Advantage Fund Targets Job Creation
Through its Ag Fund, Advantage Capital targets growing middle-market food and agriculture companies that create jobs in rural America.
Ever since Advantage Capital was founded in 1992, impact investing has shaped its mission. During the past 26 years, its investments have supported more than 48,500 jobs across 700 companies, according to the firm. The fund that invested in Fishpeople—Advantage Capital Agribusiness Partners LP, or the Ag Fund—continues that focus on job creation.
Formed in 2014, the $154.5 million fund is licensed as a Rural Business Investment Company, part of a program created by the U.S. Department of Agriculture to stimulate food and agriculture job growth in rural areas. (It also allows Farm Credit Banks to invest in private equity funds.) The program requires the fund to invest at least 90 percent of capital in rural areas.
There are 12 companies in Advantage’s Ag Fund, which concentrates on business areas such as sustainable and organic agriculture, indoor agriculture and vertical farming, and “better-for-you” branded food.
They include Harrisonburg, Virginia-based Shenandoah Growers, one of the largest providers of certified organic herbs in the United States and a supplier to retailers such as Walmart and Whole Foods. After Advantage invested in August 2015, Shenandoah Growers acquired another company with the help of financing from the Ag Fund, which added over 600 full-time jobs, says Cara Schiffman, Advantage’s vice president of regulatory affairs.
American Botanicals, based in Eolia, Missouri, is another example. “Without our investment, the company may have closed or been restructured after the sole owner decided to retire,” Schiffman says. The Ag Fund provided American Botanicals’ new CEO with the capital needed to acquire the business, allowing it to retain all 31 employees, she says, noting that the company now has more than 70 staff members. “We also provided additional growth capital, enabling the company to offer new products, enter into new sales channels and pursue new growth initiatives.”
“We want to create jobs, so we’re looking for growing companies,” says Tyler Mayoras, principal of the Ag Fund. Advantage generally won’t invest in companies with less than $2 million in annual revenue—most of its businesses have $10 million to $100 million in earnings, he says. The firm’s approach to sourcing opportunities includes direct contact with companies at trade shows and industry events, referral sources such as attorneys or accountants, and investment banks and intermediaries.
That network has helped Advantage identify middle-market companies that are tapped into industry trends and poised for strong growth.
“There’s a food revolution going on right now, and it’s driven by younger people—millennials and Generation Z,” Mayoras says. “They really want to know what’s in their food, so they’re very focused on clean ingredients.”
Big companies are catching on to that transformation, but smaller companies noticed early and have claimed market share, he adds.
This article originally appeared in the September/October 2018 issue of Middle Market Growth, which includes a cover profile of Advantage’s portfolio company Fishpeople. Find the full issue in the MMG archive.
S.A. Swanson is a business writer based in the Chicago area.
