A record £3.1bn value in UK agricultural-tech deals was reached in 2021*, showing sustained.
Interest in technologies that offer solutions to the challenges of rising input costs, food security, and environmental impacts. Behind the headlines is a strong pipeline of early-stage companies considering the best strategy for investment and the growing number of options for accessing and structuring funding.
Increasing diversity in financing models and the potential of the right investors to accelerate the growth has prompted the business network Agri-TechEdto to bring together financial experts to explore the options for the industry at the event. “Focus on Agri-finance’ on 18th May 2022.
Speaking ahead of the event, SteveThackeray, Director at PwC, `comments: What’s right for any business will be driven by specific needs and ambitions; it is important to ensure all sensible avenues are explored before selecting what is right for you and your business.”
Jodi Bartin, CEO of the financial advisory company Citi court&Coagrees.She says that although Circuit mainly works with institutional investors(banks, pension funds) for funding, they are looking at companies over £5m-she is happy to advise companies of all sizes and help point them in the right direction. it is not unusual for someone to come in thinking they want to do one thing -to sell up, for example –and then realize they have other options after speaking to us.”
Companies should consider all their options, and it pays to choose your investor carefully. Greg is an Investment Partner at Cell Capital, which has recently worked with Agri-tech start-ups Breeder and Bon Vivant. He explains that the focus for founders is increasingly on finding “smart capital,” a term referring to investors bringing more excellent value than just money to the founders.
Cell Capital is built around several thematic funds, where the capital has already been set aside and is ready for investment. Each fund is managed according to a strategy co-developed with the investors, who comprise family offices, high net worth individuals, and corporates that are traditional funds.
The company calls the ‘Venture Capital as a service. (VCaas).
Greg explains: “We are the advisors to the invest bridge Agritech VC Fund, which is currently reaching the first close. We’re aiming for a final finish of $40M. It will give us ample firepower to build a healthy portfolio and provide follow-on as required. So far, we’ve led or been co-led in three out of our five agri-food portfolio companies.
“The start-up interacts with us during the whole lifecycle of the investment, simplifying the process and building up a strong relationship.”
Are spaces an option in a volatile market?
A couple of vertical farming companies have recently used SPACs to raise funds. In a volatile market, companies working towards an IPO(Initial Public Offering)sometimes consider merging with a unique Purpose Acquisitions Company or ‘SPAC’as an alternative to going to it alone. A SPAC is essentially a shell company set up by investors with the sole purpose of raising money and acquiring another company.
In 2021, AeroFarms announced a SPAC deal with Spring Valley Acquisition Corp, which was subsequently called off. Kalera told in Fed 2022 that it was planning to use a SPAC to hit the Nasdaq, and this deal, if approved, would give the combined company an equity value of $375 million.
Steve Thackeray continues,” A SPAC merger is another way to take a company private and raise significant capital to drive future growth. It can cut some of the complexities associated with a traditional IPO. They are typically faster to complete, mitigate the risk of the price being impacted by market volatility, and bring you into partnership with the SPAC sponsor team, potentially providing additional financial and sector expertise. Still, there are downsides, and the company needs to be well advised’.
The researcher says, “We are seeing interest for a much broader set of opportunities. Generalist investors
Will gravitate towards what they understand; for example,’ software as service business models that create datasets in ga is compelling. The sector is buying now, and we see a lot of investment interest’.
Jodie Bartin will change the online Agri-tech E event “Focus on Agri-finance” on Wednesday 18th May at 13:00. Where steve Thackwray will be joined by Greg Michel, Jack Wrangham of DroneAG, Hannah smith of Angila Capital Group, and Mark Lempriere of Lombard to discuss different finance models.