Cavallo Ventures: Investing in the Future

By Mike Wilbur, President and CEO of Cavallo Ventures

The agricultural industry isn’t the same as it was when Wilbur-Ellis began in 1921. And the way our customers do business today won’t be the way they do business in five years. From massive mergers to huge investments from outside the industry, this past decade is bringing sweeping changes to our business – changes driven by increasing land turnover, altered land use, a demand for increased sustainability and, ultimately, evolving consumer preferences and behaviors. Most important, these changes are altering the service our customers expect from us.

Emerging technologies are playing a huge role in creating disruption in our industry. Cheaper and faster computing power has changed the way data impacts farming decisions and has spurred a focus on innovation. For example, ag and food tech startups raised $10.1 billion in venture funding in 2017, a 29% increase from the previous year. We’ve spoken to many of these startups and the thing we hear time and again is that these companies need an established, respected connection to growers. So we asked ourselves: “How can we be more involved in this evolving agribusiness market so we can continue delivering the best service and solutions possible?” The answer is Cavallo Ventures.

Cavallo Ventures, the venture capital arm of Wilbur-Ellis, is part of our ongoing commitment to our customers and employees. On the surface, this new business is similar to other venture capital firms – the purpose being to invest in startups and small businesses that have long-term growth potential. However, unlike other venture capital firms, we don’t simply focus on ROI. Our sole purpose is to listen to our customers and employees, so we can deliver real solutions to real problems in the agribusiness retail, animal feed and specialty chemicals and ingredients industries.

Cavallo Ventures is unique in that we have direct access to almost a century’s worth of experience through our parent company, Wilbur-Ellis. This connection means we have access to industry leaders with invaluable expertise. For example, Cavallo’s new board chair, Dan Vradenburg, has over 36 years of experience in the agricultural industry at Wilbur-Ellis (with 16 years as president of the Agribusiness division). And when we wanted to invest in a microbial screening company, we were able to tap our resident experts on microbial analysis to do the scientific review. The Wilbur-Ellis network allows us to ask the right questions of potential investments, ensuring we get the answers we know our customers will want.

The needs of our customers and employees directly impact the direction of Cavallo Ventures. When listening to the customers in Wilbur-Ellis’ feed division, we found a clear majority of them saying their clients were demanding more innovative and sustainable approaches to fishmeal. So, we surveyed the market to find companies producing alternative food sources – eventually creating a shortlist of 18 companies. We toured many of the facilities and educated ourselves about each company’s business model. Finally, we decided Beta Hatch was the best solution, since their mealworm product was sustainable and smartly created by a brilliant entomologist. Cavallo Ventures was proud to invest in the Company knowing we had found the best way to satisfy our customers’ needs. Beta Hatch was also excited to be working with a company like Wilbur-Ellis that has such deep knowledge of the feed industry. Other investors were energized, too. The founder of Beta Hatch initially set out to raise $1 million, but because of her newfound relationship with Cavallo and Wilbur-Ellis, she ultimately raised $2.2 million.

Our investments are driven solely by our desire to find companies that can actively solve problems for both our customers and our employees. AgCode, a farm software company, had been around for well over a decade and was originally established to help track corn seed production. A large winery group approached the Company at a trade show and began talking to the founder about their labor and payroll problems. The founder listened and then developed an easily implemented software system that helped this very large company remain compliant. We often see companies where an entrepreneur dreams up a hypothetical problem, creates a solution, and then brings it to the marketplace hoping to find customers. In this case, however, AgCode’s founder simply sat across from his customer and asked “What do you need?” So, of course we invested in AgCode – because that’s the kind of problem-solving that Cavallo Ventures was founded on.

We are founded on the belief that the best ideas don’t come from companies – the best ideas always come from customers. Only by listening to them can we fully understand the problem before looking for a solution. Sure, 1921 was nothing like 2017 – and today might be nothing like next year, but no matter what the future looks like, you can rest assured that Cavallo Ventures and Wilbur-Ellis will always live by this motto: Our company doesn’t succeed until our customer does.


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