The Evolving Landscape of Agrifoodtech Investment: Insights from Po Bronson

“Some startups pitch us, and it’s a terrible pitch, but I don’t just ignore those people,” says Po Bronson, a general partner at SOSV and managing director at IndieBio SF. “I have to be patient, to listen, to wait, and ask, what did you say you do right there? You were kind of hiding it. Let’s ignore everything else and talk about your capability to do that and what we could do with it.”

Bronson highlights a vital aspect of investing: the necessity to sift through pitches to discover innovative ideas even when first impressions may not align with their potential. “A lot of our companies are not doing what they came to us to do originally,” he notes. “I have to hunt amongst the crumbs and find companies who no one’s going to invest in, but they are actually doing something amazing.”

The Current Funding Landscape

Despite a challenging funding environment, Bronson asserts that companies demonstrating performance are still attracting investments. “It’s not a broken system,” he claims. In a conversation with AgFunderNews (AFN), he discusses “non-rigorous thinking,” the importance of lower-capex biomanufacturing, and the role of AI in modern agrifoodtech.

Venture Capital: The Double-Edged Sword

When asked about the disillusionment surrounding venture funding in agrifoodtech, Bronson expresses that venture capital is merely a fraction of the global capital pool. “I tell every one of my startups, get out of VC world as fast as you can. It’s the most expensive capital in the world,” he emphasizes. He believes that families and sovereign wealth funds are the key long-term holders of substantial capital, and encourages startups to seek alternative funding avenues beyond venture capital.

Exploring Alternative Sources of Capital

“What makes it hard is there’s no pattern to it. It’s very ad hoc, and it’s a lot of hard work,” Bronson explains about securing private wealth investments. “But they are looking for what all capital is looking for: revenues, margins, and customer traction.”

Determining Traction in Pre-Revenue Startups

For pre-revenue startups, Bronson suggests that showing strong customer interest is vital. “One way or another, you’ve got to find customers showing strong interest,” he advises.

The Challenges of Raising VC Funds

“VCs are not deploying capital because they have a portfolio to support,” says Bronson. He points out the importance of identifying those who are ready to deploy capital, especially in a time when many VCs are holding back from new investments.

Low Capex Companies and Biomanufacturing

Bronson advocates for investing in “low capex companies that can get to market in two years.” He highlights the challenges faced by startups in precision fermentation and emphasizes the potential of biomanufacturing that relies on microorganisms. “If instead you can grow an organism that lives around microbes all the time and has the ability to fend off other microbes, you don’t have to spend all that capex,” he suggests.

Innovations in Plant Cell Culture

Bronson sheds light on plant cell culture, mentioning bespoke bioreactor designs that offer excellent unit economics, despite needing to demonstrate various risk mitigations before scaling up.

The Role of AI in Agrifoodtech

He lists several exciting applications of AI in his portfolio, such as:

• Avalo: Utilizing AI to develop better crops.
• NotCo: Reformulating products with the help of AI.
• FloVision: Implementing AI to enhance quality monitoring in food processing.
• Calyx: Harnessing AI to predict weight in poultry for better planning.

Corporates and Government’s Role in Agrifoodtech

Bronson acknowledges the increasing influence of corporations in agrifoodtech investment, appreciating their commitment to emerging technologies. “I love to have multiple corporates in a round…they know every test a potential product is going to go through,” he remarks.

Regarding government involvement, he highlights initiatives like the Ireland Biomanufacturing Fund, showcasing the potential for governmental support to foster innovation in biomanufacturing, thereby anchoring economic growth.

The Future of Agrifood Innovators

Even amidst critique of venture capital practices, Bronson remains optimistic. “If companies are performing, they are getting funded in this market, despite everything,” he asserts. “It’s not about the valuation; it’s that they don’t have the revenue to show product market fit.”

Conclusion

With unique insights into the agrifoodtech sector, Po Bronson emphasizes the importance of resilience, strategic funding, and the agile adaptation of startups in an ever-evolving landscape. His experience underscores that while challenges persist, opportunities remain for those willing to innovate and seek alternative paths to success.

Further Reading:

• Rockstart’s Mark Durno on agrifoodtech’s next chapter: ‘Quality deals with defensible valuations’
• Matt Crisp on agtech investing: ‘We need to get small in order to get big again’
• Where Siddhi Capital is placing its bets: ‘GLP-1 is our AI. It’s a huge opportunity’
• Rich Products Ventures MD: ‘We have to get results, but we don’t have to answer to Wall Street’
• Astanor’s Eric Archambeau on agrifoodtech investing: ‘It annoys me when people say ‘That will never work’