Having invested in non-alcoholic drinks maker Lyre’s Spirit Co in a personal capacity, he had developed a passion for food and agtech, he knew he wanted to do something in this space.
Mr Fullerton was already fund manager for the Australian Food and Farming Fund investment syndicate, so the pair decided to join forces to raise a dedicated seed to series A fund.
Bridging the gap
“There’s been a gap that exists between the size of the agriculture market and the amount of investment going in. Less than 2 per cent of venture funding goes into agtech, so it’s hugely under serviced,” Mr Gustowski said.
“There’s only one other fund, Tenacious, that does seed stage agtech. We’re looking to bridge the gap.”
The new fund will focus on areas such as carbon sequestration, on-farm efficiencies, supply chain automation, autonomous vehicles, future foods, e-commerce and e-grocery platforms.
Despite already having investment experience through CEA, which had backed the likes of TrademarkVision, Fame and Partners and Travelshoot, Mr Gustowski and Mr Fullerton wanted to validate their abilities as agtech investors before raising their first fund.
Through Australian Food and Farming, they have invested in four ventures, including food authenticity start-up Zondii, single-use plastic and polystyrene disruptor TomKat and composting innovator Monty Compost.
With the first close achieved for the new fund, Mandalay is ready to make its first investments, and is assessing 300 opportunities.
‘A lot of dry powder’
Despite raising the fund during last year’s long lockdowns and the current tech downturn, Mr Gustowski was confident Mandalay would hit its target of $50 million by early next year.
“No one baulked at the current downturn. There’s lots of dry powder and the feedback has been incredibly positive. People are holding money because they don’t know where to place it,” he said.
“The NRMA crew is interested in the ESG focus that we have with the agtech fund. Everything we invest in has to be at least net neutral in terms of carbon and waste. We don’t market ourselves as an impact fund, but we have a sustainability focus.”
Mr Gustowski hopes to attract international interest in the fund. Mr Fullerton is flying to Europe next week to meet with investors.
NRMA head of investments Ainsley Lee said Mandalay’s management team’s track record impressed them, as had its hands-on approach to working with portfolio companies.
“We are highly focused on investing in areas of impact while helping to address sustainability, especially if we can support regional and rural parts of Australia,” he said.
