Grit Road Partners: Adding Value To Nebraska’s AgTech Landscape
Ben Williamson and Mike Jung launched Grit Road Partners to address a market gap in the venture capital landscape and fund AgTech founders in Nebraska and the Midwest.
Venture capital interest in AgTech as an investment opportunity is relatively new, emerging within the last 15-20 years. The first wave of investment was driven by VCs and entrepreneurs on the coasts who sought to apply existing technologies to agriculture.
The results were underwhelming, according to Ben Williamson and Mike Jung, founders of Grit Road Partners. “Because none of the companies were being built by people that understood agriculture,” Williamson said. “The value chain is more complicated than just traditional software, for example.”
Williamson said this first round of AgTech founders in places like Boston and the Bay Area struggled to validate that their solutions mattered to producers and could generate revenue. AgTech unicorns, startups with a valuation of at least $1B, are rare. And lucrative exits are even rarer, Williamson said. Instead of being discouraged by the “crowded graveyard of AgTech companies,” Williamson says he and Jung recognized a gap in the market.
Earlier this year the pair launched Grit Road Partners — an $11.25M venture capital fund investing in seed stage companies in the Midwest that are solving problems across the agriculture value chain.
Jung and Williamson hypothesized that founders with actual experience in agriculture who live in areas of the country where agriculture is a driving economic force are best positioned to succeed at building AgTech startups. They looked around and decided there had to be founders in Nebraska and the surrounding areas who wanted to build, and be funded in the Midwest.
“The epicenter of AgTech should be in Nebraska and in the Midwest,” Williamson said.
Not just because the founders are here, but because there are a plethora of potential investors in the region who also have deep experience in agriculture — potential customers, too. Jung pointed out that “all the big industrial ag players are based here in the Midwest.”
Jung said the Midwest has a high concentration of what he called “institutional ag families,” which he described as multigenerational feedlot operators, ranchers, producers, dealers and distributors. “We say these are the people that are truly on the frontline of Ag. These are the ones that move the needle in the ag sector.”
Grit Road says its differentiator is its commitment to investing in entrepreneurs with authentic agriculture experience. Grit Road invests in companies across the entire value chain, from inputs and bioscience to consumer-facing products, which goes beyond the “stereotypical AgTech focus” on tech, software, robots and the hardware that a farmer buys, according to Williamson.
When it comes to AgTech solutions that Grit Road considers investing in, it’s not always the individual producer who drives the value. “Sometimes it might be the beef processing company in the middle of the value chain, or supply chain logistics part of the supply chain, or it might be financial services that is pervasive across the value chain,” Williamson said.
While the farmer or producer is always top of mind, Williamson says, not every AgTech startup is selling to that part of the value chain.
At the end of the day, the goal is to solve real problems with the support of a network of experienced producers and AgTech innovators to help validate and research these solutions, Jung said. A majority of the fund’s investors have an agricultural background, which adds an additional layer of value beyond the capital investment, he said.
Grit Road writes $250k checks at the seed stage and the round size tends to range between $500k to $2M. They defined “seed stage” as the first round of capital investment following a friends and family round. So far Grit Road has invested in 16 companies in the region, including six that are based in Nebraska.
Nebraska portfolio companies include Grain Weevil, Sentinel Fertigation, Birds Eye Robotics, Marble Technologies, HerdDogg and Corral. The companies are split between the crop and animal side of AgTech startups. Most companies were introduced to Grit Road via The Combine — an AgTech incubator based in Lincoln for Nebraska-based startups.
Grit Road plans to invest in a total of 24 companies in their portfolio and expects to complete that process in 2024. Their long term goal is to strengthen the AgTech ecosystem and build momentum in Nebraska and the Midwest.
Engaging more investors in the space is one way they hope to accomplish this. Grit Road currently leads a monthly AgTech deal flow group to share opportunities with potential co-investors representing 50 different groups. Wiliamson says the current lack of AgTech specific investors means there is little to no competition for deals.
They plan to raise another fund at some point in the future.
In closing, the pair offered several pieces of advice for aspiring AgTech founders:
- Customer discovery and market research and validation is even more critical in the agriculture space because customers tend to be skeptical and have less ability to pay due to very thin margins. Make sure you’re solving a problem that someone is willing (and able) to pay for.
- Find guidance and mentors. People in the AgTech space are willing to help. Try to find entrepreneurs who have already “been there and done that”. In Nebraska The Combine is a great resource.
- Be realistic about the amount of capital you need to raise so that you’re not in a position of needing to raise more in six or 12 months. Make sure to raise enough money to actually achieve your milestones.
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