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Ag Startup Engine raises second fund of $2.25 million to invest in startups over the next five years

February 9, 2021

Ag Startup Engine announced today that it has increased its investor-member base and has raised a second fund of $2.25 million with plans to invest in up to 45 startups in the agriculture and food technology space over the next five years. 

“We’ve essentially set out to triple our efforts by doubling the investor base,” said Joel Harris, Executive Director of Ag Startup Engine (ASE) in a release. “We’re extremely proud of the work we’ve done the last four years, including working with startups who have created over 140 high-tech jobs and have gone on to either exit to publicly traded strategic partners or raise over $30 million in follow-on funding. While our hypothesis to support early-stage founders seems to align with the agtech investment market, there is still more we can do.” 

Established in late 2016, ASE began by looking at agtech startups in the Iowa State University ecosystem. The Ag Startup Engine’s goal was to address how to deploy risk capital into early-stage startups to solve problems in all aspects of agriculture.

“Ag Startup Engine has been able to offer a unique, customized platform for portfolio companies to build enterprise value over time,” said Kevin Kimle, who advises as a co-director of ASE. “Access to our network of successful Midwest entrepreneurs, innovators and investors has been very impactful.”

Startups accepted in the program typically receive a $25,000 to $50,000 investment along with additional resources, connections to investors, partners, customers, advisors, and preferred service providers. This can include office space in the ISU Research Park, assistance in talent acquisition, and discounts on digital tools that help the startups scale quickly.  

“Although Ag Startup Engine is one of our smaller investors in terms of check size, their network, connections, and resources for startups are just as critical if not more than the access to capital,” said Kyle McMahon, CEO and Founder of Tractor Zoom.  

Joining ASE as another advising co-director is Colin Hurd, who was previously CEO and Founder of SmartAg. SmartAg was acquired by Raven Industries in November of 2019 and was ASE’s first investment.

“2020 has been a trying year for us individually, as a country, and in many cases our companies. That being said, I believe the outlook today for agriculture, technology, innovation, and startups is brighter now than it has ever been through the course of human history,” said Colin Hurd. “I hope ASE over the coming years will continue to propel bold and innovative founders to the next level.” 

As part of the new fund, ASE is bringing on several new investors including Paul Schickler, former president of Dupont Pioneer; Bob Haney, Haney Family Foundation; Kent Corporation; and New Leader Manufacturing.

“ASE is aligned with my focus on innovation and ag startups, addressing the needs and trends now occurring in ag and food,” said Paul Schickler. “Iowa needs to significantly lift its place in this arena and the ASE, working with the ISU Agricultural Entrepreneurship Initiative, is a way to do that.” 

Initial investors—including Summit Ag, Al Myers, Hertz Farm Management, Veridian Credit Union, Next Level Ventures, Iowa Farm Bureau’s Renewal Rural Iowa, Peterson Genetics, Ag Venture Alliance, Peoples’ Company and the Farmers Fund—are continuing their support of the program.  

“We are proud to be members of Ag Startup Engine, now as repeat investors. Agtech is one of the leading fields of innovation in our state, and Ag Startup Engine has an important place in that ecosystem, said Craig Ibsen, Managing Partner at Next Level Ventures. “Next Level Ventures is excited to see the great investments that come from the new fund.” 

Previous coverage

Continuum Ag receives $50,000 investment from Ag Startup Engine and Ag Ventures Alliance -Nov. 12, 2020

Ag Startup Engine invests $50,000 in Haber Technologies -April 22, 2020

Smart Ag acquired by Raven Industries -Nov. 1, 2019

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Ag Startup Engine raises second fund of $2.25 million to invest in startups over the next five years | Clay & Milk
A central Iowa ag-tech accelerator has secured more backers and finally has a name. The Greater Des Moines Partnership first announced the accelerator last year, naming four initial investors. On Monday, the Partnership said the program will be called the "Iowa AgriTech Accelerator" and named three new investors. The new investors include Grinnell Mutual, Kent Corp. and Sukup Manufacturing, all Iowa companies. They join investors Deere & Co., Peoples Co., Farmers Mutual Hail Insurance Co. and DuPont Pioneer. Each investor has agreed to put up $100,000 for the first year of the accelerator. Startups entering the program will receive $40,000 in seed funding in exchange for 6 percent equity. Tej Dhawan, an angel investor and local startup mentor, is serving as interim director until the AgriTech Accelerator names a permanent leader. Dhawan held a similar role with the GIA before Brian Hemesath was named as managing director. As interim director, Dhawan said his main job includes hiring the accelerator's executive director, establishing a business structure and initial recruiting for the first cohort. The accelerator will place few filters, such as location and product, on the applicant pool, Dhawan said. "When you’re seeking innovation, innovation can come from every corner of the world so why restrict ourselves," he said. One area the the AgriTech Accelerator won't recruit from is biotech. For its first cohort, the AgriTech Accelerator will work out of the GIA's space in Des Moines' East Village, Dhawan said. A future, permanent home is still to be decided. The accelerator's program will host startups from mid-July through mid-October, ending with an event connected to the annual World Food Prize. The GIA, which the AgriTech Accelerator is based on, also ends with presentations at an industry event. The accelerator has also started lining up a mentor pool. The Iowa Corn Growers Association, Iowa Soybean Association and the Iowa Pork Producers Association have agreed to provide mentors, as has Iowa State University. While the AgriTech Accelerator is loosely based off of the GIA, it will differ in its business structure, Dhawan said. The GIA runs through a for-profit model for both operations and its investment fund. The AgriTech Accelerator will have a nonprofit model for its operations and a for-profit setup for its fund. Dhawan said the nonprofit model is being used so the accelerator can better work with other nonprofit partners, such as trade associations. "These are all organizations that are nonprofits and can be amazing stakeholders without ever having to be investors in the accelerator," he said. "It becomes easier to work with trade associations in their nonprofit role when we are also a nonprofit." When it's up and running, the AgriTech Accelerator would be one of a handful of ag-focused startup development programs in Iowa. Others include the Ag Startup Engine out of Iowa State University and the Rural Ventures Alliance from Iowa MicroLoan. Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at mpatane@clayandmilk.com.
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