In his Chicago home, Michael Lavin is clearly proud of his ties to American agriculture. A mounted longhorn cow skull adorns the wall behind him, a bronze bull on his desk bears the brand of the family meat business.
It is much the same in his downtown office, an oil painting of a dusk-lit cattle drive gives another nod to the family meat business. It hangs next to a pair of framed antique duelling pistols, inherited from his grandfather and bearing the tag: “shoot first, ask questions later”.
These days, Lavin’s links to American agriculture are through Germin8, a venture capital fund he set up to specialise in agricultural and food technologies, but he remains at his most effusive when talking of his early work in the meat trade.
“On one job I would wake up at 4am, drive into the city, and begin massaging frozen hog intestines in lukewarm water so they become pliable enough to extrude sausage into,” he recalls with a smile.
From massaging pig intestines to investment banking
Germin8 started life in 2017, when Lavin, having moved from massaging pig intestines to investment banking, sought to return to the agricultural realm to try and “invest in companies that will change American agriculture for the next 200 years”.
The sector was hugely underinvested, he believed, for while it contributed close to 20% of global GDP on some estimates, it still only commanded a few percentage points of total venture funding.
Like the many new players that were entering the agricultural investment ecosystem at that time, Lavin’s bet that more funding was on its way quickly proved true. Within a couple of years, money began piling into the sector and by 2021, it had grown to 7.6% of total venture funding around the world, according to an AgFunder global investment report.
While an ensuing correction has now taken place, Lavin remains confident in his initial hypothesis. “At the peak of the cycle, there was a lot of irrational exuberance and valuations became far too inflated,” he says. “So this is a healthy correction but I think the industry is still under invested.”
Investment thesis
Lavin claims Germin8 is avoiding such unwarranted exuberance by “taking rifle shots, not shotgun shots,” usually with an initial investment of between $1m and $3m and about two-thirds of its capital kept back for later rounds. In total, it now has around $75m under management.
This is focused across three streams – agriculture technology, food technology and science, and what Lavin calls: “frontier sciences and computation”.
“We realise that the best sciences are often created outside of the sector – in biotech, life sciences, AI – and we should be able to invest in those companies to help have an outsized impact within food and agriculture,” he says.
Take mass spectrometry, for example, a process initially developed to help search for the electron and now common place in labs around the world for identifying molecules in chemical processes.
In the last 20 years, mass spectrometry has revolutionised bioinformatics thanks to new advancements, giving scientists the opportunity to gather accurate information about molecules quicker than ever.
And yet, Lavin explains, there has never been any software built to interpret the results. This typically leaves junior lab scientists to do the grunt work which given its sheer scale, means much is missed.
“The science you’re doing is inherently reductive because you’re missing all this opportunity in the dark spaces of what you’re not able to interpret,” he says.
Germin8 – led by its chief scientific officer Ashlie Burkart – therefore began looking for a company that could fill this gap, coming across Matterworks, an AI developed that has built a large language model for raw biological data coming out of mass spectrometers.
Lavin is effusive on its potential benefits. “The agro chemical majors – the likes of Bayer, Syngenta, BASF – each run about a million samples of organic matter through mass spec in their labs every year.
“Every sample costs about $145 for the method development and analysis over several months and so that costs them about $145 million each. Just for the interpretation part.”
Lavin says Matterworks could give these companies a full analysis of each chemical make-up within five minutes, cutting their costs in half. While no agrichemical companies have yet chosen to sign up, some pharmaceutical and food ingredient players are now on the books.
Matterworks is indicative of Germin8’s attempts to find solutions to problems people may not even realise they have. “It’s really exciting to focus on what’s taken for granted as common practice in the industry, but actually can cause seismic shifts in the markets,” Lavin explains.
Backing the most pioneering scientific advancements
Germin8 also holds a stake in Bushel, a company now associated with mobile and payment tools for the grain industry, but one that started off by digitising the scale tickets given to farmers when they drop off their product.
“There was no real digital record of this until Bushel arrived on the scene. And once it did that, it opened up many, many more opportunities.”
Lavin is an autodidact when it comes to the types of science Germin8 is dealing in. “I’ve learnt just enough to be dangerous,” he jokes. But in hiring Burkart, a lecturer on regenerative agriculture at Harvard as well as a practicing pathologist, Germin8 has shown its commitment to backing the most pioneering scientific advancements.
Lavin explains that behind each investment decision sits an internal competition, each colleague developing their own thesis to champion and try and push to front. “They compete over each other as a free market. I’m a big free market guy, and I think the rest of the team is as well.”
For Lavin, the next gap is within the hard assets and infrastructure for food and agriculture. “For example, where could we set up some farm storage so that farmers can transact their grain at more optimal times. That would shift the balance of power away from the big grain companies and back to the farmer.”
It’s a free market though. That means before anyone else, he’s got to persuade his own team.
