Wilbur-Ellis, the agriculture retailer, is joining the venture capital game after launching Cavallo Ventures late last year.
Cavallo Ventures has already struck three deals, most recently investing in AgCode, the vineyard management software startup. It has also made an equity investment in an undisclosed agronomy-focused startup, but it is not just focused on investing in startups. Cavallo also wants to partner with them and late last year, it struck a distribution deal between Wilbur-Ellis’ agribusiness division and HydroBio, the water management software platform. HydroBio uses satellite imagery analytics to help farmers conserve water and maximize yields.
“The focus of Cavallo is to invest in or partner with companies that we believe we can positively impact,” said Mike Wilbur. “There’s a ton of innovation and technology coming down the pipe such as HydroBio, but as a distributor and agronomist, we’re obviously not going to be able to develop all these solutions in-house. But we have customers asking us to help them sort through these new technologies, so we want to be in a position to help them and maintain our circle of influence with the grower. We want to remain innovative and be thought leaders in the sector.”
Cavallo, which is run by Amar Singh who joined the company after leaving The Andersons’ VC arm Maumee Ventures, is looking for investments and partnerships that are relevant to Wilbur-Ellis’s existing offerings and services. With three core divisions — agribusiness retail, specialty chemicals, and ingredients, and animal feed — it is casting a wide net.
On the agribusiness side, the firm is interested in software solitons like AgCode, but also in companies impacting soil health. “That’s a big deal for us,” said Wilbur. “We are really interested in anything we could eventually help brand and sell; we have manufacturing facilities and very extensive testing and research facilities these companies can leverage.”
“Given our presence in 160 farms centers with around 700 sales agronomists on staff touching around 300 crops in the U.S., there’s a strong footprint to get products into the right hands at the right time” Singh added.
In specialty food ingredients, the firm is interested in alternative ingredients, such as alternative colorings, nutraceuticals, and industrial enzymes. It is not interested in any branded products.
In animal feed, it is looking for innovations in animal nutrition, specialty grains, pulses, and fishmeal.
“There will be plenty of technologies where we can’t add value from an agronomy or distribution standpoint,” said Wilbur. “We take time assessing technology before we feel comfortable taking it to the growers because our reputation is on the line. As a result, we are a bit slower than pure-play investors.
Stage-wise Cavallo Ventures is agnostic. AgCode was a growth stage investment, for example, which is a cash flow positive business, according to Singh. But Cavallo will also invest in earlier stage startups. Investments may result in an acquisition, but Wilbur-Ellis is also happy to remain a long-term investor.
“Our point of view is very simple; we will only invest in businesses we like, and if we like it enough, why would we ever exit it?” said Singh. ‘We can continue reinvesting over multiple years and not seek an exit.”
“On acquisitions, we don’t go in with the notion of investing first, and then buying later; we go in thinking this is a great team and we’re excited about the tech they’re building; let’s see if we can help them with distribution,” he added.
While the company has no set agenda or target on the number of deals it wants to strike each year, Wilbur expects to announce three more within the next few months.