Company and fund investor, BASF Venture Capital, injects $4 million into the Brazilian AgVentures II fund, as part of its first round of closing.
The AgVentures II fund is the only fund that exclusively focuses on agricultural technology, (AgTech). The fund is managed by São Paulo-based SP Ventures, an AgFood tech leader in Latin America. Chemical company BASF’s investment will center on its nutrition, care and agricultural solutions business.
Highlighting that BASF Venture Capital's investment in SP Ventures’ AgVentures II fund is its first investment in LATAM, Markus Solibieda, Managing Director of BASF Venture Capital, explained: “Latin America is a strategic region for venture capital and for the chemical industry; especially the agricultural and food sector which offers many opportunities for entrepreneurs.”
“Cooperation between our businesses and startups has become an important driver of innovation for our customers and growth for BASF in South America,” enthused Manfredo Rübens, President of BASF South America.
Promoting AgFood innovations
Centering on Latin American agricultural and food (AgFood) startups, the AgVentures II fund is designed to create opportunities for between 20-25 new companies. The fund aims to encourage, enhance and emphasize the innovations that are taking place in the AgFood market by startups that are founded and headquartered in the LATAM region.
Marking the company’s first AgFood commitment in Brazil, BASF Venture Capital focuses on supporting chemical products and new materials, software and services, as well as innovative and digital business models in the chemistry field. BASF Venture Capital joins a selection of strategic and financial investors, international development finance institutions and local family offices, in developing the fund.
How the climate is affecting agriculture
Agriculture is a core economic area in Brazil, with agricultural products making up approximately 50% of the South American country’s exports. Brazil itself is a leading global exporter of crops, including cereals and corn (maize).
In a typical year, up to three harvests can take place in Brazil. However, the country is not without its climate-related challenges as crop diseases, the proliferation of pests, and varying soil conditions disrupt the agricultural industry.
AgTech proving formidable in addressing climate worries
As the country strives to overcome the detrimental climatic conditions, the promotion of AgTech and its solutions have grown in popularity for Brazilian venture capital firms. Companies in Brazil are dedicating their resources and strategies to developing technologies and business models that tackle the country’s specific agronomic environment.
Sharing why BASF chose Brazil as a key opportunity, Solibieda explained that due to the specific climatic conditions that Brazil and the Brazilian agricultural landscape face, “the number of companies working on technologies and business models that fit to the area’s unique agronomic conditions has grown considerably in the past two years”.
“The LATAM AgTech scene is one of the most exciting places to be,” shared Francisco Jardim, Co-Founder, SP Ventures. “The region has a large addressable market — Brazil alone is the second-largest food producer on the planet — and represents one of the most promising growth opportunities. It is a tropical agriculture platform, which creates several particularities that demand native solutions.”
Areas of focus
Current Brazilian agriculture threats relate to agricultural production factors, business management, precision farming, software solutions and livestock management, food technologies for innovative food, new ingredients and plant-based proteins.
Supply chain technologies, such as food safety and traceability, logistics and processing technologies, will also feature as focal points of the fund. Financial services that focus heavily on technology in agribusiness are also important to advance the AgFood sector.
Commenting on the brands tapping into agriculture and working to improve nutrition in LATAM, Jardim highlighted: “We are seeing brilliant entrepreneurs attempting to disrupt the ag distribution value chain, building tech-enabled ecommece and logistics solutions. We are also engaging AgTech firms attempting to build the region’s agribusiness financial services industry, focusing on tech-driven credit and insurance.”
South America has been a target region for BASF for several years. In 2016, the chemical company launched AgroStart, an acceleration program that has since registered 420 startups in the AgTech sector.
“BASF Venture Capital’s investment in the AgVentures II Fund will provide us with the opportunity to further participate in this dynamic, innovative and co-creative environment that can bring valuable solutions to the industry,” added Rübens, President BASF South America.
The next decade
Looking ahead to its longer-term activities and objectives in Latin America, Markus Solibieda, Managing Director of BASF Venture Capital, shared: “We are preparing the ground for our own future direct investment activities in Brazil and Latin America.”
Along with promoting and advancing the LATAM AgFood and AgTech environments through financial and technical support, BASF also intends to team up with earlier entrepreneurs and businesses in the SP Ventures organization to share information, best practices and market insights.
“BASF will convey institutional credibility with the entire agribusiness economy in Brazil. By tapping into BASF’s technical expertise and market know-how, we will also be able to make more qualified investment decisions,” said Francisco Jardim, Managing Director of SP Ventures.
“AgTech has become one of the most important sectors for venture capital firms in Brazil, and SP Ventures’ AgVentures II fund is currently the only fund focusing exclusively on agricultural technology,” added Solibieda.