Global ag chemicals company Bayer CropScience has mandated Israeli startup incubator company Trendlines to invest $10 million in early-stage agtech startups through a 5-year fund.
The Bayer Trendlines Ag Innovation Fund will co-invest with Trendlines in seed stage startups discovered by the incubator as part of its existing process, and will make follow-on investments of around $1 million in companies that are doing well, according to Nitza Kardish, CEO of Trendlines. Bayer is the only LP in the fund.
The deal appears to the first stage in the launch of a wider co-investment platform for Trendlines. The company is also planning to launch a larger $30 million fund with non-strategic investors that will co-invest alongside Bayer’s fund and its own capital.
“This fund could co-invest with the Bayer fund or invest in areas that Bayer is less interested in such as animal health,” she said.
This fund will target family offices, institutional investors and high net worth individuals, according to Kardish.
Bayer is particularly interested in investing in seed technology, crop protection technologies, biologicals, precision agriculture and robotics, according to Kardish. It will also keep an eye on Trendlines’ deal flow and investments will be considered for acquisition by the company at a later stage.
“Bayer didn’t want to build their own tech scouting team to build an in-house portfolio, so they were looking around for options,” she said. “It’s very encouraging that they are seriously looking at very early stage technologies and the fact that they chose Israel and in us projects the future of their strategy.”
This isn’t the first early stage agtech investment play by Bayer; its crop science division is invested in Finistere Ventures’ second agtech fund, which is targeting $150 million and held a first close in February 2015. Fund II is invested in CropX, a soil sensor company, ZeaKal, a genetic traits company, and ShopWell, a food discovery platform.
“Israel is a hotspot of innovation and Trendlines offers the right combination of regional know-how and technical experience to be a compelling partner for us,” said Adrian Percy, head of research & development at Bayer Crop Science in a statement. “The agricultural market is ripe for groundbreaking innovation and Trendlines, with its focus on developing startups and new technologies beyond a one-time investment, shares our commitment to supporting productive and sustainable agriculture.”
The deal with Bayer is good news for Trendlines, which recently lost its agtech incubator licence. The company has applied to the Office of the Chief Scientist (OSC) to expand its medical incubator licence — which is valid until 2023 — to include agtech before the existing agtech licence runs out on June 30.
“It’s sad in many ways that they decided to essentially give up on the agtech incubator, which was the only one if Israel, in favour of another medical incubator, and everyone was very shocked especially considering the importance of agtech in Israel and how much the country has to offer,” said Kardish.
If the medical incubator licence is expanded, it will be business as usual and Trendlines will invest in 4-5 early stage agtech companies each year. It’s invested in 15 agtech companies so far.
If the expansion is not approved, Kardish is confident the company will find other sources of funding and support from OSC to continue investing in and nurturing agtech startups.
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