In the face of a public health crisis and exacerbated environmental conditions, money is pouring into sustainable agriculture and agricultural technology as part of finding larger viable solutions to both problems. According to AgFunder’s 2021 AgriFoodTech Investment Report, startups in the industry raised $26.1 billion in 2020, with $15.45 billion coming from the US alone — representing a 15.5 percent year-over-year increase globally and a 56 percent increase domestically. And while there were numerous venture capital (VC) fund managers that were extremely active over the course of the year, with 21 deals for AgFunder, 19 for New Crop Capital, and 14 for Innova Memphis, the leader was clearly Chicago-based S2G Ventures with 37 investments in 2020.
S2G Ventures has been a major player in this field for some time. OpenTable’s founder Chuck Templeton launched S2G in 2014 and raised $125 million with its 2015 debut fund, $280 million with its 2017 follow-up fund, $550 million with its third fund in 2020, and a new $100 million fund dedicated specifically to the oceans and seafood.
It invests in entrepreneurs and startups that are shaping the future of sustainable foods, ranging from early to growth-stage businesses. S2G then becomes a “value-added” partner to the companies in its portfolio, providing them with “resources and relationships that help them push through challenges every day in the lab, the field, [and] the kitchen, so their ideas can go from seed to growth.” At the end of the day, S2G aims to create a food system that is nutritious, cost-effective, and widely accessible, altogether improving the health of both the planet and people. Plus, Templeton knows this is also good for profits, telling The Business Journals, “if you’re building a company that’s not going to address climate change as part of one of its goals, then you’re going to be building a company that’s less competitive going forward,” adding on S2G’s website, “ultimately, healthy people and a healthy planet will lend itself to a healthy profit.”
VC is a particularly effective method for focussing money towards these ends. A 2017 report by the Croatan Institute notes that “private equity and venture capital provide opportunities to invest directly into private companies working on business and technology solutions across food and agricultural value chains.” Templeton is enthusiastic about the impact that VC can drive, telling The Business Journals, “I think venture can take a very aggressive role (in addressing climate change) because there are a lot of different types of ideas that need to be tried. And a lot of corporate America doesn’t have the R&D mindset or capital set aside to be able to go after some of those opportunities as aggressively.”
S2G Ventures’ impact validates its founder’s faith. With more than 55 portfolio companies across 5 countries, S2G currently manages $1 billion in capital, has added $3 billion in total capital to the system, and has averaged revenue growth of 150 percent. Because the fund invests in companies across the entire supply chain, it claims to have been able to “construct a portfolio that sees the bigger picture environmental and financial system impact and synergies.” At the farm production stage, for example, AppHarvest builds controlled environment agriculture facilities that can grow more sustainable food for more people, achieving up to 30 percent greater yields. A more recent investment, Benson Hill implements data science into plant growth cycles to “optimize nutrition, flavor profiles and yield” of crops like soybeans and yellow peas, and it just announced a SPAC merger that will bring in $625 million in proceeds.
Further down the line, portfolio companies are driving advancements in the supply chain. In perishability, Apeel Sciences adds a plant-based layer of “extra peel” to fresh produce to extend shelf life. In logistics, SWARM Engineering has created a database for better supply chain management so that users can more easily handle obstacles like load and inventory planning; a seed round closed in April raised $2.7 billion.
Finally, at the consumption stage, S2G has partnered with “natural, functional and clean label food” brands: Once Upon A Farm creates organic, cold-pressed smoothies and blends for children, and Lavva makes pili nut-based, dairy-free milks and yogurts more targeted to adults. One of their better-known portfolio holdings, Sweetgreen offers locally sourced salads and grain bowls as a healthy meal option; co-founder Nathaniel Ru told Forbes, “our mission is to connect more people to real food and build healthier communities,” aligning seamlessly with S2G’s goals.
The firm’s impact can be felt beyond its portfolio, too. From the blog Seeding Change and the podcast Where We Grow From Here, to reports on macro and industry trends, S2G consistently releases content, stories, and perspectives about the food system and sustainability. One report, “Everyone Eats – The Future of Food in the Age of COVID,” was especially important in teasing out the implications of a pandemic unprecedented in our lifetimes for an already fragile system. S2G also interacts with the community offline: through hosting discussions for more than 300 industry leaders at the S2G Summit; and through the Annual AgSharks Competition, a collaboration with Western Growers that was launched in 2017 and awards $250,000 in investment capital to each year’s winning start-up. The company consistently works to help others: through philanthropic endeavors, like joining Land O’Lakes’ American Connection Project to expand broadband internet access to rural communities; and through engaging in policy, recently publishing the proposal “Healing America: A Future Food System for our Farmers, Consumers and Planet” to champion public solutions like better coordination between federal research nutrition agencies and private solutions like pushing $10 billion toward agtech innovation over the next three years. All in all, S2G is clearly paving the path to a better future. Fortunately for the planet, it is just one VC fund of many that are improving the health and viability of the agricultural system.