AgLaunch Farmers LLC is announcing two new “Farmer Innovation Dividends” - the second and third exits in their portfolio, following their first exit about a year ago.
According to Pete Nelson, executive director of AgLaunch Initiative, this marks the first time in the world that a group of farmers have earned equity returns from their in-the-field contributions to startup development across multiple company exits.
“Different groups like Cornell University have been studying us, and there’s no other group of farmers that we can find in the world that are organized in a way that takes equity like this with these steps and everything systematic in order to grow out companies,” Nelson says.
A Bit More About The Companies
While AgLaunch won’t share the company names, here are profiles on the two companies now exiting their portfolio:
Company 1:
- University spinout focused on on-farm nutrient detection in crops
- Founder wanted to maintain family ownership
- Farmers being bought out as founder regains full ownership
Company 2:
- Working in the biological space
- Provides data and intelligence to farmers and other companies
- Acquired by another company to build into their platform
What Farmers Receive
In all there are 72 farmers receiving dividend checks ranging from $100s to $21,000, while the average check is around $3,000.
All LLC members receive some distribution regardless of direct involvement. Farmers who actively worked on the technologies receive a 20% kicker plus base distribution.
“What’s very cool about these three distributions, is that different farmers were the lead farm trial partners, but every farmer gets a piece of that pie. When we talk about a pool of farmers that are willing to collaborate, work together, all for the good of the industry it’s about the mission of ag tech getting to the farm faster,” says Margaret Oldham, vice president of innovation at AgLaunch.
“It’s not just the check,” Oldham adds. “The technologies will still be available, and farmers’ input still counted. They still stand to benefit from the tech itself.”
The Business Model
Farmers trade services, data, farm trials, and knowledge for equity in startups, which is organized as a pooled LLC where farmers get member units. Currently, there are 40 companies in the portfolio, so equity from all portfolio companies is pooled to spread risk.
“What we’ve been able to do over time is build a pool where farmers for those same services get member units in an LLC for providing those services, and then all the deals that get worked on are pooled to equity in that overall LLC. So you spread everybody’s risk,” Nelson says.
Last year, AgLaunch reviewed about 80 business plans, with farmers selecting just four offers. Those selected companies automatically gain access to farmers from Oregon to Iowa to the Mississippi Delta who help scale the technology.
Currently, 250+ farmers across 32 states are part of the Farm Innovation Network (FIN), learning about the model and potentially joining. Interested farmers can start by joining AgVentures Alliance, which vets participants before they enter the LLC.
What Makes This So Different
The AgLaunch mission is two-fold: include farmers in deal flow for their contributions, and get technology into farmers’ hands earlier in development to accelerate innovation and on-farm benefits.
“We’ve done assessments on how much venture capital has gone into these companies–just farmer-facing agtech companies–and It’s been as much as $40 billion has gone into venture investment,” Nelson says. “Maybe as much as 70% of that’s been spent on farmer acquisition as a customer, data, farm trial implementation. So our model is, in a systemic way, helping drive those costs down and make it better and easier to get companies into the field.”
What’s Next
With 40 companies currently in the portfolio and the model now proven across three exits, the team is bullish on future returns.
“These early examples are pretty modest examples, and it takes time to create a lot of durable value in any business,” says Spencer Stensrude, CEO of AgVentures Alliance. “Probably the most exciting things are still being actively built out right now. Hopefully, next time we’re talking about a really big outcome, where instead of $3,000 checks and $20,000 checks, the farmers are getting a lot bigger checks than that.”
He adds, “I think that the state of startups and agriculture, it’s never been more exciting than it is today.”
Timeline For AgLaunch Portfolio
- 2016 - Initial business plan written; first on-farm trial with a company
- 2021 - AgLaunch Farmers LLC officially started
- May 2025 - First exit/distribution
- June 2026 - Two additional exits
