Private equity fosters agritech innovation

Overconsumption is at the heart of Earth’s environmental crisis – notably our broken food system. Breakthrough technologies have the potential to help the planet overcome this challenge, but the companies behind such innovative solutions need the right funding and support for product development, testing and scaling to achieve their full potential.

Private markets have traditionally been leaders in fostering innovation and have benefited from the high-growth rewards as well as absorbing the risks involved. But the investment landscape is changing.

The growth of impact investing – particularly private equity funds that focus on impact – is enabling a broader set of investors to benefit from the companies driving transformative solutions.

Enhancing growth potential

Private equity is undeniably at the riskier end of the investment spectrum, but risks can be managed. We focus on growth-stage companies – known as Series B – which have already gone through seed funding, technological innovations have been proven, are ready to take the next development steps and have started to gain commercial traction.

These companies still offer significant growth potential, and this potential can be further enhanced by experienced private equity partners guiding the institutionalisation of business, refining governance aspects and helping international development by offering relevant global business connections.

Given our specific focus on impact investing, we also use our expertise to advise founders and other shareholders about the value impact integration can add to a business. This ranges from ensuring impact is correctly and accurately defined, then measured, as well as ensuring that the appropriate disclosures are in place to meet the regulatory obligations for SMEs.

Agriculture: ripe for innovation

Risk can also be mitigated by focusing on the right target areas.

Agritech is beginning to take a more critical role in addressing global food production and sustainability issues. While the challenge of humanity’s ongoing need to eat has resulted in little consequential disruption for the agricultural sector as yet, powerful forces are starting to compel change.

Governments worldwide have set targets to lower emissions – sometimes embedding these into law. Corporates are being pushed to be more transparent about their supply chains and production practices, and consumers increasingly want a clearer understanding of the journey from farm to fork. These demands will not be met without a fundamental transformation of our food systems.

Fortunately, cutting-edge innovation is driving sustainable and regenerative developments in the way we produce food. Pitchbook’s Q2 2024 Agtech Report identified several key areas that are attracting investor attention, including Ag finance and insurance, the development of livestock and land animal technology, the increasing use of drones and imagery analytics, as well as robotics and smart field equipment. In addition, the World Economic Forum named alternative livestock feeds and their potential to revolutionise animal nutrition for sustainability as one of its top ten emerging technologies of 2024.

In our view, three core areas will lead the transformation:

Agritech, which utilises AI, robotics, big data and the internet of things (agriculture 4.0), to improve resource efficiency, productivity and carbon sequestration while reducing pesticide use.
Novel ingredients, which is the development of new food sources that are as attractive as today’s mainstream animal proteins.
Waste and circularity, which seeks to improve product lifecycles, limit waste, promote more sustainable packaging and create opportunities to upcycle food waste.

Innovation in action

For us, the most important stage is identifying growth-stage companies creating transformative solutions, through redesigning how agricultural land is preserved and food is produced, and reinventing what we eat. In enabling a more sustainable, regenerative food system, such companies will be pivotal to achieving net zero by 2050, but to do this they need investment now.

Regenerative Growth I portfolio examples

Micropep

Micropep is where the worlds of biotechnology and agriculture collide. Harnessing the incredible potential of micropeptides – short natural protein molecules that target and regulate plant genes and proteins – Micropep is developing the next generation of safe, efficient and sustainable natural crop protection and crop stimulation solutions to help farmers adapt agricultural systems to the impact of climate change.

While the science can be complicated to understand – Micropep utilises the combined powers of computational biology, bioproduction and delivery, and formulation science, technologies already widely used by pharmaceutical and cosmetics companies, to create its products – the potential outcome could be game-changing. In our view, biotechnology could solve some of the biggest challenges for sustainable agriculture by limiting its reliance on damaging chemicals, improving crop yields and protecting biodiversity.

Koa

Founded in Ghana, Koa upcycles waste to create new products. By processing previously unwanted cocoa pulp – the residue after cocoa beans have been harvested – it produces a natural sweetener that can be used for food and beverages. It has even established connections to the chocolate industry – taking the cocoa story in a full circle. Not only is its focus on circularity and waste reduction an impactful concept, but it also has an agenda of empowering local communities by creating more income streams for small-scale farmers and creating new employment opportunities.

BettaF!sh

BettaF!sh is a German company developing impact-enhanced foods based on seaweed. Seaweed is a vastly untapped resource, which grows naturally without consuming any additional ingredients or water – it just needs sunlight. There are currently 10,500 known species of seaweed and its potential for further discovery is significant. Like many plants, seaweed naturally sequesters CO_² and is a source of protein that can be applied to feeding animals or for human consumption.

And this is what BettaF!sh does. It uses seaweed to mimic the taste and texture of seafood. At present, it offers plant-based alternatives to tuna – 'Tu-Nah' – and salmon – 'Sal-Nom'. A key differentiator for us is that, unlike other alternative meat manufacturers, BettaF!sh sells its products at price parity with similar products and has partnered with some of the major low-cost supermarkets in Germany, Austria and Switzerland, which should help it avoid the underwhelming sales experienced by premium meat substitute products.

Private equity for impact

For investors seeking to directly contribute to meaningful change at speed and scale without compromising on financial performance, our impact-focused Regenerative Growth I strategy targets these twin objectives. Innovation-centred businesses need private capital to survive and thrive; our strategy focuses on growth-stage ventures with proven technology, post-revenues and commercial traction, and we use our extensive experience of supporting Series B companies to minimise risks and maximise value potential.

With the technology lens increasingly focusing on agriculture, we envision an ever-growing wave of cross-sector, nature-positive tech innovations that private capital can help fulfil their growth potential, as well as accelerating a nature-positive transformation of our planet.

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Private equity fosters agritech innovation

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Regenerative Growth I

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Investing in partnership with Zebra Impact Ventures

Mirabaud Asset Management and Zebra Impact Ventures have formed a unique strategic partnership with the power to catalyse financial and impact performance. Together, we have the expertise to deliver meaningful change and powerful impact performance.

The Regenerative Growth I strategy invests in companies creating solutions to our broken food system to generate positive investment outcomes for our clients.

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