FMC Restructures VC Arm: What does it mean and what are the implications?
The news says more about FMC than it does ag related venture capital investment.
Index:
Overview
R&D and Deprioritizing Innovation Investment
Late in, Early Out, but Meaningful Impact
Will We See Other CVC Announcements in 2025/26?
Innovation or Distribution Companies?
Final Thoughts
FMC Corporation restructures agtech VC arm FMC Ventures ‘to optimize operations’ - AgFunder News
FMC Corporation has changed the organizational structure of its VC investment arm FMC Ventures, letting go of staff in the process.
Mark S. Brooks, managing director of FMC Ventures, confirmed the news via an email to AgFunderNews, which understands that all three members of the FMC Ventures team would see their roles eliminated.
AgFunderNews reached out to FMC Corporation and received the following response from executive vice president and CFO Andrew D. Sandifer:
“FMC remains committed to innovation in agricultural technology. While we have made changes to our organizational structure to optimize operations, FMC Ventures continues to operate and manage its existing portfolio of investments under the leadership of Zack Zaki, Vice President of Corporate Strategy & Development.”
The news from FMC came in the same week that Intel announced a spin-off of its corporate venture capital arm.
In December, Bayer and Trendlines announced the initiative to dissolve their joint AgTech Fund.
When assessing that news, I shared the following:
It’s unlikely that Bayer and Trendlines will be the only discontinued AgTech fund.
CVC wasn’t where that comment was specifically targeted at, but CVC is not exempt from needing to consider the current financial landscape agriculture companies find themselves in. There is a similarity between the spin-off of Intel Ventures and the “structure change” at FMC Ventures— the businesses invest off of their own balance sheet and are not in a great position and when your business is not in a great place it becomes difficult to justify capital allocation to high risk areas that are unlikely to drive any short term benefits.
FMC is currently one of the most shorted stock on the S&P 500 and the destocking issues in LatAm remain particularly challenging, a region where over ~33% of FMC business is derived and their fastest growing geography.
R&D Cuts
FMC isn’t just deprioritizing VC investment. They are deprioritizing innovation investment overall.
In the Q3 2024 Crop Protection & Seed Earnings Themes, Highlights and Analysis I highlighted FMC commentary on cutting costs and the main area for 2024 was R&D expenditure. The plan was for about $50 million according to the earnings call, with the primary amount coming out of R&D expenditure, which would be about 15% of their 2023 expenditure: