Cultivation Capital Launches New AgTech Fund Amid Improving Market Conditions

Cultivation Capital, a venture capital firm based in St. Louis, has introduced its latest investment vehicle, the Cultivation Capital AgTech Fund IV, with an initial offering of $20 million.

The fund’s management team includes Cultivation Capital Co-Founder and General Partner Kyle Welborn, along with General Partners Martha Schlicher and Grant Pothast. This launch follows the firm’s earlier $14 million capital raise for a seed investment fund completed in May.

A key component of Cultivation Capital’s agtech strategy involves a partnership with the Yield Lab, a venture capital firm specializing in early-stage agri-food technology startups. The collaboration targets a broad range of agtech areas, including crop innovation, animal health, precision agriculture, sustainability, logistics, and food ingredients, with investments typically ranging from $100,000 to $1.5 million. The Yield Lab, with 55 venture capital investments and a median deal size of $2.9 million, according to PitchBook, will play a significant role in deploying capital for this fund.

The agtech sector faced considerable challenges in 2023, with funding dropping nearly 50 percent from the previous year to $5.7 billion across 762 startups, according to Crunchbase data. Additionally, there were fewer exits, all through mergers and acquisitions (M&A), marking a 15 percent decline compared to 2022.

However, the sector has shown signs of recovery in early 2024. In the second quarter, agtech startups raised $1.6 billion, reflecting a 15 percent increase in funding year-over-year. The sector’s share of global venture capital remained steady at 2 percent of the $79 billion total.

The outlook for M&A activity in the latter half of the year is uncertain, though the recent merger of Swiss-based Gamaya and Terraview might signal a resurgence. Announced on July 16, the merger combines their AI platforms to enhance sustainability and climate resilience in global food production. The companies aim to expand into additional markets and value chains, with a focus on decarbonization and water use efficiency for crops such as sugarcane and grapes.