April 16, 2016

By Lynda Kiernan

Finistere Ventures is in Australia seeking capital from Australian family offices, institutional investors, and high net worth individuals for its $150M Finistere Ventures II Fund prior to a final close expected in June. As the firm searches out investment opportunities within Australia’s emerging agtech sector, which has been making particular strides in the advancement of seed varieties and water conservation technologies, it has appointed Melbourne-based Somerset Capital as its placement agent for the fundraising.

“Australia has a very high standard of scientific research and innovation, but historically a gap has existed in the capital and expertise available to commercialise [sic] these ideas,” said Dr. Spencer Maughan, Finistere Ventures Partner and a former research scientist who is an Australian citizen. “We see a huge and growing opportunity for growth equity financing of Agtech companies and are actively seeking to identify Australian technologies and businesses that need both capital and the strategic, technical and operating expertise that we bring as partners and investors.”

The firm’s exploration in Australia follows the first close of the fund, launched to target early-stage backing ofagtech business developing technologies in food production, sustainability, and nutrition in North America, Canada, Australia, New Zealand, and Israel – all countries that are recognized for their strong ag sectors and healthy agtechR&D pipelines, according to a company statement.

“This is a $3 trillion dollar industry that we have globally producing food for the planet and absolutely has always been the recipient of trickle-down technology from other fields,” Finistere co-founder and Partner, Arama Kukutai, told GAI News in an interview following the first close of Finistere II Agtech Fund. “But we see real significant unmet demand for smart capital in the space. There are fundamental resource and quality issues that are out there around need for agricultural products but we also see that the sector is underserved by innovation capital.”

Founded in 2005, Finistere has been investing for more than a decade and usually aims for a five-year window for returns and exits for its investors. Although the fund will focus solely on the agtech space, the size of its investments remains fluid with commitments that will range anywhere between $1 million up to between $10 million to $15 million in a single company. Within these parameters, Kukutai told GAI News, “we’re looking for minimumthree times cash returned on capital and typical for a private equity stroke venture returns need to be in the mid-twenties IRR.”

Despite the fundraising expected in Australia, not all potential funds raised there will be invested in Australian ventures, notes the Weekly Times. AVAC Ltd. and Bayer are among the existing strategic investors in the fund, which gives Finistere Ventures a wide scope of scientific and market expertise across different geographies to call upon when deciding on potential investments. “Bayer’s investment in Finistere Ventures offers another option for Australian entrepreneurs to link their innovations to global markets,” notes Richard Dickmann, Head of New Business Development at Bayer’s Crop Science division.

Most recently, Finistere led a $5.3 million oversubscribed Series B for San Diego-based biotech startup, ZeaKal, which also included Middleland Capital and a range of family offices.

ZeaKal is seeking to increase agricultural output through the integration of its PhotoSeed™ technology. Plants typically are able to convert sunlight to biomass at levels between 2% to 3%, but if affected by environmental stressors, particularly high temperatures, this conversion rate falls even lower. PhotoSeed™ is able to increase plants’ photosynthetic capabilities – allowing them to harvest more sunlight and fix more carbon dioxide while using less water. This increased capacity can result in an improvement in grain and seed yields of up to 20%.

Other investments include commitments to personalized nutrition app Shopwell, cloud-based software irrigation service application, CropX, Robert Bosch Venture Capital GmbH, and the Flex technology accelerator, Lab IX.

“The best investments are built on working with the best teams, and our operating experience is invaluable to entrepreneurs looking to build big successes with their companies said Kukutai. “I would say that one thing that sets us apart from other investors in the space is that experience allows us to bring both capabilities and networks to the table specific to the ag sector, whether it be commercial, technical, regulatory, internationalization expertise because that’s how we see we can build value alongside the other stakeholders and companies.”