AgTech Fund is Ready to Invest in New Ag Technologies

By Joan Sanstadt News Editor
Thursday, October 16, 2008 7:28 AM CDT

New technologies for agricultural products may have a better chance of being funded. That’s because the first private equity fund to focus exclusively on agricultural and clean technologies in Wisconsin was launched this month.

“The AgTech Fund is poised to be one of the nation’s largest private equity funds focusing exclusively on agricultural technologies,” said Jason Smith, president of Peak Ridge Capital, a global alternative asset firm with its Midwest office located in downtown Madison. Other Peak Ridge offices are located in Boston, Canada and Bermuda.

Smith, who grew up in northern Wisconsin and graduated from UW-Madison, is one of the original four founders of Peak Ridge Capital.

“We’ve raised enough funds to begin operations,” Smith told Agri-View. “We won’t begin making investments until the first quarter of 2009,” he added.

When those investments are made, they are expected to be in early and growth stage companies that have the ability to grow rapidly in providing innovative products or services in the agriculture industry.

“The fund will focus on investing in companies that provide better, faster and more efficient methods of agricultural production that will make future agricultural companies and producers more competitive globally,” Smith continued.

Would a project to pelletize biomass so it could be used instead of (or along with) coal at an electrical utility’s generating plant be the type of technology AgTech might consider? What about manure digesters for smaller livestock operations?

“We are looking for agricultural technologies or innovations n platform technologies n that can be used in a number of settings that will allow farmers and farm companies to be more efficient and competitive. These types of technologies and ones that accomplish similar goals are the kind of opportunities that could fall within our purview,” Smith responded.

The Peak Ridge AgTech Fund’s team is the result of numerous key, local relationships with the most successful participants in the agricultural industry.

Members of the Advisory Board include Bill Bruins, president of Wisconsin Farm Bureau Federation (WFBF); Bill Oemichen, president and CEO Wisconsin Federation of Cooperatives (WFC); Dr. Molly Jahn, UW-CALS dean; Richard Pavelski, president of Heartland Farms; Dr. Hector DeLuca, UW Department of Biochemistry and UW-Madison Steenbock research professor.

Asked how the current financial market situation would affect the fund, Smith had this to say: “Contrary to assumptions of many people, the reality is that when there is turmoil in the public marketplace, there is greater opportunity in the private arenas. A private equity fund may have greater buying power. Private equity funds tend to be uncorrelated to the public market and offer investors an opportunity to diversify their portfolios. In fact, over the last decade, alternative investments actually outperformed both public stocks and bonds.”

Structured as a typical venture capital fund, AgTech is structured so it will make investments over a ten-year time frame.

Roger Cliff, chief administrative officer at WFBF, said, “Farm Bureau doesn’t have any financial resources involved in the Fund n our contribution is our knowledge of the industry.”

Agricultural technology companies that need help to get to the next level are the kind of businesses that can benefit from the Fund.

Cliff noted “the Fund is not designed to invest in farms or farmland; it is for technology innovation n the product development side of agriculture.”

Board comments

Smith noted, “the superior expertise of the AgTech Fund’s Board, combined with Peak Ridge’s proven track record in private equity, results in a fund with substantial potential to make a positive impact on the region’s agricultural climate, and likely resulting in global implications and benefits.”

Dr. Jahn immediately saw the vast potential for agriculture-related investment in Wisconsin and throughout the Midwest. “This is a tremendous time of change and opportunity for Wisconsin and its agricultural industries,” Jahn said.

“I firmly believe our most promising path forward involves increased partnership between public-sector research and development and industry. As dean of one of the premier land-grant ag and life sciences colleges in the world, I see the fruits of agricultural innovation every day, and I have a deep commitment to helping to identify and connect these emerging opportunities with the resources required to deliver their full promise,” Jahn continued.

Bill Bruins, president of WFBF, agrees with Dr. Jahn, but sees the benefits from a slightly different angle. “I see no better time than the present to invest in the future of Wisconsin agriculture. The recent court decision reaffirming the Right to Farm law, combined with the strong commodity prices producers have experienced lately, provide the perfect time for the agriculture community to reinvest in its future,” Bruins said.

“The [Peak Ridge] AgTech Fund will help Wisconsin’s agricultural companies and farmers stay at the forefront of production and directly benefit producers and processors by investing in companies that increase yield and decrease operating costs,” Bruins.

Innovation is an essential component of all industries, including agriculture. “It is widely accepted that companies and industry sectors that focus on innovation tend to have the highest investment returns and revenue growth,” said Smith.

“Agriculture is an industry with an annual economic output of nearly $60 billion in Wisconsin alone, and investing in this industry’s innovation is key to sustaining the region’s position as a global leader in agriculture,” Smith explained.

Bill Oemichen, president and CEO of the Wisconsin Federation of Cooperatives and Minnesota Association of Cooperatives, agreed to serve as an advisor to Peak Ridge’s AgTech Fund, and commented “the Fund will provide a new and unique opportunity to grow agriculture in the Upper Midwest by providing needed equity investment in emerging agriculture technologies and companies.

“The Upper Midwest is one of the principal agricultural regions of not only the United States, but of the entire world, and Peak Ridge offers this opportunity to not only maintain our vitally important leadership role in agriculture, but to also enhance the economic health of our region for the future benefit of all our citizens,” Oemichen said.

For more information contact James Hanke, private equity director at 608-310-9520.

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