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Midwestern BioAg Raises $21M to Ramp Up Fertilizer Production

Xconomy Wisconsin — 

Midwestern BioAg, a Madison, WI-based manufacturer and distributor of fertilizers, seed, and other products designed to improve soil health and increase crop yields, says it has raised $21.3 million from investors.

Midwestern BioAg says that the money will be used in part to expand its fertilizer manufacturing capacity. The company also plans to start working with more large food producers to improve the nutritional content of crops, while also reducing their environmental impact.

S2G Ventures, based in Chicago, led the round. Other participants included Bison Capital (Santa Monica, CA), the McKnight Foundation (Minneapolis), Franciscan Sisters of Mary (St. Louis), and two funds based in New York: Madison Bay Capital Partners and Tau Investment Management.

In 2014, Midwestern BioAg raised $20 million from investors, and gave up a controlling interest in the company as part of the deal. That financing, which Midwestern BioAg says was its first time raising outside capital, was led by two California-based groups that concentrate on the agriculture industry.

Sanjeev Krishnan, managing director at S2G Ventures, says that following the 2014 deal, more investors started to take a look at Midwestern BioAg.

“The early investments from agriculture-focused funds were hugely important, as were the investments from individuals and family offices,” says Krishnan, who is also a member of Midwestern BioAg’s board of directors. “The presence of these institutional investors sends a signal that we’ve crossed an important threshold. We’re prepared for growth.”

Kevin Sweeney, Midwestern BioAg’s chief marketing officer, says that following the latest capital raise, there is no longer a single investor in the company that holds a controlling interest.

Midwestern BioAg, which was founded in 1983, says it has annual revenues of more than $40 million. According to its website, it operates three locations in Wisconsin, and five more across the Midwest. Sweeney says the company currently has about 100 employees.

Part of Midwestern BioAg’s approach is working with farmers to create farm management plans that it says can lead to economic and environmental benefits. Some of these plans fit into what the company calls “biological farming,” which is not a reference to the application of agricultural microbials, tiny microorganisms that work with the plant or soil microbiome to promote plant health. Instead, Midwestern BioAg describes biological farming as a process of working with nature that keeps chemicals use to a minimum and maintains a balance that keeps soils healthy. This focus on soil health ultimately improves the health and productivity of farmers’ land, crops, and livestock, the company says.

Despite sinking prices for commodities such as corn, soy, and wheat, venture investment in agricultural technology has risen sharply in recent years. That’s according to a report released last week by Boston Consulting Group and AgFunder, an agtech investing marketplace. Their report found that corporate and venture capital investment in the ag sector reached between $20 billion and $25 billion in 2015, an all-time high.