A New York family office is one of several investors entering a $40 million financing deal with agriculture-technology firm FarmLink, which provides big data to crop farmers so they can benchmark and improve productivity.
The technology provides information about factors such as soil quality and yield, comparing patches of land as small as 150 sq ft to previous harvests or other farmers.
Single family office Thorndale Farm will commit an undisclosed sum in the Series B funding. Venture capital and private equity firm OpenAir Equity Partners will lead the financing deal.
Reza Vishkai, head of specialist investments at Insight Investment, a BNY Mellon company, says family offices, as long-term investors, have an affinity for stable investments such as farmland.
Vishkai says the anticipated rate of population growth means now is a particularly good time to buy into agriculture, with the demand for agricultural production expected to grow by 60 to 70% by 2050, which is expected to be the peak year in population growth.
“If you own high quality land and are in a position to increase production to meet the growth in demand, then your investments in farmland is likely to be rewarding” he says, adding: “From a technology standpoint, anything that can increase the yield and production growth, you would think there would be some demand for it because people are looking to do that and it is increasingly difficult to do so.”
However, Vishkai adds: “Venture capital has its own risk, like the potential market size, what the technology is doing what kind of adoption rates they’re looking for.”
Vishkai says family office investors considering buying into agricultural technology start-ups should take into account: the quality of the people behind it, the quality of the technology and what need it serves, the size of the market, the start-up’s business plan and whether it’s realistic, how much capital they need, and, how your family office might be able to help them in executing the process.
“From a tech standpoint, anything that can increase the yield growth and production rate will probably have demand, because people are looking to do it and it is increasingly difficult to achieve,” Vishkai said.
Last October, US farming giant Monsanto acquired The Climate Corporation for just under $1 billion. The technology platform combines weather and agronomic data to assist farmers with monitoring, analytics and risk management.
FarmLink is a subsidiary of MachineryLink, which leases combine harvesters to part-time farmers and also happen to be equipped with company’s data-gathering technology.
Thorndale Farm was founded by the Thorne family in 1996 following the sale of the family’s publishing business Commerce Clearing House. Fifth-generation family member Oakleigh Thorne manages the family office.