Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.
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Investment in agriculture and food technologies has increased within the past five years as consumers have sought more fresh, local food from growers using sustainable farming practices.
During that time, investors sunk more than $17 billion into agtech investments, according to Crunchbase data.
Since 2017, 16 of those investments have come from Germin8 Ventures, a Chicago-based venture capital firm actively investing in foodtech and agtech. The firm closed its fund in 2019 after raising $20 million. It invested in those 16 deals across seven companies to date, and is poised to invest in another three, Michael Lavin, Germin8’s founder and managing partner, told Crunchbase News.
In December, the firm decided to take its expertise in the area one step further and brought in its first-ever chief scientific officer, Ashlie Burkart, M.D. An anatomic clinical pathologist, Burkart is providing medical science expertise to Germin8’s portfolio and vetting the science as it relates to the cause and nature of diseases as we see a health paradigm shift to using food as medicine.
We spoke to Lavin about Burkart’s hire, how he works with founders, and the future of agtech investment. What follows has been lightly edited for length and clarity.
You recently appointed your first-ever chief scientific officer, Dr. Ashlie Burkart, to provide medical science expertise to your portfolio. What drove that decision?
Lavin: We are super excited to have her join the team. She is a brilliant and creative mind, and culturally a good fit, but also brings a different perspective. She is from the medical world, anatomical and pathology, where she was mapping the behavior of diseases to come up with treatments. She has an amazing way to conceptualize impact pathways, which is relevant to what we are doing. We call her our “medical ecologist,” which is what she is. She is able to add value to the companies we are investing in, especially the ones, like Brightseed, that are focused on compounds hidden in nature. Their interaction with Ashlie provides a unique lens of the medical world. The same is true for Enko Chem, which is developing evidence-backed safe and reliable chemistry for crop production and healthy consumption.
What is Germin8’s investment strategy, and how did you develop it?
Lavin: I was previously an investment banker, representing founders and family-owned companies. I consider myself still working for founders. I loved being on the investment side and working with founders because I saw so many different industries and business models. I have a personal family background rooted in food and agriculture — I also come from a family that is entrepreneurial. I knew I wanted to make an impact on the food system, and we recognized that this is the No. 1 lever to make people healthier, better nourished and food secure, while also combating climate change. Like other good VC firms, we get high outsized returns, but look for impact returns in the same way. We try our best to measure what this looks like and do a lot of calculus to get goal posts around it.
How do you like to work with founders?
Lavin: I love it. I am a founder and everyone on my team is a founder as well. It is personal to us, and we try to take a personal approach to working with founders. Just being a close colleague and friend to them, lending an ear. They can rely on us to back them up and back-channel them. We think this is a big motivator to do what we do.
Agriculture and food technology are two areas where startups can get really creative. What are some of the more interesting technologies that have come across your desk?
Lavin: Recently, we have seen interesting breakthroughs in technology on the life sciences side, and some are targeting cancer therapies, mapping the microbiome to establish pathology behind cancer and chronic disease. Even though the sequence here is focused on cancer, over the course of business, it could transform food and agriculture, as well as the way consumers plug into that system and take control of their health with food. Inflammation, which stems from disease, can be modulated with the food we put in our bodies.
Funding to both of these areas is growing as well. Where do you see venture capital funding into these areas going?
Lavin: We see a lot of new entrants in terms of venture capital, so new capital is coming in. There is also diversity from where the sources of capital are coming from. That is very good. At the same time, we are realistic, as investors, in the level of commitment and are honest to founders. There is a lot of over-promise and under-delivery out there. We try to steer clear of working with those funds. Life is too short to partner with the wrong people. We want to make a difference and have fun doing it.
In terms of deploying capital, we see more going into life sciences, especially to innovation around sequencing RNA and transcriptomics. Microfluidics technology and computer vision can be used in full stack for life science applications. The cost of this technology is going down, making it more accessible for startups and other companies to utilize them in different ways. In food and agriculture, we are going to see more funding into the working capital dynamics and upstream agriculture. So many companies are focused on improvement of yield, but that is only one area. The farmer is thinking about both yield and working capital. When you buy inputs at the beginning of the season, you are buying at retail prices, but selling at wholesale. We shined light there, calling it “agrifintech,” which is why we invested in Bushel.
The last area is regenerative agriculture and making the shift from conventional to regenerative and doing so in a way that can credibly draw down carbon so farmers can participate in the carbon markets.
Illustration: Dom Guzman
Photo of Michael Lavin, Germin8 Ventures, courtesy of the company.
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