Gaule: What is the key purpose and objective of Monsanto Growth Ventures?
 
Hamer: First of all we are here to create future options and test cases for developing new growth opportunities for the corporation. Monsanto has grown at about 20% earnings before interest and taxes per annum for about the past 10 years, so remarkable growth. As the company has expanded its market capitalisation considerably, finding new growth opportunities is a challenge and innovation is happening much faster.
Second, not many investors are aware of the opportunities in agriculture, so we see a big part of what we are doing as promoting and enhancing the investment ecosystem, particularly for investors who are interested in investing in cutting-edge technologies in agriculture. So we access and solicit leading investor and entrepreneurial networks in key centres of excellence – Boston, Silicon Valley, Israel, London and so on – to solve major problems in food productivity.

Gaule: Describe the key technology, business model,  emerging market and other trends that Monsanto is trying  to address with its venturing.

  Hamer: Monsanto has been very active in the areas of  genetics and biotechnology. The new opportunities for  growth for Monsanto are, first of all, the application of biologics to agriculture – the use of microbes and biological molecules in place of pesticides to create a more sustainable  agricultural ecosystem for farmers. That is new technology  modalities within genetics, particularly nucleic acids and the  application of sustainable, biologically-derived approaches  to enhancing crop productivity.
 
The other really big advance is the interaction between  use of advanced engineering systems and information  technology to improve agriculture, which is making farming more precise, more prescriptive, more exact and helping farmers make better decisions, something we are calling agtech.
 
In terms of business models, we are doing pretty standard series A and seed investments, but we are also doing  investments where we are structuring buyouts of technology right up front in our deals and being the only investor  in the deal, helping the technology hit key milestones, and  if it does then we are triggering a buyout of that technology.  That is a new business model for us. 

Gaule: Describe the process and team Monsanto has in the  venturing group.

Hamer: We have a small team of four investment professionals, two based in San Francisco, a partner in Boston and a partner in St Louis. We then have an operational partner who takes care of a lot of the operational co-ordinations of our group and is based in St Louis. Then we have pretty strong admin, finance and legal support.
 
In addition to the venture group, we are also supported  by a large and diverse technology scouting operation – 20  people. It is very active – not a transactional group but  there to identify opportunities. They bring us a lot of deal- flow and we use them a lot in diligence. We also have a  pretty sophisticated corporate intelligence group that can do turnaround studies for us and data mining, and that group is about 10 people. It feels like a team of 50 but in reality it is four investment professionals with very large team support. 

Gaule: That interaction, that relationship, is so important to make sure you leverage the value of the insights you are seeing externally in the investments you are making.

Hamer: Yes, it really helps to know, when we are looking at something, what the competitive landscape around that technology is, and we can get that answer very quickly from our extended team in corporate intelligence and technology scouting by sharing insights.

Gaule: How do you feel venturing and your innovation can help drive your business forward and help solve major world issues concerning nutrition?

Hamer: Less than 2% of the US population is involved in agriculture. It was 40% before World War II so few investors have a significant understanding of agriculture when compared with other verticals – finance, healthcare, manufacturing, IT. This is especially true in investment centres like London, San Francisco and Boston.
It is helping investors who are unfamiliar with agriculture make smarter and better investments. With our participation in syndicates and helping investors think about opportunities in agriculture and helping share challenges we see in the future of agriculture, investors understand where the opportunities are, where the white space is and where disruptive technologies can be brought to bear. A lot of them think about genetics and biotechnology, but it can take 10 to 12 years to bring a new gene or new trait forward in agriculture. In many of the other areas, the use of IT and advanced engineering and biologics can happen much quicker, so we are helping investors think about those areas.
We believe our activity can significantly strengthen the global investment thesis for food production through partnerships with various funds and entrepreneurs.

Gaule: The Climate Corporation acquisition by Monsanto recently caused a level of interest in the industry. What was the logic and experience in Monsanto?

Hamer: We encountered Climate Corporation mainly through our network, our IT and technology areas, in San Francisco. Monsanto over the past 10 to 15 years has made considerable investments in seed technologies involving breeding, genetics and biotechnology, to improve seed and increase yield for growers. In addition it has invested considerably in seed-coating technology to make sure the seed germinates and grows at the right time and to protect it from early-stage stress and pests.
As the seed becomes more valuable, the next opportunity is how we make the planting of that seed more precise and exact. We started to do that through the use of precision planting – our acquisition of Precision Planting in 2012. Of course, as you make use of precision agriculture to put the seed in the right place, one then begins to encounter all the other decisions made by growers through the growing season. One can think about the application of fertilisers and pesticides and things like this. 
As growers make all those decisions, you realise that most of those decisions are averaged across large areas – so if you are in the north you would have a certain practice, if you were in the south you would have another certain practice. But in fact we know from precision agriculture that metre by metre, even 10 metres by 10 metres, is what can really make a difference in agriculture. So how do you bring all that decision-making, insights from soil, from weather, from the environment and from the genetics together to make it very precise, very local for specific growers and give them the right information in a useable way.
That is what we saw Climate Corporation was doing. 
IOt was providing that technology and use of large data systems and analytics and linking that with financial products, in this case novel insurance products. The two were very powerful because not only did this help farmers make better decisions but it also insured what they were doing through a financial instrument. 
We initially had discussions about a minority investment and initially about partnership but we linked up really quickly and what really made sense was the two science cultures. At Climate Corporation, several of the founders came out of Google and are very science-driven. As they got to know the science-driven culture at Monsanto more and more, they began to see that the companies were a perfect fit. We were reaching the arc of our development and information technology was going to drive the next set of revolutions in agriculture and they were looking for how to take their business global beyond corn and soya beans, so the merging of these two companies really made sense. Everyone got it very quickly. That is how that acquisition came to be and set Monsanto on a new path. 

Gaule: I think the insights of bringing data, financial services and things outside the scope of business as usual is a transformation happening in lots of other sectors as well, be that in energy, sustainability and the smart home, or health monitoring for individuals. Monsanto’s change in business model and approach is a good example for a lot of other industries. What do you do to relax?
Hamer: We do a lot of cycling and road riding. We do a lot of gardening, I do not have a big garden but I have a few fruit trees that I take care of and wonder why some seasons they make fruit and some seasons they do not. As a hobby I also sit on the board of trustees for CIAT (the International Centre for Tropical Agriculture). I have been involved in international agriculture throughout most of my career and being on the board of CIAT – which has activities in Colombia, Nigeria and Vietnam – is a very rewarding experience.
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To contact Andrew Gaule and for future interview ideas email [email protected] and tlewis@globalcorporateventuring.com