St. Louis, Missouri, is home to the headquarters of international agri-food companies Monsanto, Novus International, and Bunge Limited but in recent years, an influx of agri-food startups in the area have been helping to shape what some call agriculture’s Silicon Valley. One of the earliest agri-tech accelerators in the area, The Yield Lab, hopes to help scale up these startups to impact the food system at large.
Since its 2014 launch, The Yield Lab’s work has focused on a venture capital fund and accelerator program that provides capital and mentorship to agri-tech companies around the world. Companies accepted to the accelerator program receive US$100,000 (or 100,000 euros for the Europe program, based in Ireland) and guidance from both a mentor and the Lab’s advisory board.
In exchange, The Yield Lab receives a portion of equity or quasi-equity (i.e., convertible debt), the amount of which is determined through a due diligence process that takes place after a company applies.
According to Thad Simons, Co-Founder and Managing Director-emeritus, The Yield Lab has received 700 applications from companies in 69 countries over the past 3.5 years.
The Yield Lab’s Board of Advisors includes experts on topics ranging from operations to research and development. Simons himself is formerly the CEO of Novus International, Inc, an animal health and nutrition company also based in St. Louis. Pat Pinkston, another Managing Director, spent 40 years at John Deere serving as the company’s Vice President for Information Services.
The Yield Lab has invested US$2.3 million in companies from across the world, and the wide variety of The Yield Lab’s partnering firms represents the diversity of the agri-tech space. The Yield Lab’s first class of six companies in 2015 included a precision agriculture company, AGER-point; an animal feed and biofuel startup, Arvegenix; and a microbial fertilizer producer, Holganix.
“We invest across the value chain,” Simons says, “and we think that is important because the food-related challenges we face require innovation across the value chain.”
The most recent Yield Lab North America portfolio, announced in March of 2018, includes New West Genetics, Plastomics, Impetus, Nutrivert, and EIO Diagnostics
“Finding a way to sustainably feed the world’s growing population is a human issue and we believe our new cohort will help immensely in the efforts to finding innovative production methods and technologies,” Simons said in a statement. “Agri-tech is a high-growth area, even while other segments of the agriculture market are not.”
Companies in the accelerator have secured additional capital from other investors. For their first round of funding in 2015, The Yield Lab invested US$700,000 in six companies. Over the subsequent 12 months, those six companies received an additional US$12 million from investors.
Simons notes that high growth doesn’t come without challenges. “The need for mentorship within the agri-tech space is critical,” he says, “because the agri-food business can be challenging, even for experienced entrepreneurs.” Of the 500 companies that have applied to be part of the Yield Lab’s portfolio since 2015, 70 percent have reduced their workforce, while 11 percent have doubled, and 19 percent have remained about the same size.
“While innovation in agri-food is on the rise, it’s nowhere near proportional to the opportunity that exists in the space,” says Connie Bowen, a Program Manager at The Yield Lab.
With an aim to encourage more entrepreneurs—especially experienced entrepreneurs—to address problems in the food and agriculture systems, The Yield Lab created the nonprofit The Yield Lab Institute. Though The Yield Lab Institute operates under the same branding as The Yield Lab fund, The Yield Lab Institute is legally distinct from its for-profit parent.
“While we’ve been able to aid our portfolio companies, we are limited by the amount of capital we can deploy and the risks that we can reasonably take with that capital,” Bowen says. “With the Institute, we’re able to reach out and assist more entrepreneurs and help them to commercialize their solutions globally.”
According to Bowen, The Yield Lab Institute’s focus is on connecting stakeholders in the agri-food-tech innovation space: creating a space for entrepreneurs to meet and speak with producers and corporations, investors, and other entrepreneurs.
The Yield Lab Institute is set for full operation and programming in 2018. This will include launching their first AgriFood Tech Open, a conference for agri-food entrepreneurs, and developing a tool to connect stakeholders in the space.
“The food system challenges that society faces require a global response,” Simons says. Through their capital, mentorship, and The Yield Lab Institute, The Yield Lab aims to spur innovation in this space through a global community of companies.
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Source: Agric Investment Opportunities