Aleph Eins Capital Warns Agtech Startups: Refuse Exclusivity or Die

Agrifoodtech startups should refuse corporate exclusivity deals outright and tie every pilot to a guaranteed purchase, according to George Bilkis, managing director of family-backed German investment firm Aleph Eins Capital. His verdict on right-of-first-refusal clauses is blunter still: "It is a poisonous pill. Don't take that money."

Aleph Eins, launched roughly a year ago, deploys capital across three buckets. Its core focus is controlling buyout positions in agriculture, chemicals, water and energy firms with enterprise values of €200-300 million ($221-332 million). The firm operates between a private equity fund and an independent sponsor, keeping 30% of each equity check for itself — six times the 5% typical of a standard GP-LP relationship — and syndicating the rest among families and institutional investors.

The vehicle sits on substantial operating assets. Bilkis said the backing family is the biggest grower of vegetables and cereals in the UK, the country's largest agricultural chemicals distributor, and is building the UK's largest water reservoir. Entrepreneurial projects on less productive land include a biochar plant, a syngas plant and potential controlled environment agriculture ventures. The firm is now working on a seed company acquisition and holds live discussions with a substantial chemicals company carrying a sustainability angle.

What should founders refuse in a corporate deal?

Bilkis spent six years running all global M&A, joint ventures and the transaction side of VC activity at German seed giant KWS. That vantage point shaped hard rules for startups courting corporates.

• Exclusivity: "You just say no. There is no such thing." A startup bound to one customer becomes, in his words, a servant of one master with limited exit options.
• Right of first refusal: among "the worst of the worst," deterring every future investor.
• Endless pilots: founders must reach real decision makers and make purchase automatic if the product performs.

"You have to be brutal as a founder. You have to tie your pilot to a concrete purchase that is going to happen," Bilkis said. "Otherwise, you will be wasting your resources and your precious time on pilots to nowhere. It will be pilot after pilot."

Without a commercialization understanding from the start, he added, the partnership is wishful thinking: "If somebody doesn't want you, you can be as strong as you want, you cannot convince them. They will waste your time."

Formalized corporate relationships cut both ways. They make external fundraising easier, and they reassure the corporate partner that the supplier will survive beyond a year — a real concern when a joint product depends on the startup. Founders should also insist on using corporate partners in fundraising and securing their feedback to prospective investors.

Where will agrifoodtech capital come from?

Corporate venturing has slowed, Bilkis noted — not a total freeze, but a waiting period in which internal corporate goals set priorities. Looking ahead, he expects capital from specialists who treat agrifood as a standalone category between private equity and venture, plus family offices, particularly in Germany, willing to accept sub-software-VC returns for impact.

More portfolio clearing is coming. Zombie companies cannot be propped up indefinitely, and exits will mean recovering "30 or 50 cents on the dollar" as innovation lands inside consolidators — a pattern he sees in CropX's recent acquisitions.

Which sectors fit the lower-risk model?

Valuations for new companies are now realistic, hinging on proximity to commercialization. Bilkis's fund model targets lower risk rather than two 100x outliers: "We will not be writing off 90% of our portfolio, we will have only very few defaults."

His picks:

• Precision agriculture: post-down-round, high technology readiness level companies — some at TRL 10 — are available at low valuations, suiting a buy-and-build private equity play.
• Ag robotics: farmer readiness has risen; growers now understand non-chemical weeding robots on first pitch.
• Seed coatings for drought tolerance: necessary because European weather is shifting faster than breeding and genetics can adapt.

He flagged caution on AI-only ventures — replicable by anyone with working knowledge of tools like Claude — and noted that regulatory and field-trial timelines still favor the pharma model: startups develop to a point, then offload to deeper-pocketed acquirers.

Bilkis's practical bottom line for founders: read every term sheet clause against the next financing round, commercialization and exit, because each one will eventually come back to haunt you.