Farmers are an innovative group. Whether it’s coming up with better ways to grow crops or care for animals, they’re constantly at the forefront of what’s next. You can now extend that to financial thinking.
While attending Dairy Strong in mid-January, I had the opportunity to sit in a presentation that turned on its head the way ag research and the ideas from that research are funded. A team from the University of Wisconsin-Madison Department of Dairy Science, Robert W. Baird & Co. Inc. and Bunker Labs in Madison are looking at using angel investors to fund ag innovation.
When Stacy Williams and another colleague from Baird attended Dairy Strong in 2015, they saw the potential to gather financial support from both within and outside the dairy industry to fund industry innovations. They spent the past year thinking about ways to do just that and meeting with other people to see if the idea was possible. Williams thinks it is and hopes a fund dedicated to financing industry innovation is up and running by this time next year.
“We’re just starting a dialogue now with the dairy industry and others to see what the interest could be in something like this,” she said. “What’s different about this from some other investment concepts out there is that the potential investors would be the ones to benefit the most from the discoveries.”
While Wisconsin is weak in venture capital funding compared to other states, it is a national leader in angel investing and is already home to an innovative investment model in the BrightStar Wisconsin Foundation, a not-for-profit foundation that accepts charitable donations to an evergreen fund that then makes equity investments in early-stage companies.
Michael Ertmer of Bunker Labs thinks something similar to BrightStar could be started for the ag industry.
“What we’re proposing is unique – invest before a company is even formed,” he said. “The current models of investing in research aren’t working the best.”
Heather White, a UW dairy science professor, said it’s all about creating a competitive advantage for Wisconsin and the state’s dairies. Right now, she said other states are investing more heavily in research whether it comes from industry check-offs or through direct industry support of endowed faculty positions.
“In the current way of doing things, too much time is spent by faculty chasing funds, which slows research productivity,” White said. “We need a major reinvestment to revitalize dairy production and animal production so we can get quicker flow from idea to application.”
Another possibility is to piggyback on BrightStar and have an ag-focused fund within that organization, Ertmer said.
While this group looks at pursuing this possibility for Wisconsin, I’m sure teams in other Midwest states are looking at ways to strengthen their ag funding sources whether it’s something like an angel fund, putting an additional check-off into place or partnering with corporations on research. Whatever is decided, these innovations can only help the ag industry.