Spurring investments and innovation in agriculture


The federal government is often criticized by Silicon Valley for being outdated and slow to react to cutting-edge technologies. That old-hat perception is compounded in the agriculture industry, where many agreements take place with dirt-crusted handshakes on backcountry roads, rather than HD video conference calls between Bay Area skyscrapers.

But the U.S. Department of Agriculture is striving to shed old-school labels, making swift strides in the past year to accelerate some of the innovative technologies combating the country’s water and ag-related resource issues.

One such program is the $154.5 million Advantage Capital Agribusiness Partners, LP, fund, which was licensed as a Rural Business Investment Company (RBIC) by the USDA in April 2014. The RBIC was originally formed in 2002 to promote job creation and economic development in rural America, but funding for the program was cut three years later.

The USDA has since helped resurrect the program as a way to facilitate private equity investments in agriculture-related businesses, with the goal of boosting jobs and ag tech adoption in rural areas.

While the USDA had previously provided loans, grant financing and technical assistance to develop ventures in rural areas, it hadn’t focused on spurring on equity financing (critical to growing businesses in the tech sector) in addition to those borrowed funds.

New public-private partnerships allow the USDA to do just that, facilitating equity support for private investments in businesses working in bio-manufacturing, advanced energy production, local and regional food systems, improved farming technologies and other cutting-edge fields.

At the same time, it allows the USDA to take a step back and let companies such as Advantage Capital Partners to manage the fund in partnership with the Farm Credit System — a network of banks and lending institutions federally chartered to serve agriculture and the U.S. rural economy.

In April, the USDA announced two additional private investment funds, Innova Memphis ($100 million) and Meritus Kirchner Capital ($25 million), would begin raising capital, as well.

“It’s no secret that businesses in rural America face a shortage of investment capital,” said Timothy Hassler, Principal at Advantage Capital Partners. “Advantage Capital Agribusiness Partners is focused on making impactful investments to foster growth and job creation in those rural communities, and we are hopeful that our partnership with USDA and the Farm Credit System will help provide more rural entrepreneurs with access to capital.”

One of Advantage Capital Agribusiness Partners’ recent investments was a $5 million boost in June to Hortau Corp., a manufacturer of smart irrigation management systems that does much of its work in drought-plagued California.

Hortau’s in-field sensors have helped Golden State growers cut back water use significantly during a time when many farmers have seen surface water allocations cut back by an average of 33 percent.

“These types of investments not only help ag tech companies grow, but create the high-value jobs we need in rural communities,” said Hortau CEO Jocelyn Boudreau. “With the water and other resource issues we’re seeing throughout the country, we need technology more than ever. Investments in data-driven technology will help improve the decisions being made in the field, and that in return will improve production, make operations more sustainable, and can help revitalize rural communities.”


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