Each year, around 30-40 companies approach us, and we usually meet around 25 of them from which we select 8-10 to pitch to members. We review their deck and have an initial meeting with the CEO and senior team to understand the business. This first stage simply tests for eligibility:
- we do not invest in animal farming,
- we only invest at seed or pre‑seed stage,
- the company must be agritech – this is our focus.
Most companies we meet are seed‑stage agritech startups with pre‑money valuations of £1.5-4m, raising £250k-£1m, expecting breakeven in 1-4 years, with teams of 3-8 people, and mostly UK‑based.
If a company passes this initial filter, we carry out a more sophisticated analysis using what we call the “Quadricoptor”. This framework was developed through work at the Cambridge Judge Business School (the Ever Project) and refined over many years of reviewing agritech startups.
We analyse each company under five headings: Strategy, Products, R&D, Funding, People. Taken together, they give us a very good picture of the business and whether it is likely to succeed.
1. Strategy
We start with strategy: how the company plans to commercialise its intellectual property or know‑how. At a basic level, are they selling knowledge (ie licensing it) or as a product that applies the knowledge? We assess whether the strategy fits the team’s skills and experience.
Example: A company developing a natural product from wetland plants had interest from up‑market brands. A new investor wanted them to scale rapidly into global commodity markets. We felt this strategy was well beyond their capabilities and unlikely to succeed.
2. Products and Markets
We look at what the company is selling, whether it is ready or still being developed, how much support it needs, and how expensive it is for the target customers. We examine the markets they plan to enter, over what time period, who they are competing with, and how they plan to sell (direct or through distributors – who, and what is the engagement thus far). Each answer usually generates more questions.
Example: We invested in a company developing an additive for polytunnels. Their route to market was through existing polytunnel manufacturers, who would buy the additive and incorporate it into their polythene. This meant a very large market could be reached through a relatively small number of manufacturers.
3. R&D
This simply assesses the development stage of the company. There is no preference for or against early‑stage companies, but the further away they are from the market, the longer they will need to fundraise, and the more money they will need.
Example: We reviewed a company with interesting technology but likely 7+ years from a saleable product. Their ideas for bridging the gap were vague and unconvincing, and their pre-money valuation was high for such an early stage company so they would likely face down round before generating revenues. We decided not to progress.
4. Funding
We expect companies to raise enough for an 18‑month runway. Assuming the next raise takes six months, that gives them 12 months to make progress before they need to start another round. The amount they need to raise is not always a concern, provided they have a strong enough story and a realistic plan.
We also expect valuations to be appropriate for stage. As a rough guide, we are unlikely to invest in seed‑stage agritech companies with pre‑money valuations above about £4m. That is not an absolute rule, but we will not break it simply because a CEO assures us that they have been cautious in setting the number.
Example: A company developing encapsulation technology for crop protection to reduce runn-off was very early and 6+ years from any sort of revenue. Their pre-money valuation was very high, and they would almost certainly face down‑rounds. We did not progress.
5. People
Early‑stage companies usually have fewer than five people. Three to five is normally enough to cover R&D and commercial roles. Higher numbers can be a concern because of burn rate and because it suggests the company is gearing up for rapid growth, which is unusual in agritech. We do also look for agricultural experience, even if through consultants or relatives, to ensure the company is grounded.
Example: We met a small company and were tempted to invest. A senior team split left the CEO largely alone. We were impressed by the way they handled the situation, and once it was resolved, we invested.
After the Quadricoptor
Once we have built a picture of the company, we apply a further, more ad hoc stage: confidence in the team, their market awareness, how well they have built setbacks into their plans, their overall realism, and the pre-money valuation. This helps us decide whether the company is likely to be successful and whether it fits our investment strategy.