Venture capital firm The Yield Lab Latam is seeking capital for its Ignition Fund, which will support early-stage start-ups in the region, Ana Laura Fernández, managing partner of the fund, told AgTechNavigator at the World Agri-Tech Innovation Summit in Mexico City last week.
The Ignition Fund has a target size of $20 million and will seek companies that are focused on food security, climate, financial inclusion, and the blue economy, Fernández explained. Currently, The Yield Lab Latam is raising capital for the Ignition Fund and will deploy funds at the fund’s close, Fernández explained.
Fernández joined The Yield Lab Latam in September to lead the fund, bringing 25 years of investing experience from impact investors Fondo de Fondos, development bank Nacional Financiera, and others.
“Something that I have seen in all my investment career is that most of the start-ups in Latin America are in the early stage, and there is a big gap in the support for early-stage startups,” Fernández elaborated.
Are global investors taking LatAm more seriously?
Despite LatAm’s vital role in the global food system, the region receives only about 4% of the amount of impact funding, Fernández noted. Latin America and the Caribbean make up roughly 14% of the global food production, with 45% of net international trade, according to the Food and Agriculture Organization of the United Nations.
However, global sentiment on investing in LatAm appears to be changing, as global investors seek partners in the region, Fernández pointed out.
The Bovespa Index — an index of roughly 86 top stocks on the Brazilian stock exchange — has grown nearly 18.12% in the last year, amid global investors searching for growth opportunities outside the U.S., per data assessed on Nov. 6.
“We have a growing ecosystem in Latin America. I’m impressed that more banks are giving access to credit to growers, which did not happen for a long time. And there are also entrepreneurs finding ways to support them with financial inclusion as well, which is also a big gap. There are things that are happening, but there is still a lot to do in the space,” she elaborated.
Water conservation tech needed in LatAm
The need for agtech innovation also comes as Latin America (LatAm) grapples with climate change, including droughts in Mexcio. Despite historic rainfalls in June, Mexico’s water storage levels at CONAGUA-monitored dams were 5% lower than average for the end of June, according to Reuters reporting.
To better manage resources, the Mexican government committed to investing Mex$63.153 billion through the National Water Commission (Conagua)to modernize 200,000 hectares of irrigated land, including investments in drip irrigation systems, sprinklers, and other infrastructure, according to a government website.
LatAm farmers are investing in technology to conserve water resources better, like The Yield Lab portfolio company and Argentinian software-as-a-service companies Kilimo, Fernández explained. Kilimo uses big data and a property algorithm to recommend an irrigation system designed specifically for a farmer’s needs, according to The Yield Lab.
“We invested in Kilimo, which has been doing great [work] in really promoting water savings, and it has been immense,” Fernández said. “There are also many new technologies measuring how much [water is in] your soil and when it is needed and when not.”
