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May 25, 2022

Tech advances could aid global food system, says specialist investor Anterra Capital

Anterra Capital has just closed its second investment fund, with commitments of US$260m.

By Andy Coyne

A specialist investment firm that backs businesses looking to back technological advances in food and agriculture says the sector has fallen behind some of its peers.

Netherlands- and US-based Anterra Capital suggests biotech and digital solutions could “shake up the lagging food and ag-sector”.

Anterra Capital – which has just closed its second Global Food and Agriculture Technology Fund with commitments of US$260m – suggests a focus on technology explains the higher-than-expected interest in its second fund.

It argues the Covid-19 pandemic and the Ukraine war have convinced investors the world needs to radically change how it produces, distributes and consumes food.

Managing partner Adam Anders said: “The pandemic highlighted the fragility and adverse health impacts of our current food system – soaring prices, empty shelves in stores, the fact that unhealthy diets are a major risk factor for getting Covid and that the way we treat farm animals could trigger the next pandemic. Post our final closing, the devastating impact of the Ukraine war on the global food supply has increased the awareness among investors even further.”

All investors from Anterra Capital’s first fund have returned for the second one, led by Rabo Investments and Eight Roads Ventures. The second fund also saw new investors coming on board, ranging from pension funds and sovereign wealth funds to family offices and tech entrepreneurs from other sectors.

Anders said: “A new crop of mainstream investors is ready to get involved … Investors realise they can help build a resilient and regenerative food system and make excellent returns at the same time.”

Anterra believes biotech and digital solutions are the two key technologies that will transform the food and agricultural sector.

Anders said: “Growing public acceptance of biotech solutions and gene-editing thanks to mRNA-vaccines, is an important shift. Biotech advances will also play a critical role in making food and agriculture more resilient and less carbon-intensive, from fighting and preventing infectious diseases that jump from animals to humans to developing more sustainable crop health solutions.”

But he suggested food and agriculture has a way to go in catching up with other sectors in embracing the new.

“Technology-wise, food and ag lags 20 years behind sectors like human health and banking,” he said.

Anders pointed to a lack of experienced entrepreneurs and the domination of a small number of players in food retail.

However, he suggests playing catch-up could be an advantage.

“You don’t necessarily need the latest, cutting-edge technology to transform it,” he said. “It’s an advantage of operating in a slow-moving sector – you can innovate in a slightly de-risked way.”

The firm has previously invested in California-based gene-editing pioneer Caribou Biosciences – co-founded by Nobel prize winner Jennifer Doudna – and transparent pricing and direct distribution channels such as ProducePay and Agriconomie.

Anders told Just Food Anterra Capital is a “risk-adjusted response investor” so would avoid areas where there might be “big consumer pushback” or a “long-term horizon”.

On some of the more talked about areas of food when it comes to innovation, he remains guarded.

Reflecting on plant-based protein alternatives, he said: “Clearly there is a huge consumer demand and success from Beyond Meat and Impossible Foods but several of the other companies that came after didn’t have differentiating technology.”

He described vertical farming as a challenge to investors because it is capital intensive and said cell-based meat overlaps with plant-based and vertical farming by having “technology and capital intensity challenges”.

But he remains confident technology can help with the food challenges the world is seeing at the moment.

“There is a lack of flexibility in our food system. Covid forced a change in where you get your supplies from,” Anders said.

“Digitalisation inserted flexibility and that’s good for the food system. It will benefit from these necessary changes.”

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