Lever VC Announces First Close of Fund II with $50 Million for Agrifoodtech Startups

Lever VC has recently announced the first close of its Fund II with an initial $50 million dedicated to early-stage investments in agrifoodtech startups. The fund, which will continue to accept new investors until its final close later this year, has already secured a diverse range of limited partners (LPs) including institutional investors, funds of funds, family offices, and prominent food and agriculture companies from across the globe.

Among the first five investments in Fund II are innovative companies such as novel fats producer Gavan Technologies, sweet protein maker Oobli, agtech software/digitization players Flox AI and HerdDogg, and meat replacement ingredient producer Mush Foods.

Nick Cooney, managing partner at Lever VC, highlighted the team’s extensive experience and expertise in the sector, having completed over 100 investments in recent years and tracking more than 6,000 startups globally. Cooney emphasized the significant opportunities present in the food and agtech space due to its large category sizes, compelling compound annual growth rates (CAGR), and robust exit environments.

Interview with Nick Cooney

AgFunderNews (AFN) caught up with Nick Cooney (NC) to delve deeper into the current funding landscape and Lever VC’s investment strategy.

Consistently Strong Exit Environments in Agrifoodtech

AFN: You mention “consistently strong exit environments” in agrifoodtech. Can you elaborate on this?

NC: Most exits in the VC-backed space are through acquisitions, and the food category ranks high in terms of the number of exits over the past decade. Major food companies have been acquiring successful startups to scale their products across distribution networks. While recent years have seen a slowdown in acquisitions and IPOs across all sectors, including food and ag, the trend is expected to revert to normalcy.

Food and agriculture encompass vast categories, and identifying areas of opportunity is crucial for generating strong returns.

Evolution of Investment Strategy

AFN: How has Lever VC’s investment strategy evolved over the years?

NC: With six years under our belt, we have continuously refined our valuation discipline, emphasizing revenue, profitability, and sustainability. Our focus has shifted towards larger categories with potential for significant returns. Fund II is diversifying investments across sustainable food and agtech sectors.

Raising Capital in the Current Environment

AFN: How challenging was it to raise funds in the current environment?

NC: The fundraising landscape has become more challenging, with a notable drop in LP commitments to VC and PE funds. Lever VC’s strong performance track record and sector specialization have been instrumental in securing investments even in tough conditions.

Areas of Opportunity in Agrifoodtech

AFN: What areas in the agrifoodtech space are most attractive right now?

NC: Lever VC’s Fund II is exploring opportunities in novel ingredients for health and sustainability, digitization/software in agriculture, and emerging food brands with healthier products. Investments in companies like Gavan and Mush Foods highlight the focus on b2b ingredients and sustainable solutions.

Role of Strategics in the Sector

AFN: How do you see the role of strategics in the agrifoodtech space?

NC: Corporate strategics continue to show interest in novel technologies and startups that align with their business goals. Lever VC’s partnerships with major food and ag corporates provide insights into cutting-edge technologies and potential business expansion opportunities.

Current Downcycle and Excitement in Alt Protein

AFN: Where are we in the current downcycle? Are you still excited about alt protein?

NC: Despite recent funding challenges, the food and ag categories offer immense growth potential. Lever VC remains optimistic about alternative protein sub-categories, emphasizing the importance of team, category, and valuation for successful investments.

As the industry continues to evolve, Lever VC is well-positioned to navigate the dynamic agrifoodtech landscape with its strategic investments and sector expertise.