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How two cooperatives and a $50 million investment fund bring innovations to farmers

Cooperative Ventures is a new capital investment fund founded by Growmark and CHS.

Both have partnered to create advancements in tech for the ag industry by investing in start-up companies.

“What is differentiating about Cooperative Ventures is that we are two cooperatives working together with a focus on the farmer,” says David Black, chief information officer at CHS.

“There has been a lot of ag tech in the industry for many years. I’ve been involved in it and the ag industry my whole career,” he adds. “So as a technologist, I honestly can say I’ve never seen this sort of focus on the producer at this scale.”

Black explains how the fund will work to meet the needs of farmers and provide solutions to the industry.

SF: How will CHS and Growmark help fund and shape ag tech start-up innovations?

DB: There are two strengths that both Growmark and CHS bring to the table. One is size and scale due to the number of acres that we touch and the number of farmers and producers for whom we have the ability to make a difference. CHS has a wonderful presence across the Upper Midwest to the west and Growmark has the same across the I-states. While there’s some overlap, the work we do complements each other nicely.

The second strength is that both organizations are cooperatives. The culture of cooperatives and our ability to work together and with start-ups really is differentiating. And more importantly, we’re both highly focused on what’s right for a farmer.

SF: How did the fund choose to focus on crop production, supply chain, and sustainability, and what kind of solutions will you be seeking?

DB: We chose those three areas not only because they fit the strategy for both companies, but because we heard through feedback that those are what our owners are looking for. 

On the crop production side, we will continue to focus on precision agriculture because there is opportunity in terms of profitability and helping farmers understand what improvements can be made to how they farm and operate their business.

We will look for opportunities to achieve efficiencies within both companies’ supply chains. In addition, we will put more focus on distribution to the farm gate, especially with the use of analytics to provide more transparency.

While we don’t know exactly what the future of sustainability looks like in agriculture, we know it is important and we hear from farmers that sustainability is important to them. Whether it addresses greenhouse gases or clean water, whether it is driven by legislation or consumer trends, we should think about the impact of sustainability.

SF: How does the fund invest in start-ups?

DB: Cooperative Ventures is a 10-year fund. We see investment occurring in the first five years, which could vary based on the maturity of the start-up, how close they are to commercialization, and what funding round they are in. The second five years is for scale and growth. We have a structure for fund management and both companies will participate equally in an investment committee to make selections.

Both companies have had their own innovation work already and have connections to the start-up space. Early in 2022, we’ll likely begin workshops, host start-up entrepreneurs, and begin the selection process.

SF: What are the benefits of investing in start-ups?

DB: This fund provides greater alignment to strategy because of the equity model. We are very open about what we see that the industry needs, what farmers need, and we can articulate that. By taking equity in a start-up, we take a board seat, which allows us to drive our strategy even more. There is reciprocity when we’ve taken an equity position because the start-up probably has an even stronger commitment to us and to success.

We don’t expect to be the only venture fund that may be invested in a start-up in its early stages and quite frankly, we’re OK with that because we see value in the diversity while helping a start-up grow.

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