Banking the Common Good
During his first week as head of CleanTech at Wells Fargo, Matt Servatius wrote out a check for $1m to Imagine H20; the check being one in a series of grants totaling $100m committed by Wells Fargo to the clean energy sector. Born out of the renewable power sector, CleanTech at Wells Fargo has put a total of $67bn to work across early stage, pre-revenue, venture and middle market and large public companies for the past 12 years.
In 2016, Servatius’ team invested in AgTech for the first time. The $100,000 check was written to THRIVE, the global accelerator program scaling and investing in technology companies with solutions targeted to the agriculture sector. “We wanted to identify other big areas of focus that we felt were ripe for innovation and that we could leverage the expertise of the bank enterprise so that led us to AgTech,” explains Matt about the decision to invest in THRIVE. As the most active commercial ag lender for 19 years – right behind the government – Wells Fargo had the enterprise reach and expertise that Servatius recognized could provide valuable lead relationships for companies developing new technologies. As an accelerator with access to hundreds of AgTech entrepreneurs and a strong network with growers and ag companies in Salinas, CA, THRIVE provided Wells Fargo with the opportunity to see AgTech as it developed on and off the field. Servatius describes ‘seeing the buy-in’ of some really meaningful collaborators. “We could see the ecosystem being built and as a THRIVE mentor, I saw the caliber of companies involved. It was impressive.”
Each investment made across the clean technology landscape represents the opportunity for Matt’s team to move beyond “just being a bank or a capital provider to becoming a thought leader” by gaining first-hand insight about the problems that an economy is experiencing and trying to solve for. Matt explains the group looks to provide a bridge which links technology entrepreneurs to growers in order to ensure that incoming solutions are tailored to the real problems the industry is trying to solve: “If we can do [that], we’re in the best position to serve both sets of our customers.”
Matt’s team is no stranger to supporting entrepreneurs beyond capital infusion – the group also designed and hosts the annual CleanTech incubator program, IN2 which provides the country’s most promising CleanTech entrepreneurs with a non-dilutive $250,000 grant, technical support, and access to the National Renewable Energy Laboratory based in Colorado. Working side by side with each of the entrepreneurs in the cohort, the ultimate hope of Matt’s team is that the companies will pilot in Wells Fargo itself. “That’s what entrepreneurs need, that marquee customer like Wells Fargo have a large role in helping drive innovation.
Matt however does not discount the importance of capital in propelling AgTech and broader innovation projects, but does believe that investors must have a long term orientation as far as return horizons are concerned. “Innovation in this sector can’t just come from VCs, it’s got to be all sets of investors, and especially more flexible, patient capital,” Servatius says. “AgTech commercialization is a process which can take up to 3 – 4 times longer than a traditional tech company. When you think about an entrepreneur getting their technology into a grower’s field, a grower is not going to say, ‘here’s 100,000 acres go at it’. They’re going to pilot in increments: perhaps 100 acres in the first season and 1000 the next, so it takes time”.
In the final analysis, Matt believes that investors from VC all the way up to sovereign wealth funds with a 20-30-year horizon must all play a role. Looking forward, Matt is excited about where AgTech will go from here. “We are making tremendous traction in terms of collaboration across the bank and we’re beginning to understand the actual challenges and create the necessary linkages,” he says. All of this geared towards fostering entrepreneurs looking to scale innovative solutions in the most important sectors of the future and putting another $60m behind them to help them do it.