Agtech incubator Reservoir hopes to strengthen the bridge between Silicon Valley deep tech and California’s agtech sector with the launch of a new fund, Reservoir VC.
The Salinas, California-based incubator and investor this week unveiled the fund, which will invest in pre-seed automation, robotics, and precision ag startups. The announcement comes a couple months after the official launch of Reservoir Farms, which aims to de-risk the process of testing, validating, and deploying agtech solutions.
It does this by providing startups with real-world testing environments where they can refine their solutions directly with growers. Reservoir Farms CEO Danny Bernstein calls it “a launchpad for pre-seed startups and a landing pad for scale-ups.”
With the new fund, “We really want to be in a position to lead a pre-seed round, and to gather other investors—they could be other firms, they could be growers, strategics, or angels,” he tells AgFunderNews.
“We feel comfortable leading because we think Reservoir Farms is a great place to de-risk early-stage agtech bets. We think we can really accelerate those first two years down to six, nine months.”
The fund will write average check sizes of $500,000 with what Bernstein calls “valuations aligned to today’s agtech exit realities.”
“What are the kinds of companies that are fitting into an R&D structure for a John Deere, for Kubota, for CNH? They’re not $500 million companies. They are $30 million, $50 million outcomes.
“If we’re delivering value to our investors, we want to be investing at $5 million valuations. Then we can do 6x, 10x from those outcomes and feel great about what we’re delivering to the acquirer and the startups themselves.”
‘We need more deep tech talent in ag’
Reservoir also this week announced the appointment of Matthew Hoffman, Ph.D., to lead the fund as managing partner.
Hoffman, a sixth-generation farmer and agtech veteran, has spent the last decade at California berry giant Driscoll’s as the company’s global R&D, agtech, and digital transformation lead.
Bernstein says that besides his extensive background in agtech and ag digitization, one of the big attractions about Matt was “how adept he is at explaining the first principles of agriculture to someone without an ag background.”
For Reservoir Farms, this will be an especially important skill as the company attempts to strengthen the ties between Silicon Valley and agtech, and bring more deeptech to places such as Salinas.
“We think this is going to be one of our superpowers,” says Bernstein. “Ultimately, it will be to draw more deep tech talent into ag by providing a friendly entry point from a deep tech background into an agtech background.
“We need more talent in ag, and we’re really trying to position the fund to be there for that,” he adds.
Actively seeking startups
As to what Reservoir VC will look for in startups, Bernstein says a critical piece will be how companies are connecting with growers and if they are building “bi-directional” collaborations with them.
“Are they humble or are they supercilious? Are they listening or are they telling?”
Another point he raises: startups should be “digging into the commercialization realities of agriculture.” That includes understanding the role of ag equipment dealers (e.g., RDO, Velcourt) and how to work with them.
Reservoir VC’s initial startup investments include Farm-ng, which was recently acquired by Bonsai Robotics, soil-sampling-focused startup TerraBlaster, led by ex-Deere exec Jorge Heraud, Agriful Software, led by a Stanford team with ties to the Central Valley, and Cal Poly alum company Nexstera Tech.
The firm says it is currently seeking more startups that meet the above criteria in addition to having a focus on the specialty crop sector.
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