New venture capital firm off to blazingly fast start

Ron Meeusen lands on his feet a lot, and now he’s doing it again in an industry in which he has virtually no experience.

A scientist by training, Meeusen was the point person for Dow AgroSciences’ foray into genetically engineered crops, and then he helped BioCrossroads figure out where the state had the best opportunities to invest in agribusiness.

He left BioCrossroads in 2005 to co-found a venture capital firm focused on food and agriculture. Originally called IN Partners LLC, the firm recently renamed itself Cultivian Ventures.

The sun is shining on him again.

With partner Andy Ziolkowski, who brought venture experience to the partnership, Meeusen closed the fund with $34 million in late 2008—just weeks after the collapse of Lehman Brothers and the onset of the financial crisis.

The 20 investors in Cultivian include traditional institutional investors; two Midwestern Farm Bureaus or their associated insurance arms; Indiana and one other Midwestern state; and a number of individuals who made bundles in food and ag.

The firm couldn’t have come into the market at a better time. Venture funds were hoarding cash for their portfolio companies, drying up the flow of capital to new investments. Not only was Cultivian one of just a handful of venture firms in North America devoted to food and ag, but it also had money burning a hole in its pocket.

Cultivian has made five investments and anticipates making a couple more before the end of the year. In the first four deals, Cultivian put out $9 million and attracted $45 million in follow-on investment from other venture firms.

About half of the 500 deals Cultivian have screened originated within its target “heartland” footprint of Minnesota to Texas and from Colorado to mid-Pennsylvania. The firm initially planned to take advantage of the plethora of research coming out of land grant institutions like Purdue University, and still does.

But only two of the five investments have been in the footprint. AquaSpy Inc., which develops high-tech moisture sensors for the irrigation industry, is headquartered in Indianapolis, and the other investment, genomics firm Divergence, is in St. Louis.

In Massachusetts, Environmental Operating Solutions makes carbon to purify water, and Harvest Automation develops greenhouse robots. San Diego-based Allylix develops terpene for flavor, fragrances and other uses.

Meeusen thinks Cultivian will accumulate more investments closer to home, but he also suspects the coasts, where the remaining three investments are located, are churning out more early stage companies due to their plentiful serial entrepreneurs.

Cultivian’s entry into the market at a time when other firms were backpedaling could set it up for huge profits. Four of the investments are later-stage, C round, deals that could bring paybacks for investors within a couple of years.

Cultivian is on track to commit its entire $34 million as early as the first quarter of 2012, about two years earlier than the five-year window demanded by investors.

So, you guessed it, another fund already is being discussed.

What does Meeusen think about all the success? He’s happy, to be sure.