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AgFunder - Alternative Protein Fund 1

VC Pitch Deck

The venture capital pitch deck used by AgFunder to raise their Alternative Protein Fund 1.

Year	2019
Raise	$20m
Fund	1
Lead	Follow (Lead if round makes sense)
Ticket	$50k-900k
Geography	Global

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VC Pitch Deck- AgFunder – Alternative Protein Fund 1

This is part of the VC fund deck collection of pitch decks. In this blog we are going to go through the Alternative Protein Fund 1 by AgFunder. I’ve tried to pull all the information I can find that could be interesting for you to learn as an emerging manager, including a presentation for founders on why to take money from them.

About AgFunder

AgFunder is a new kind of venture capital firm. Our mission is to invest in bold and impactful technologies rapidly transforming our food and agriculture system.

Founded in 2013 and based in Silicon Valley, AgFunder is one of the world’s most active foodtech and agtech VCs. We’re rethinking venture capital for the 21st century. We were born online, and with our publication AFN we’ve built a global ecosystem of 85,000+ subscribers. This gives us one of the most powerful networks to help build impactful and important companies.

They were funded by Michael Dean and Rob Leclerc. They invest from pre-seed to series-B with tickets from as low as $50 up to $900k.

The Foundation of AgFunder

I believe they started in 2013 going through 500Startups as an investment platform:

The document discusses an agribusiness investment platform that raised $4 million in funding in April 2012-August 2013 and $2 million in March 2014-May 2015, with a closing of $3 million. It has over 1,200 registered investors including venture capital, family offices, private equity, and sovereign wealth funds. The agribusiness sector represents 8.4% of global GDP and has been the second fastest growing sector since 1999 with $200 billion in annual investment in growth and innovation. The platform charges investors commission rates of 4-3% on cash and options. It was founded by Rob Leclerc, PhD and Michael Dean, JD, LLM to serve as a global capital markets platform for deals under $30

AgFunder funds

AgFunder have raised 4 funds so far. Here are some images with companies they invested in.

Fund I (2017)

Fund II (2018)

Fund III (2020)

Alternative Protein Fund / New Carnivore Fund I (2020)

AgFunder Fund Performance

I pulled this from their deck and it is as of September 2020.

How AgFunder Invests

I pulled this from an FAQ page:

What stage does AgFunder invest?

Seed to Series B. In general we expect you to have some sort of prototype, a team, and ideally some traction.

How much can AgFunder invest?

We’ve invested between $50,000 and $900,000 in a company in a single round.

Will AgFunder lead?

We can lead in circumstances where it is appropriate for the size of our investment to do so. If the investment is too large given our check size we can co-lead and work to put together a syndicate of investors.

Will AgFunder invest in a non-U.S. company?

Yes, we are a global platform and are not restricted geographically.

What does AgFunder look for in an investment?

Exceptional teams with whose individual’s show a historical pattern for achievement, large market opportunities, capital efficiency, differentiated product, cogent Go To Market business opportunities, and startups with a sustainable advantage.

How fast can AgFunder make a decision?

We can make a decision in as little as a week.

AgFunder’s investment process

The following is a general outline from initial deal evaluation to investment:

Phase I: Deal Screening

AgFunder reviews materials from inbound and outbound deal flow.
AgFunder meets with the founders for initial discussion.
AgFunder’s investment team will discuss the past week’s opportunities at AgFunder’s weekly deal team meeting.
AgFunder will set up a follow-up call with another member of the AgFunder team.
AgFunder will have discussions with other VCs and potential co-investors, entrepreneurs, and domain experts in the AgFunder network to sanity check the opportunity.
AgFunder will set up a due diligence folder and send due diligence questionnaire:
Initial review of financials, strategy, market size, competition, traction.
AgFunder’s investment team will discuss the merits of the investment and the interest in proceeding.

Phase II: Due Diligence*

Set up due diligence call/meeting with the company
AgFunder sends out second due diligence questionnaire with input from the investment team
Team evaluation
Expert calls (if required).
Review legal and corporate documents.
Review financials.
Market size and competitor analysis
Strategic analysis
Diligence calls/meetings with the Client’ engineering team or executives
On-site visits (if required and appropriate)
Reference calls: Customer, partner, investor.

*Note: level of due diligence should be commensurate with the size of the investment, the level of investment participation, strategic interest and the stage of the company.

Phase III: Investment Determination

Review and investment determination discussion with investment committee.
Negotiate and send term sheet (Where leading or co-leading)

Phase IV: Investment Memo

Deal lead will prepare the investment memo. The investment memo represents a balanced assessment of the company, the strategic and financial merits, and of the risks and rewards of the investment. Note that most investments getting to this stage should receive approval.
Deal lead takes the investment memo to the investment committee for vote.

Why choose AgFuder as an Investor?

They wrote this presentation that might be of interest to you.

About Alternative Protein Fund 1

They term the Alternative Protein interchangeably as the “New Carnivore Fund”. I’ve pulled generic information from their slide and added a few slides from the deck you might find interesting.

Intro

We invest in the Protein Revolution

Cars replaced horses, petroleum replaced whales, tractors replaced oxen, telecommunications replaced carrier pigeons, fermentation replaced cows and pigs for insulin production. And despite its many shortcomings, plastic continues to take market share from leather. Wherever we look, humans have consistently built technologies that surpass their animal predecessors. Food may be next.

All over the world, entrepreneurs are reinventing how we make products we’ve traditionally derived from animals, and startups like Beyond Meat and Impossible Foods are only the beginning. Applying the latest technologies from biotech, tissue engineering, artificial intelligence, and food science, entrepreneurs are trying to create new animal-free products that are cheaper, healthier, tastier, and more sustainable. Even if they’re moderately successful, they’ll have an opportunity to capture a meaningful portion of the $2.9 trillion dollar animal products market. Opportunities don’t come much bigger than that. As venture capitalists, this is hard to ignore.

We established AgFunder’s New Carnivore fund to invest in startups working to create non-animal based protein alternatives including plant-based meat alternatives, cellular agriculture, and the picks and shovels technologies required to enable this emerging industry.

Fund Overview

Market Opportunity

$2.96 trillion market for animal products, with alternative protein expected to capture 5-10% by 2025.

Investment Opportunity

Dedicated fund to invest in ~20 startups (pre-Seed to pre-IPO) globally that are pioneering the alternative protein sector.

Structure

$20 million fund with up to 50% reserved for follow on. 10-year fund life.

Why AgFunder

Founded in 2013 and based in Silicon Valley, AgFunder is one of the most active foodtech and agtech VCs globally. We’ve coinvested with Andreessen Horowitz, Bessemer, Data Collective, Foundation, Horizons Ventures, Index, Sequoia and others, and our first funds are tracking 20%+ IRR. Our investment team has deep technical capabilities including two biology PhDs from Yale and Stanford. Our media publication AgFunder News is a cornerstone of the industry with over 85k subscribers giving us a global network and visibility.

Fund Terms

Quick comments:

General: Terms are normal to me (mostly)
Fund term: They’re smart to set as 10 years with two extension periods. This gives them time to maximise exit timing
Target return: Arguably this is low for the VC asset class (But most funds do not perform well!)
Number of investments: This is a solid number (15-25). Concentration is likely based on how they allocate reserves to follow-on
Stage: My guess is they focus on pre/seed, then will use reserves to do pro-rata where they can
Investment period: 2 years is normal, but stating 3 could be safer in legal docs (in case). I’m not sure if maxing follow-up period at 3 years makes sense though? Tell me in the comments if you have an opinion?
Annual MF: 2% blended means that likely are starting at say 3% over investment period, then taking that % down to say 1% over the maintenance period
Fund admin costs: No need to add in terms. Many funds list who they use for admin/legal etc to give trust factor
Carried interest: 20% is normal. Normally only established funds get more than 20%. But scaling after 5x is fair I think
Manager contribution: 1% is normal. Large funds used SVB to get loans when fund size is large