A $500m Question: What’s William the Conqueror’s Cousin Got to do with FoodTech?

If you’ve ever walked the streets of Central London, you’ve probably walked those belonging to the Grosvenor family, particularly if you headed to London’s most upmarket neighborhoods. Many of the streets and squares of Mayfair and Belgravia are named after the family, and you may have even stayed at the Grosvenor Hotel — hopefully at someone else’s expense!

A household name in the UK, the Grosvenor family can trace its ancestry back to William the Conqueror’s cousin and today Hugh Grosvenor, Duke of Westminster, is godfather to Prince George. No big deal then.

But what’s the link to foodtech?

Wheatsheaf Group. Don’t know them? If you’re reading AFN, maybe you should. They were one of the first investment groups to focus on agtech, and they have a cool $500 million to play with.

Where did Wheatsheaf come from?

In 2012, the Grosvenor Estate was looking for ways to diversify what’s largely a property business with land and real estate holdings across the globe and ensure its legacy for the next 1,000 years. It soon landed on food and agriculture.

“They were looking at how we could build exposure to another significant industry beyond property, and food and agriculture was a sector that had not yet been disrupted but faced many macro challenges,” Graham Ramsbottom tells AFN. “The opportunity for technology to impact the sector is vast.”

Ramsbottom was approached by the Grosvenor Estate to build an agrifood investment team. He had identified agri-foodtech as an opportunity after managing rural properties, founding a farm consultancy and working for some of the UK’s biggest farmers and cooperatives, and then moving into sustainable development.

Launching in 2012, well ahead of many of the most active agri-foodtech investors now, Wheatsheaf has since flown largely under the radar, despite making 20 investments including some big names in agri-foodtech such as AeroFarms in the US and Farmdrop in the UK. According to the website, the firm’s “operational, investment and development activities are implemented by over 2,500 people working across 34 countries.”

Other investments include LSE-listed microcap Benchmark Holdings, an animal health business, Californian shelf-life enhancement tech BlueWrap, Canadian insect farming group Enterra Feed, Australian livestock monitoring tech AgriWebb, and eco-friendly fertilizer business Ostara.

While not identifying as an impact investor, Wheatsheaf looks for companies that aim to make a positive impact on a few core global issues, and aims to become the investor and partner that can help them drive commercial success.

“It’s not an either/or; I’ve realized over my career that it’s possible to make commercial returns and deliver positive impact at the same time,” says Ramsbottom.

Significant leadership expansion

Last week, Wheatsheaf bolstered its 20-strong investment team with two major hires: Stephan Dolezalek, a San Francisco-based private equity investor who has developed five “unicorns” including Tesla, and Katrin Burt, former managing director at Syngenta Ventures.

The appointments signify Wheatsheaf’s increasing focus on North America and intentions to bolster its senior management.

We caught up with Ramsbottom and Dolezalek to find out more about the firm’s focus.

What global themes do you focus on?

Graham Ramsbottom: Our overall focus is to improve efficiency in the production of healthy and nutritious food. We aim to do so by helping agricultural business be more efficient and adaptable; reduce reliance on antibiotics, harsh chemicals, fossil fuels and unsustainable resource use; and reduce waste, using raw materials efficiently.

What stage do you invest at and where?

GR: Because we’re not a fund, we can set our own rules on that; we can invest very early stage and have even set up some companies. But we also have many later-stage investments such as the UK’s leading dairy farm Grosvenor Farms Limited, and world-leading aquaculture technology in Norway, AKVA. Our sweet spot is something in the middle with proven technology that’s in the commercialization phase.

Our senior appointments are building our footprint in the US. We tend to focus on Europe and North America, and are also active in Australia. While we have lots of our companies operating in Asia, we haven’t invested there directly yet.

What’s changed since Wheatsheaf launched?

GR: The conversation has moved on from the challenge of having enough food for the growing global population, to how to feed them healthy, nutritious food.

The Grosvenor Estate has been a steward of land for a long time, but the role of the land could be changing; there are uses of land beyond food that are interesting and technology will allow us to have sufficient food but also think about how to use land for other purposes such as sustainable uses to combat climate change. The opportunities become greater as our understanding of the role of land increases. We see some real opportunities in regenerative agriculture, for example.

One of your investments that could help free up some of that land for other uses is AeroFarms, which has been around for some time but been quite slow to expand. How do you compare them with other vertical farming players?

Stephan Dolezalek: One thing that really separates AeroFarms from the competition is how many data points that company has collected. The vertical farm is collecting and analyzing vast amounts of data about how its plants are growing while at the same time it’s constructing and operating manufacturing facilities.

This other side looks more like what I did with Tesla as they’ve in effect built a large-scale, highly automated manufacturing facility with a very controlled environment. But there’s a key difference in that Tesla’s first plant was for cars and solar panels, dealing with static technologies where it’s all about scaling and automation to take pennies out of costs here and there. But AeroFarms is dealing with a biological substance that behaves differently as it scales. As in biotech, that can be easy to do at lab-scale or in a pilot, but it can behave quite differently in large scale, continuous production.

What are some of the challenges you face as an agri-foodtech investor?

GR: Finding co-investors that are aligned with our time horizon, values and passion. We want to have an impact and build great businesses; we don’t want a quick ‘in-and-out’ type investment.

But we are seeing more long-term investors coming into the space, and as a family business ourselves, we have networks with other families that have capital looking for a home and that share our desire to have commercial success with impact.

How does agtech differ to other sectors you’ve invested in Stephan?

SD: I’ve looked at technology invading and disrupting industry after industry — from IT and biotech to semiconductors and energy and transport — but I had no background in agriculture. So my role is more focused on pattern recognition; seeing the pace and ways in which technology disruption occurs and doesn’t occur, how we can take advantage of that, and where to be cautious.

We have a lot of different disciplines and expertise in our investment team, for instance in plant and animal science, and so we have to combine those skills and work together at different points of time with our portfolio companies to guide them forward.

Within Wheatsheaf, we have a bench of very senior people from deep in agribusiness that we parachute in to work as board members or advisors as companies go through different phases of growth that require different skills. Part of what we’ve done there looks more like private equity than venture capital.

Your portfolio has been typically heavier on the farm tech side than consumer plays. What’s your thesis around your investment in farm-to-consumer eGrocer Farmdrop?

GS: We’re very interested in the end of the supply chain and the interaction with customers. Farmdrop is a great business that gives us exposure to understanding where the opportunity comes from and how customers talk to the producer. Farmdrop facilitates that already as consumers ask more and more questions around the provenance of food; people are asking questions they haven’t been able to ask before.

SD: It’s also interesting because Farmdrop works with lots of small farms. Wheatsheaf is taking a global view of the industry so this becomes important when you look outside the US and Europe at a massive number of smaller farms. Attempting to solve and manage ag on a global basis ultimately means how can you move produce from small farms to market in an effective way, but also get consumer information about what they want to eat back to small farms to make them more survivable and economically robust.?Farmdrop is a small but growing piece of that and it’s connecting the dots in Wheatsheaf.