Agtech incubator and venture capital firm Reservoir is expanding its support for start-ups with the acquisition of Contain, which provides underwriting and financial services that could help companies scale from pilot to commercial stages.
Launched in 2017, Contain is a financial tech company that has focused on helping indoor growers scale by arranging 3- to 5-year leases for equipment. The platform features 30 lenders and over 70 equipment vendors and provides a marketplace to purchase pre-owned indoor farm equipment.
Contain worked with greenhouses and container farmers to give them access to low-cost debt from non-traditional sources, like the Rural Business Investment Company program administered by the USDA, Nicola Kerslake, Contain founder, told AgNavigator.
As part of the acquisition, Kerslake will join Reservoir as a general partner, serving on the firm’s investment committee, and lead underwriting and due diligence responsibilities. Kerslake has over a decade of experience managing early-stage venture capital and finance, including roles at Newbean Capital, IBank California, and SEI Investments.
Also, Kerslake is helping Reservoir develop the thesis for its second fund, which will focus on physical AI opportunities. In developing the second fund, Reservoir’s “focus was understanding why there have been so few strong exits in the ag space, and how Reservoir VC could help to expand those exit opportunities,” Kerslake said.
“Our thesis for the second fund is rugged AI, software-enabled hardware that has to survive contact with the real world — robotics and intelligent machines built for fields and farms, not data centers, where dust, weather, and wear are the operating conditions, not edge cases. Even by the standards of ag, this hardware is capital-intensive. Too many great startups are forced to exit early because of a lack of capital. If we can help extend the runway with something more than VC funding, we can help with that challenge,” Kerslake elaborated.
This acquisition complements Reservoir’s venture arm and will help start-ups access “the broader capital stack, which is where a lot of these companies actually live and die,” Danny Bernstein, founder and CEO of Reservoir, told AgNavigator. Regardless of category headwinds, successful agtech start-ups need a blend of capital to succeed, he noted.
“Every agtech company, in every sector, needs a blended and resilient capital stack, and almost no one is building the infrastructure that makes that possible. Contain has spent nearly a decade connecting technology companies with lenders and building exactly that marketplace. That capability and that talent are what we acquired, and they matter more than any single sector’s moment or any single sector’s headwinds,” Bernstein elaborated.
