL managing director Tomás Peña tells AFN:

“The region has multiple realities depending on the value chain: climate change, soil degradation, water access, digitalization, small farmers’ access to markets.”

Small-scale farming, in particular, plays a critical role in Latin America’s food system: 50% of total production comes from the region’s 14 million smallholder farmers, according to a recent report from J.P. Morgan Private Bank.

But these smaller operations often lack access to the kinds of digital tools and technologies that will enable them to farm more sustainably, increase food production and gain better access to supply chains.

“Farmers are the agents of change in this opportunity in Latin America,” says Peña.

One of YLL’s major goals, he says, is to ensure farmers “don’t get left out of the system,” in addition to building stronger connections between innovators and investors.

Decentralizing innovation

Peña says the main focus areas of the new fund are environmental and social impact.

“Companies and consumers want to know more about where their food is coming from,” he says. “There’s also a very big opportunity for decentralized innovation in Latin America.”

Agribusiness marketplaces like Seedz, which brings small-scale farmers online, and digital banks like Agroforte, are just a couple examples of this decentralized innovation. Outside of the YLL portfolio, Arado connects farmers to buyers without the need for a middleman distributor, and Traive gives farmers access to more credit options.

Launched in 2017, YLL’s portfolio now includes a range of agrifoodtech companies from Brazil, Chile, Mexico, Peru, Argentina, and other countries. Its current roster of 19 startups includes the aforementioned Seedz as well as Ucrop.it, which tracks farms’ sustainability practices via blockchain, and irrigation-management platform Kilimo.

The new fund, managed by YLL with investors from the AgTech Garage network, Nesters and Agcenter, will invest in 30 companies in seed, series A and series B stages across Latin America and the Caribbean.

YLL is part of The Yield Lab’s larger global network of VC funds dedicated to agrifoodtech startups.

‘A powerful innovation network’

For all its potential, Latin America hasn’t yet yielded the kinds of investment dollars seen in other parts of the world outside of North America, like Asia and Europe. According to the latest AgFunder Global AgriFoodTech Investment Report, Latin American startups raised just over $1 billion in 2022, a decline from previous years thanks to high inflation rates and the overall economic climate.

“We believe it is critical to create systemic change, and for this, we’ve helped build a powerful innovation network across the region,” says Peña. “This allows incumbents like Bimbo, farmer networks, and other LPs to become agents of change by investing in our fund to create the necessary context for disruption of the food-producing value chains all over Latam.”

“We need more corporate players, banks, producers, scientists to become involved so we can generate better access to markets to regional and scalable world-class startups to address this opportunity,” he adds.

Connecting Latam to the global agrifood system

In July, YLL along with many of its LPs and portfolio companies will gather in São Paulo, Brazil for the World Agri-Tech South America Summit, which will take place on June 20-21.

As Peña suggests, this will be a much-needed event for connecting innovators with not just the Latam agrifoodtech industry but the global industry, too.

“The Yield Lab Latam has been a gold sponsor of the World Agri-Tech São Paulo, and since the beginning, we have been working with the Rethink team in creating the context for entrepreneurs to meet the broader agrifood industry,” he says.

“This year we are very proud to have invited a group from Saint Louis, Missouri (where YL was originally founded) to showcase what that city can offer to startups from Latam. We have also actively participated in the San Francisco event bringing large delegations and leading roundtables. Our partners in Asia Pacific, Europe and the US have also had very active participation in their respective events.”

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