SproutX has closed its AU$10 million agtech venture capital fund with backing from Artesian Venture Partners and superannuation fund Hostplus.
The SproutX Venture Capital Fund, managed by Artesian Venture Partners, will invest in agtech startups accepted into SproutX's accelerator programs over the next four years.
The 2017 accelerator program, to be launched later in the year, will accept 10 agtech teams, each of which will receive AU$40,000 in exchange for 8 percent equity. They will also have access to mentorship and workspace in SproutX's new innovation hub in Melbourne.
In addition, the agtech startups will have the opportunity to distribute their products through SproutX's corporate partners, including Ruralco and Findex.
Following the six-month accelerator program, SproutX's agtech fund will continue to invest in the startups that are able to demonstrate traction and raise capital from third-party investors.
SproutX told ZDNet that its fund has the capacity to invest up to AU$1 million in the startups' later-stage rounds, while Artesian has the capacity to invest an additional AU$2 million to AU$5 million.
In February, Artesian raised AU$85 million from Hostplus, a portion of which is being deployed into the agtech fund. It may raise more than the already-committed AU$10 million from other additional investors, according to SproutX.
"Artesian has seen strong interest from domestic and international high net worth institutional and corporate investors in accessing a pipeline of the best Australian agtech startups," said Tim Heasley, COO of Artesian.
According to Heasley, Australia is well positioned to benefit from growing demand from Asian markets.
"Global food demand is forecast to increase 70 percent by 2050, and the growing middle class of China and India will consume both a greater amount and greater variety of food," Heasley explained.
SproutX Accelerator director Andrew Lai said the program's competitive advantage is that participating startups will have "immediate access to customers".
"Four of our pre-accelerator startup participants are already undergoing in-store trials with Ruralco," Lai said.
Earlier this year, SproutX, which is a joint initiative of financial advisory firm Findex and the National Farmers' Federation, completed an agtech pre-accelerator program designed to help startups and entrepreneurs refine their ideas in food, fibre, and agriculture.
SproutX has since opened its pre-accelerator course content to the public under an open-source licence.
Michael Dean, co-founder of agricultural crowd equity platform Agfunder, also joined SproutX's board.
"Australians have a unique cultural and historical passion for agriculture," Dean said in February. "Our farmers are among the best in the world, yet the industry isn't getting the support and funding that it needs to drive technology innovation to boost farm efficiency and productivity.
"On a per capita basis, Australia spends 32 times less than the USA on agricultural venture capital. SproutX is the initiative Australia needs to address this imbalance and drive our nation's next innovation boom".
Earlier this month, Food Agility -- a consortium of commercial companies, universities, and farming industry bodies looking to facilitate the digital transformation of agriculture industry in Australia -- received AU$50 million as part of the federal government's Cooperative Research Centres (CRC) program.
The government funding adds to the AU$160 million in contributions -- both monetary and non-monetary -- previously raised by the organisation from partners such as KPMG, National Australia Bank, IAG, and Bosch.
Moving forward, Food Agility's innovation programs will seek to deploy real-time big data market intelligence and predictive analytics to help farmers produce the right products at the right time, connect food producers with consumers in new ways, and develop a common knowledge base.