New Venture Lab: Equipping Christian Entrepreneurs

New Venture Lab is pleased to announce that is has successfully managed a venture capital raise for AgStrong, LLC, whose founder and CEO, Robert Bruce Davis, is a New Venture Lab member.  New Venture Lab was also an investor in the round that included several other venture and “angel investors”.  The capital raise was oversubscribed by 30% as investors invested more capital than the amount AgStrong was targeting to raise.

Given the economy, one would naturally assume that raising venture capital is a very difficult prospect, and indeed this is the most difficult environment I have personally seen in my fifteen years in the venture capital and venture development industry.

AgStrong’s success in raising the capital is noteworthy as it provides a few lessons for other entrepreneurs interested in raising capital:

• First and foremost, God must be given the glory for His providential hand in raising the capital.
• Second, Robert is a highly-experienced and exceptional entrepreneur and he is uniquely suited to run AgStrong.  Venture investors invest in both the entrepreneur and the business and often, it’s the entrepreneur that is most important, because every investor knows that the original plan they invested in is bound to change based upon market conditions.  Therefore, the entrepreneur is critical in that he needs to be nimble, creative and courageous as he deftly guides his early-stage company through the growth process.  Robert has an Agricultural Engineering degree, he has experience running large agribusiness operations at all levels including as a division General Manager, and he is the visionary that conceived of the AgStrong value proposition.
• Third, AgStrong has a compelling value proposition, profitable business model and demonstrable success in its first four years of operations.  Venture investors want to know that the business plan does not carry undue risk and they also want to know that the entrepreneur has full commitment to the business.  In the case of AgStrong, the company is an agribusiness that focuses on adding value to high-demand crops and produce, creating new markets for those products, putting southern U.S. land back into more productive use and giving Christian families an opportunity to make a meaningful income while working together on their small acreage farm or on nearby land they rent from other landowners.  AgStrong’s initial business division is a Canola and Sunflower oil crushing division with a successful four-year operating history.  Robert and his co-founder -- and first cousin -- Mallory Davis, designed, financed, and built their first two plants by themselves, along with the help of their children and other cousins.

As I’ve mentioned in previous posts, every entrepreneur needs to develop an investor elevator pitch that describes what they do and how they do it.  AgStrong’s “elevator pitch” is as follows:

• AgStrong designs, builds and operates value-added Canola processing plants in the southern US that supply the $1 billion US Canola Oil industry at less cost and greater convenience via regional plants in the South where Canola Oil and meal is in the greatest demand.
• While the US demand for Canola Oil is growing, the country is a net importer of two thirds of is usage and the growing unmet demand can only be satisfied by importing from Canada at significant transportation costs. And, while nearly all of the US-based Canola acreage is in the North, most US-based Canola Oil bottling and Canola meal consumption is in the South, creating an opportunity for AgStrong as the lone southern processor to provide lower-cost oil and meal to its nearby customers.  AgStrong’s primary customers are large Canola Oil aggregators and the company has contracts for all of its current capacity.
• While Canola is a commodity that is subject to typical market fluctuations, the company locks in profits by hedging each supplier contract.  While farmers are independent producers that can easily change their planting decisions from year to year, AgStrong builds strong relationships with farmers that co-invest in each regional plant to ensure sustainable feedstock.  At the same time that southern farmers are seeking farm replacements for the lower-demand cotton and tobacco crops, AgStrong has developed farm development programs to educate southern farmers on the benefits of growing Canola.  Not only is Canola the most profitable crop southern farmers can grow, it can also be grown in the winter and double-cropped along with the usual summer crops.  The same plant capacity can also be used for Sunflower processing.
• AgStrong is led by a team of Agricultural Engineers that have worked closely with each other for decades and have deep experience in food and agricultural processing plant design, construction and operation.
• AgStrong is currently raising up to $__ million in equity capital to fully fund its business plan to grow to $___ million in revenue and $__ million in EBITDA in five years.  Investors in this round are expected to achieve a _x to _x return in five years. (I've removed the data due to confidentiality, but if you are raising capital, your investor elevator pitch will need to include what your overall goals are for the company and the investors).
• AgStrong has a four-year operating history and has successfully built and sold its initial processing plant for an 8x return in just two years.  The company currently operates one plant and is raising growth capital to build additional plants.

AgStrong is now rolling out a second division to wash, dry, pack and market grape tomatoes, a crop that can produce a net income of $50k plus for a family on small acreage plots of only 5 acres.  Similar to its Canola/Sunflower division, the company plans on providing all the necessary expertise, smoothing the way for inputs and commitments to purchase the harvest from its partner customers.  Stay tuned for additional details…

We are also planning to profile Robert and AgStrong in our upcoming Chrisitan Family Entrepreneurship film project that we are co-producing with Franklin Springs Family Media.

New Venture Lab provided the following services to AgStrong and its CEO over the past several months:

• Business plan research and preparation
• Detailed financial model preparation (learn more about financial models and plans)
• Investor presentation preparation
• Capital raise (find and qualify investors, present to investors, negotiate deal terms, oversee the preparation of the investment documents and attend the transaction closing)
• Invested in the round as a venture investor

Congratulations to Robert and AgStrong, LLC.  May God richly bless Robert's vision to impact the Kingdom of Christ through his business.