“You bring it out to our farm, we’re going to break it. But we’re going to help you rebuild it better.”
That is how Joe Rowe describes what a farmer offers an ag technology startup. It is also, increasingly, a business proposition with a balance sheet behind it.
USDA Rural Development announced July 16 that the Farmers Innovation Fund has been certified as a Rural Business Investment Company, a designation that allows Farm Credit System institutions to invest as limited partners. The fund has secured multiple limited partner commitments and will supply early-stage capital to companies developing technologies that improve farm productivity, profitability, resilience and competitiveness.
What separates it from a conventional agtech venture fund is who sits on the other side of the table. Farmers in the network are not advisers consulted after a product is designed. They help select the companies, run the field validation, deliver the feedback — and hold pooled equity in the startups they help prove out.
The Farmers Innovation Fund is a joint initiative of AgLaunch Holdings Inc. and Ag Ventures Alliance, a farmer cooperative based in Clear Lake, Iowa. It becomes the formal financing arm of AgLaunch Farmers LLC, a national network the two organizations built with regional partners including SEDCOR in Salem, Oregon; the National Science Foundation AgTech Engine in Fargo, North Dakota; and the Knoxville Entrepreneur Center in Tennessee. Member farmers contribute trials, data, knowledge and network access across 16 states, 150 crops and every major livestock sector. The network holds 40 startups in its portfolio and has recorded multiple exits that returned profits to farmer members.
A farmer’s time is the asset nobody pays for
“You have to start with a farmer’s most valuable asset, and that’s their time,” says Kyle Courtney, a voting member of AgLaunch Farmers LLC and a board member at Grand Farm and the NSF AgTech Engine of North Dakota. “We get asked all the time to try out new technologies, but there’s really not a financial incentive for farmers to do it.”
Equity changes that math.
“If the farmers can get equity within that company, there’s more of an alignment with making sure they succeed or helping them succeed,” Courtney says. “They’re not just thinking it’s another fly-by-night thing that somebody’s trying to take advantage of them and their time to work on it. The farmer is actually aligned with them and is just as engaged in seeing them succeed as anybody else.”
Courtney says the fund targets the two failure modes he sees most often in agtech.
“When you look at startups and a lot of times why they fail, they haven’t taken the end user into consideration, or they run out of funds,” he says. “The whole AgLaunch concept is: how do we provide the funds and the end user to the startup at the beginning?”
For Reggie Strickland, an AgLaunch Farmers LLC owner-member, United Soybean Board director and seventh-generation farmer in southeastern North Carolina, the farm is where claims meet conditions.
“That’s what you’re doing when you bring it to the farm,” Strickland says. “You’re bringing it to the true research facility to see whether it’s going to work or not.”
Strickland’s operation grows corn, soybeans, sweet potatoes, cucumbers, flue-cured tobacco, sweet corn and pumpkins, and includes swine and turkeys.
“Our farming operation is typically one that is first to market or first to try new things,” he says. “We’ve been sought out by others over the years to look at new products and new technology and how it could work on the farm.”
The value is not only in confirming what works.
“Everything doesn’t win, so the losers along the way — you find out that it’s a loser early on before companies invest more money in a technology,” Strickland says. “We can help make improvements or recommendations on how to move it forward in the chain.”
Farmers have pooled capital before — it built the ethanol plants
The model has a precedent in the same region that produced Ag Ventures Alliance.
“Ag Ventures Alliance started well before my involvement, but it was a group of farmers in the late ‘90s that basically came together recognizing that they did not have a viable market for the corn they were producing — and one that paid,” says Rowe, an AgLaunch Farmers LLC owner-member and Ag Ventures Alliance board member.
Rather than sell only into bulk commodity channels, those farmers pooled capital to build processing capacity.
“It was a mechanism, a cooperative by design, to enable farmers of various sizes to come together, pool together an investment, and build one of the very early ethanol facilities in the region that they served,” Rowe says. “That was kind of generation one — that mindset of, we’ve got to add value back onto the farm and drive profitability on the farm to keep rural America and our area vital and strong for the future.”
“Fast forward to today, Ag Ventures Alliance makes investments in early-stage startups that we feel can directly impact and help drive on-farm profitability through their technology and advancements,” he says. That track record is one of the cornerstones of the Farmers Innovation Fund joint venture.
What the cooperative brings to company selection, Rowe says, is not capital alone.
“The difference is, we actually have people who have real-world experience with on-farm actual product use,” he says. “That really is a unique differentiator — that direct farmer connection in the selection process and then interviewing these founders and startups.”
“Traditionally, for a lot of these founders that don’t have those connection points back to the end user, they spend so much resource time and monetary spend to access field trials and run prototypes outside of that lab setting. We’re able to close that gap much quicker.”
What works in Iowa does not work in Oregon
The network is national by design, because agriculture is not uniform.
“Anyone in an agricultural environment will tell you, especially if you look at it in the context of legislative or government regulation, that what works there doesn’t necessarily work here,” Rowe says.
He offers a specific failure.
“I step into my machine shed, and my machine shed does not have internet connection. All of a sudden, the app is completely dysfunctional and does not work,” Rowe says. “That’s an issue they had not run across. But when I ran it on my farm, I did.”
“Having a network that stretches from the southern part of the U.S. to the northern and out west enables us to do that quickly.”
Strickland, who is helping extend the network into North Carolina, frames it as risk management.
“With a network of farmers across state and regional boundaries, you spread out your risk,” he says. “Every farm is different. Just because it works for me, and things that I like, it may be totally different than on your farming operation. The more diversity you get involved in that organization — the more people looking at it in different areas, with different cropping systems — it will make that a much better product at the end if it makes it to market.”
In Oregon, AgLaunch Farmers LLC member-owner and Ag Ventures Alliance board member Helle Ruddenklau opens crops and production systems that startups rarely reach. Her farm joined through SEDCOR, a regional economic development organization and one of AgLaunch’s partners.
“We’ve always worked with researchers. We’ve always had our farm available for anybody who wanted to do trials,” Ruddenklau says. “In my mind, it’s just part of what you do.”
That does not make it free.
“It’s an inconvenience. It’s work. You’ve got to treat that part of the field differently,” she says. “This concept from AgLaunch — that if you do that, hey, that should be worth something — I was like, ‘Oh, that is a novel concept. I like it.’”
The payoff for companies is exposure they cannot buy.
“The broad network, and us being in Oregon — both the diversity in terms of location, but also the types of crops — they have access to a range of different crops through people like us that otherwise they wouldn’t have,” Ruddenklau says. “They are able to test their products much more rigorously and expose their technology to many different situations much earlier than they otherwise would.”
Sometimes the most valuable feedback arrives in one sentence. Ruddenklau recalls a founder pitching a blueberry technology.
“I had somebody come up and say, ‘This technology is going to be $200 an acre for blueberries.’ I’m like, ‘No. Nobody’s going to buy that at $200 per acre. I’m not sure who you’ve talked to.’”
“Having that direct connection to the farmers early on, when it’s still small, is important,” she says. “It’s easier to make changes when you’re small than when you’re big.”
Who gets to test it decides who gets to buy it
Christi Bland, an AgLaunch Farmers LLC member-owner from Mississippi and vice chair of the National Black Growers Council, says the model also changes who technology is built for.
“I’ve been on the NBGC board about 6.5 years, just working to help minority and underserved farmers have access to capital, access to resources, and just know about different programs and things that are going on,” Bland says.
Trial access, she says, tends to follow purchasing power.
“A lot of times, when companies come up with innovation, they’re definitely going to go to whoever can afford it,” Bland says. “At the end of the day, they let farmers try products that they know can, in turn, buy those products — and sometimes that’s not the underserved farmer.”
“That’s the good thing about AgLaunch,” she says. “It gives those farmers access to potential companies, and they don’t just give you access, but they really take the time to partner with you and see if it’ll work on your farm.”
Bland argues the network points to a wider definition of diversity in agtech.
“I don’t mean just race, the black and white. I mean diversity in size of operations, diversity in thought, and diversity in the type of crop,” she says. “With this innovation network, they work with farmers of all sizes. There’s a lot of diversity in crops within the network. I think tech is going to be diverse.”
Seven to 10 years is too long
Courtney’s clearest argument for the fund is a timeline.
“Typically, from concept to commercialization in agriculture is seven to ten years before it actually gets in farmers’ hands and starts providing value on a larger scale,” he says.
“If we can engage farmers early to help shape the technology, and we’re able to put funds behind it to help build that technology with farmers at the center of it — almost like the center of the wheel — hopefully we can cut that commercialization time down to three to five years,” Courtney says.
He is blunt about why that matters.
“I’m hoping instead of that seven-to-ten-year time frame of typical commercialization that we’ve been living through in ag — because we’ve had a lot of promises in agtech for a lot of years and not much fruition has come from it — hopefully this changes the paradigm,” he says. “Hopefully we can actually get the technology in farmers’ hands quicker, easier, and more cost effectively.”
Whoever owns the data owns the upside
Courtney sees the network as infrastructure for the next fight: farmer-controlled data.
“When you look at the world of AI, you can have the smartest AI system in the world, but if it doesn’t have data to iterate on, it is worthless,” he says. “It needs data.”
“How do you actually make sure that control stays in farmers’ hands, and farmers are the ones that are truly getting the benefit of AI in agriculture?”
Waiting, he argues, forfeits the position.
“If we take a wait-and-see approach with it, somebody else will figure out how to commoditize it, and then we become the product,” Courtney says. “If we actually control the data, we can control it in our industry, and then we can control where the revenue that it creates in our industry goes. In my opinion, that needs to go back to the blue-collar, boots-on-the-ground farmer.”
The wealth has to stay where the land is
Jai Templeton, an AgLaunch Farmers LLC member-owner, director of AgLaunch Holdings Inc., McNairy County, Tennessee, farmer and former Tennessee commissioner of agriculture, reads the fund as rural development.
“The thing that piqued my interest in AgLaunch and its predecessors goes back several years ago — a little over two decades — when I was on the county commission in a rural county, McNairy County, West Tennessee, and later county mayor,” Templeton says.
“Outside of our people, what rural counties have to offer is the land. What can that land produce? At its very basic sense, it’s pure wealth creation.”
The question is who captures it.
“How do we capitalize to give the people who have stewardship of the land — whether the farmer, whether the owner, whether they supply the owners or the farmers — ownership and opportunities to realize rural economic development?” Templeton says.
“It actually does involve the farmer. It gives the farmer, who generally lives in these rural communities and who is really invested through land and through their heritage, the opportunity to remain there.”
Agricultural production, he says, does not score well on conventional economic development metrics but produces value anyway.
“In the world of agriculture, as we know, it’s not always that large of an investment that the farmer is making, and it certainly does not always impact a lot of people for employment purposes,” Templeton says. “But it creates an enormous amount of wealth creation by having that raw production.”
“They get the opportunity to participate, to have direct input going into it early, but also owning a piece of it. It’s that equity piece that I think is very important to our rural communities.”
Ruddenklau says the fund’s portfolio strategy carries the same intent.
“The focus is really to invest in companies and emphasize that they stay rural,” she says. “The jobs that they create will end up being rural jobs out in communities that really need them. That’s an important part of it — keeping the rural economy vibrant and diversified.”
For Rowe, the stakes are generational.
“Growing up on a very small farm, my father told me, ‘Do not get into farming. There is no future in it,’” he says. “He was correct in his mind, in his viewpoint, with the world as he knew it. The difference is, I feel there is a bright opportunity for my three boys in agriculture because of the technology that’s out there.”
“They don’t have to leave agriculture to have a successful career,” Rowe says. “They can be immersed in it and have a successful career because of these technologies if we have the ability to incubate them so that they can grow and be part of that.”
‘Proof of concept’
The returns have started.
“We’re getting some checks back,” Ruddenklau says. “There are companies that are exiting, and we’re actually getting some money. It’s like, hey — proof of concept.”
She says Farm Credit capital moving through the fund also makes startup dollars go further, because the trial network is already assembled.
“All those costs go away with AgLaunch and AgVA. It’s built into the system,” Ruddenklau says. “If they can get more stable funding and larger pools of money, then they can just get on and build a company and get it as good as possible, as quickly as possible. That’s good for everybody.”
Bland sees an ownership consequence for founders as well.
“I feel like with this fund, it would find ways for those companies to still have private ownership and to be able to actually do the work that they’re intended to do,” she says.
Templeton reads the USDA designation as outside validation of a model farmers built themselves.
“I’m just excited that USDA recognizes this opportunity. I appreciate the Farm Credit System being willing to make investment and to be a part of it,” he says. “I think that speaks well of that system because they are owned by their members, who are farmers.”
“Anytime a third set of eyes, or a fourth, such as USDA, looking into it sees the worth, it makes you realize, ‘Hey, yeah, maybe I really am part of something that is big.’ It’s going to change the future for a lot of people and a lot of communities.”
Rowe puts the purpose plainly.
“We’re doing exciting things that give hope for agriculture and rural America,” he says. “And that’s what matters.”
