If there was one major theme repeated ad infinitum at the recent FIRA USA ag robotics show, it was around the need for products that bring positive impact to the farm level.
It’s a theme that for years has driven the investment thesis at Fulcrum Global Capital, an early-stage investor with a sharp focus on ag and agtech and a base of LPs made up primarily of farmers and producers.
The company’s portfolio runs the gamut in terms of agtech solutions and products, from Cover Cress (which exited in 2022) to animal genetics platform Vytelle and farm robotics startup Niqo.
“Our portfolio will reflect that we’ve stayed really grounded in the realities of production agriculture,” says Amber DeWitt, a venture associate at Fulcrum.
At the FIRA show, DeWitt and senior analyst Bijoy Shah sat down with AgFunderNews to talk about Fulcrum’s investment strategy and why farm-level impact is critical for agtech’s success.
AgFunderNews (AFN): As investors, what are the key things you look at in startups?
Amber DeWitt (AD): At the stage where we’re investing, team is the first and most important piece. If we don’t have a lot of conviction [around] the first CEO and a team built around the CEO, we start to back away pretty quickly.
One thing Fulcrum takes really seriously is, ‘How does this actually impact the farm level?’ Our investors are farmers. We need to see clear ROI at the farm level, if that’s where the technology is going to be deployed.
The question of how the producer gets impacted by this technology, whether it’s a direct farm application or not, is something we care a lot about and spend a lot of time thinking about at Fulcrum. And we need to see a pathway towards clear impact for the farmer from a financial perspective, of course. That can mean Fulcrum maybe isn’t the most trendy investor, but we care a lot about what has real impact on the farm.
Bijoy Shah (BS): We get the question a lot: Are you impact driven? Are you sustainability driven? And our answer to that is that [those things are] always a byproduct of the investments we make.
If you look at all of our portfolio companies, they address at least one of the [United Nations’] sustainable development goals, and that speaks a lot to the industry we are in [and] the impact we can have.
But first and foremost, we’re financial investors, so we have to make sure that the valuation, the metrics, all of that stuff makes sense.
I think Niqo [Robotics] is a great example of that. Jaisimha [Rao, founder] grew up on a farm, and his entire team comes from really deep engineering experience where they’ve done this at other startups and they’re able to do it again. So a repeat founder is impressive, but a repeat ag founder is super attractive to us as investors.
AFN: What’s the advantage of having farmers as LPs?
AD: We hope that our LP base keeps us grounded in the realities at the farm level. We try to get out on the farm with them as much as possible. But even just having a group of farmers that you can pick up the phone and test things with, you get the reality of how things will actually materialize on the farm pretty quickly.
By nature, producers are skeptical beasts. They first and foremost are going to be skeptical about your technology, so use that as a learning opportunity to build your product better and get to the root problem that producers have. We hope that that’s our unique competitive advantage as investors: having that direct relationship.
Our portfolio will reflect that we’ve stayed really grounded in the realities of production agriculture.
BS: About 70% of our LPs are largescale farmers and ranchers across the US. The piece of feedback that we usually get all the time, is, “What is the ROI to us? We need an immediate value proposition.”
AFN: The Cover Cress exit in 2022 was a big deal, as Fulcrum was an early investor in the company.
AD: You can’t really think of a better exit for a startup than having three strategics [Bayer, Bunge, and Chevron] come together and acquire them. They not only provided the capital but they provided three very different strategic alignments that if one of those pieces [had been] missing, Cover Cress wouldn’t necessarily have had the market they do. It’s really an important example of how you need all players in the supply chain.
BS: I think it also showcases the potential for different types of acquisitions. You always make that defensive acquisition if you have a competing technology internally. But I think the Cover Cress deal was a really good example of an intention to keep the product and company around, and keep it growing. It’s exciting to see that the financial return was there, but also that the technological return and contribution to the industry was still rather relevant.
AFN: More recently, you’ve backed Niqo, which hopes to bring agtech from India to the US, rather than the other way around.
BS: I do think that’s going to happen more, especially with the story [Niqo founder Jaisimha Rao] tells.
The food production problem is a global issue. And so one of the things we say internally is that, because it’s a global problem, there will be global solutions, and every part of the world is going to have a different approach. So whereas we might have not seen software-as-a-service work too effectively in the US broadacre row crop market, we see that working extremely well in the Indian ecosystem because of the small acre holdings. That’s another thing that gave us conviction around Niqo and the investment there.
One of the other really attracting components was that Niqo is really low-cost manufacturing, and they’re able to commercialize that tech in India.
They just announced their thinning product in the US. They’re able to do that and to have similar technology to their competitors, but they’re doing it at a fraction of the cost.
AD: We had a producer panel with our LPs prior to investing in Niqo. And even though Niqo doesn’t have a direct product for Midwest row crop growers in the US, [the LPs] saw the vision. They understood why the cost would make a lot of sense, and they had a lot of conviction that the team and the technology could address some of Indian agtech’s problems. And so I think that just was a cherry on top to have our investors really understand and be supportive of a technology that could potentially impact growers around the world with Niqo’s grower-focused, ROI-based approach.
AFN: What else excites you about agtech right now?
BS: I’d say harvesting robots are up and coming, especially as they’ve figured out a strategy.
AD: Robotics and automation are a key piece to how we think about the future. We spend time looking at the different biologic inputs, whether it’s biocontrol or biostimulants. We haven’t necessarily made any direct investments in that space recently, but that’s a space that we continue to watch and really understand the modes of action and kind of what’s happening behind that technology.
Genetic editing, anything on the gene-editing or trait side is really interesting to us on the animal health side but also crop production. Genetics is a space I think Fulcrum will continue to be super interested in. And then a piece that we think about a lot is food safety and food waste. We’re always interested in novel ways to address those problems.
BS: Whether it’s shelf-life extension or a seed coat or just packaging in general. How do you take take produce and make it last longer? That addresses the problem of food production from a different angle, but it’s one that we’re taking a deep dive into and kind of figuring out who the players are.
