They’ll work together on the firm’s third investment vehicle, The Yield LatAm Opportunity Fund, which has a $50 million target size and plans to invest in roughly 30 companies over the next five years. The longer-term goal is to build up the agtech VC landscape in Latin America to accelerate funding and tech adoption throughout the region.
The partnership combines Optimum Agriculture’s expertise in the operational side of farming with YLL’s access to startups and technologies, creating a bridge between entrepreneurs and larger, more established agribusiness players.
Optimum Agriculture is largely engaged in the operation, management, and development of farmland in the US, Europe, and Latin America. Co-founder and CEO Gastón Marquevich tells AFN that technology hasn’t historically been a focus for his firm over the last 15 years. “We need to jump into another conversation with someone who has more experience than us agtech,” he says of the YLL deal.
YLL is part of The Yield Lab’s larger global network of VC funds that invest in agrifoodtech startups. The Latin American arm, launched in 2017, has already backed companies from Brazil, Chile, Mexico, Peru, and Argentina, including agriculture risk management platform TerraMagna, biotechnology company Botanical Solutions, and shelf life-extension platform Polynatural, among others.
Backing YLL itself, rather than simply investing into its new fund, will give Optimum Agriculture more direct access to the above companies and those joining the portfolio down the road, according to YLL managing director Tomás Peña.
“This is not about getting together and having some drinks,” he tells AFN of the partnership. “This is a holistic, systematic, and scientific approach [to discover] what are the opportunities when we put together both funds.”
The agtech VC landscape in Latin America is still in its early days, Peña adds. Although agtech in the region has been “ready to launch for a long time,” the investment money has simply not been there to fund projects, he says.
“Today we see that farmers are really wanting to get involved, [and] that’s something that back in the day didn’t happen.”
The ingredients for a robust agtech VC landscape in the region already exist. Latin America is the world’s leading net ag export region and home to almost one third of the world’s arable land and freshwater. Countries in the region export significant amounts of soybean, maize, poultry, animal feed, coffee, and other staples of the global agrifood system. Enabling tech that can make these operations more sustainable and resilient is the next step in the region’s journey.
“We are very confident that Latin America will become a center for agrifoodtech innovation globally,” YLL managing director Kieran Gartlan said in a statement. While challenges related to climate change and its impact on production exist, so too do local ecosystems that can support entrepreneurs and year-round production supported by the region’s weather, he added.
Optimum Agriculture’s decision to invest in Latin America instead of Europe or North America underscores the region’s importance and potential as an agrifood superpower, Marquevich said.
“The YLL team is uniquely positioned across the different local agrifoodtech ecosystems in the region to invest in the most impactful solutions and we wish to become an active partner for these entrepreneurs.”
Along with Asia, Latin America dominated H1 2021 venture investment in the Agribusiness Marketplaces category, according to data from AgFunder. VC as a whole is breaking records in the region this year, with investments already above $11 million.