Monsanto, Bayer join venture-capital push

Agribusiness giants are sowing their own venture-capital seeds.

Biotech seed producers Monsanto Co. and Bayer AG are among the companies that recently established or expanded investment units to fund new agricultural ventures. As a wave of entrepreneurial vigor sweeps the Farm Belt, the companies want to ensure they don’t miss out on cutting-edge tools for food formulation and pest prevention, the companies say.

Geoff Kneen, head of North America new ventures for Bayer’s agriculture unit, said the company sees venture-capital investing as a means to adapt innovation from aerospace and other sectors that could help harness huge quantities of newly available data about food production.

Bayer in February formed a new $150 million fund focused on agricultural technology with investment firms Finistere Ventures and AVAC Ltd. Mr. Kneen said his company put up a minority portion of the money and attracted partners because it assured them that their startups would be able to target a large market quickly by tapping Bayer’s scientific and sales infrastructure.

“The technological landscape is changing,” he said. “Our role will be to develop those technologies for the future of food production.”

St. Louis-based Monsanto set up Monsanto Growth Ventures in late 2012 as a way to spot and exploit capabilities Monsanto didn’t have in-house. The effort also helps identify acquisitions, including its $930 million deal in 2013 for Climate Corp., a weather data-crunching firm that is now the flagship for Monsanto’s push into computer-powered farming services.

“We wanted to get one step closer to the entrepreneurs, one step closer to the scientists,” said Steve Padgette, Monsanto’s head of research and development investment strategy who helps lead the division. He declined to say how much money Monsanto has put into its venture investments.

Rival Syngenta AG also is cultivating startups. Its ventures arm in February helped lead $7.3 million in fundraising for AgriMetis LLC, which aims to synthesize molecules that plants naturally produce to defend against pests.

As they compete with other investors to woo good targets, some agricultural companies tout their commitment to a business that, by definition, can move as slowly as the seasons. Agricultural entrepreneurs at times have been wary of working with nonagriculture venture funds that they fear want to cash out quickly, industry observers said.

The Andersons Inc., an Ohio grain company with $4.5 billion in annual revenue, highlighted its long-term aspirations when it launched a new venture fund in January targeting investments of $500,000 to $5 million in new concepts for fertilizers, computer-guided farming and food safety.

“We are unencumbered by a compulsion to ‘exit’ for the sake of earning a quick return,” the company said.