Agtech Action | Week of 05.11.24 - 05.17.24
Agtech Action is a weekly newsletter highlighting and commenting on current events in the world of agtech
Rain delays for spring planting, China approves first gene-edited wheat and cocoa-free chocolate startups. Organic sector posts record 2023 sales, AI in animal feeding, and bee nests are overheating to fatal levels.
Funding is the priority for agtech, but that is not the whole story. The right blend of financing, known as the capital stack, is a great way of mitigating risk for agtech. What is a capital stack? We will outline the different funding options, how they stack upon each other, and announce the winners of the Soy Innovation Challenge, in this week’s newsletter.
Food and the World:
USDA and HHS allot $199M to quash bird flu threat to cattle and humans
Still time to make a deal on farm bill, says Thompson
House farm bill text expected this week
Ag bankers say farm income is down from 2023 in Central Plains
U.S. organic sector posts record sales in 2023
Corn planting progress falls just shy of the halfway mark
Sizing up potential downside risk for new-crop corn and soybean prices
Unrelenting rain delays challenge spring planting schedule
Corn and Soybean Planting Progress Slows Overall
Food-at-home inflation continues to tame, report finds
Crop subsidy costs could surge 56% under House farm bill, say analysts
USDA offers additional aid to fight avian flu
Manage cows with facial recognition technology
Interest rates and equipment prices: the case for leasing farm equipment
Agtech in the News:
Carbon Robotics Latest News: Secures Investment from NVentures to Advance AI in Farming
USask: $25 Million Boost for Agriculture Research
EPA Proposes to Cancel All but One Acephate Use
BeeHero takes growers inside the hive
GRAINCO FS Brings Digital Ag App, Expertise to Improve Farmer Customer On-Farm Efficiency, ROI
Artificial intelligence in animal feeding
Fun:
France reclaims world record after baking baguette measuring 140.53m
Why Supermarket Monopolies Are Bad for the Farm Economy
CFTC Sues Agridime Over Alleged $161 Million Ponzi Scheme
Solar Storms Knocked Connected Machines Offline: So Now What?
Helpful Resources:
EFI spotlights mental health awareness
Expiring Estate Tax Exemption: What Farmers Need to Know
Q3 2023 Global Fund Performance Report (with preliminary Q4 2023 data)
State of the Pork Industry Report: Takeaways from 2023
Interesting Reads:
Dairy cows get turned into major league baseballs at a Pa. meat processing plant
Amid Cocoa Shortage, Investors Develop Taste For Cocoa-Free Chocolate Startups
Meet the Men Who Eat Meat (and Only Meat)
It’s Time to Treat Sugar Like Cigarettes
Bumblebee nests are overheating to fatal levels, study finds
Two Hedonistic Texas Taco Chains Could Upend Mexican Fast Food. Is America Ready?
The Great Disease-Proof Deer Debate
Pregnant Women Are Using Herbs as Medicine — But Where Do They Come From?
Do You Even Know What Cinnamon Tastes Like?
Warrantless Searches of Private Land Unconstitutional, Appeals Court Rules
Cooks Venture: bad luck or bad model?
FTC Issues Noncompete Final Rule
In California, a native people fight to recover their stolen waters
Fast Food Forever: How McHaters Lost the Culture War
Tracking Illicit Brazilian Beef from the Amazon to Your Burger
Florida Bus Crash Involving Farm Workers Kills Eight, Leads to DUI Arrest of Driver Involved
China approves first gene-edited wheat in step to open up GM tech to food crops
US agencies unveil plan for biotechnology regulatory framework
In defense of wild meat’s place at the table
Finance:
For valuations, it’s AI versus the rest of VC
Rural Bank: Growth in Australian farmland values slowed in 2023 to 6.4%
AgriVest avoids delisting amid Arkansas ESG pushback
Stafford Capital takes $200M ticket from ‘Korean pension’
Grosvenor leads $100M round as it searches for alternative proteins leader
ACCC flags concern over Louis Dreyfus bid for Namoi Cotton
US pledges $200M to help track, contain bird flu on dairy farms
AgriWebb raises $7.2M to fuel further innovation in sustainable beef production
Omnivore Invests $2.2M in Fodder Ecosystem Builder Cornext
Hexafarms Gains €1.3M in Pre-Seed Funding To Digitize Food Production
New $3.7M lab aims to create climate-resilient crops
Sustainable ag VC preps £50M fundraise
Calgary’s Agtech Scene Grows With $52M GoodLeaf Farms Investment
Accion’s new $152.5M fund will back financial institutions serving small businesses globally
Soy Innovation Challenge 2023: Announcing the Winners
We’re pleased to announce the winners of this year’s Soy Innovation Challenge:
🏆 Grand Prize: Clean Label Solution for their breakthrough Bi-Pass Pro+ that enables beef and dairy cows to digest soybeans more efficiently, both reducing the need for palm oil in cow feed and reducing methane emissions.
🥇 First Runner Up: EDEN Concept Fill develops Cellyfill cushion products from soy hulls as a sustainable alternative to polyurethane foam.
🥈 Second Runner Up: NeuEsse creates OmegaSkin™ from soy protein as a human skin substitute for treating serious wounds and burns with minimal to no scarring.
🥉 Third Runner Up: Renewable Green Composites makes plastics and polymer building blocks from soybean meal to improve the sustainability of some plastics.
Read more about these innovative and sustainable uses for soy in the USB press release.
Theme of the Agtech Week: Capital Stack
Funding is paramount in venture. Funding is often talked about, and entire events are centered around it, but not much is said about how to actually raise funds. The way ventures bring in funds, blending them and staging them, is known as the capital stack. The capital stack is a critical component for success.
How does a capital stack work? A capital stack is different components of financing layered upon each other. The different layers of the stack include:
Debt (loan, convertible note, short-term, long-term)
Equity (ownership stake, convertible note into equity)
Grant or other non-dilutive source
The components of the capital stack must be sequenced accordingly for the stack to work effectively. Typically,
First in the stack is equity. When ventures are launched, they only have equity to offer investors. Within the equity stack are priority layers (e.g. common, preferred, etc.)
Second is debt. Debt, and its instruments, is utilized later in the venture journey because it is underwritten. In order to underwrite debt, the venture has to have assets to do so (revenue, physical assets, IP, etc.) and debt is a preferred instrument for larger fundraises.
Third is grant or non-dilutive. Grant can come at any order of the stack. I mention it after equity and debt because ventures usually explore the first two before searching and applying for grants.
The other important aspect of the cap stack is who gets paid and when they get paid. That is determined by the equity stack (who invested first, who invested the largest stake, etc.), the debt stack (size of debt, time horizon of debt, preferential rights) and the level of risk for each layer of the stack. That deserves its own newsletter to unpack.
Thanks for reading and please share!
BD
Brandon Day is the Chief Operating Officer of The Yield Lab Institute, the global agtech think-tank, ecosystem builder, non-profit arm of The Yield Lab global network of venture capital funds. The views, opinions and commentary expressed are solely those of Brandon Day.