Venture Capital Agriculture
The venture capital investment in the field of agriculture biotechnology has seemed a very dead area in recent years. Despite a recent European backed investment fund’s efforts to expand in this area, the venture capital portion of the total investment in agriculture biotechnology is very small.
Food is a basic human need. It was the ability to produce larger quantities of food that sparked the growth of civilization. Once man had the means of producing enough food without the labor of every single person in the tribe, he was free to concentrate on other things. Even the managers of billion dollar venture capital funds have to eat. Also, food supply is struggling to keep up with increasing population. Hunger is still a global problem and prices are rising consistently. So, why is so little venture capital being invested in agriculture.
The answer is that a small number of giant corporations involved in food production and chemical pest control have been providing the equity capital and buying out just about any new start-up company that manages to get off the ground. It is a very expensive process. The cost of developing a new agriculture biotechnology company is prohibitive and very few new ones can achieve profitability quickly if at all.
Yet, in a comparable industry like biotechnical health research, there is a great deal of venture capital interest and investment. The problems are almost exactly the same. The initial cost of development from conception to profitability is very high and the major companies already in the industry are competing with private equity capitalization also.
There are very few start-up companies out there working in the area of agricultural biotechnology. It may be simply a matter of the field not having the glamour of such other areas as alternative energy, electronic and computing technology, or even health care. Most people, used to well stocked grocery stores, are taking food for granted, but this trend may change. Rising prices and shortages that are already impacting third world countries might one day cause the same concern as rising gasoline and energy costs do today.
This is the thing that venture capital does best in our world. The true dream deals will come from those with the ability to see a bit into the future and position themselves to take advantage of it. The current fads are popular because everyone is involved in them. It is the future fads that will offer the great investment opportunities. Agricultural biotechnology might be one of these areas. The fact that industrial giants are so quick to buy up new companies shows this and, short term, helps insure the safety of any venture capital investment in agriculture.