Iowa VC Firm, ADM, Back Organic Bakery

Last month, an Iowa venture capital firm started doing business, with its first act of financial kindness targeted at an organic bakery. This month, the food and agricultural financial backer, Tecterra Food Capital Fund, grew several million dollars stronger, which could further help the Boulder, CO, bakery and other investment targets.

In February, Tecterra committed a $2.2 million equity investment in Rudi's Bakery, a Colorado-based organic commercial bakery building a new 50,000-sqft plant in North Liberty, IA. The financing for the new plant is nearing completion, to be followed by a groundbreaking announcement…and perhaps a silver-shovel photo or two.

"Rudi's is well positioned for growth. They have a good management team, a good location and technical advantages—all plusses," said Dan Winegarden, Tecterra's administrative director and president of parent, Iowa Agricultural Finance Corp. (IAFC).

Asked what the rationale is for investing in an organic operation, in a climate where the nutrition, health and environmental benefits are arguable, Winegarden cited a survey of organic purchasers and their priorities.

"Nutrition and health aren't the only perceived benefits. Consumers who buy organic foods feel that the products are ‘less corporate,' and offer a closer connection to the farmers, the original producers. And in fact, that's one of the advantages of Rudi's Bakery."

Tecterra's investment, the firm said, also includes "significant ownership" opportunities for Iowa farmers.

"Along with Tecterra, there's a network of local producers who are shareholders in Rudi's," Winegarden said in a Friday interview with Bakery Online, explained that IAFC and Tecterra's mission is to help Iowa's agricultural and food economy.

This week, the venture capital firm announced that Archer Daniels Midland Co. (ADM) has joined to become the latest limited partner. Other limited partners include Pioneer Hi-Bred International, DuPont, Iowa Farm Bureau Federation, Farm Bureau Mutual Insurance Co., US Bancorp Ag Credit and West Central Cooperative. The limited partners are passive investors and do not participate in management of the fund.

ADM, based in Decatur, IL, operates several processing facilities in Iowa.

Tecterra's goal is to help fund privately held companies in Iowa and non-Iowa companies whose success can provide significant growth, resulting in some benefit to the state and its producers. Says Winegarden: "Given that Iowa is a key agricultural state, making that connection is not hard to do."