3 ag tech start-ups to watch in 2021
Universities have a long history of encouraging innovation in agriculture through research and launching generations of graduates. Moving those ideas from the campus into the world, however, can be a challenge. By creating a network of industry players, Midwestern universities are addressing this gap.
The Edge Collaboration District
The Edge Collaboration District is a partnership between Kansas State University and the KSU Foundation to inspire industry collaboration along the northern edge of the campus. “It’s where industry, research, and talent come together to produce meaningful innovations and real outcomes in Kansas and beyond,” says Kate Ryan, commercial leasing and engagement manager, KSU Foundation.
With approximately 5,000 jobs expected to be housed in the corridor by 2035, the university is well positioned to advance America’s heartland through innovative research and collaborative partnerships.
This vision is one reason Topcon decided to invest resources in the district.
“While start-ups are great incubators of technology, they lack distribution, infrastructure, capital, and other things that exist within a large, mature company,” says Brian Sorbe, vice president and general manager, Topcon Agriculture . “It makes perfect sense that a start-up would want to plug into a consortium of industry players to find out who their best strategic partnership can be to leverage warehousing, marketing, and brand awareness among other things. It provides the start-up with the opportunity to scale its business more rapidly and find customers more easily.”
Focused on global food initiatives, Fulcrum Global Capital is always on the lookout for technologies that maintain or increase yield with a more biological, and less chemical or antibiotic, solution; reduce food waste; and improve food safety.
In addition, the innovations must have a sufficient and obvious return on investment (ROI) for the producer. The time frame of that ROI often gets missed, says Kevin Lockett, a partner and chief financial officer at Fulcrum Global Capital.
“When we talk about agriculture, many times the ROI is the actual growing season, because each growing season is different,” says Lockett. “Farmers are looking for a very short time period where they will at least break even by trying a technology. If it is truly value added, then over time there will be an increase in benefit and, hopefully, in margin.”
It’s also why many of Fulcrum’s investors, who represent 13 states across the Midwest, are row-crop and livestock producers.
“We want people who sign the front of the check, not just the back of the check – people who have to make these innovations work and can potentially help prove their effectiveness,” he says. “As we think about some of the strengths of Kansas State University, especially on the animal health and grain side, finding a way to partner with the university made a lot of sense as well.”
About a year ago, Fulcrum opened an office at the K-State Office Park in the Edge District. By the end of 2020, its investment team, which also includes Duane Cantrell and John Peryam, had considered more than 300 investment opportunities in one year.
“It’s hard not to get incredibly excited and want to move very quickly on a lot of these opportunities,” says Cantrell, a managing partner and chief executive officer at Fulcrum.
Both Lockett and Cantrell say start-ups that have gone far in their process possess certain qualities. First, the problem being solved has to matter.
“The real question is ‘Does anyone care?’” Lockett says. “It has to be a really big problem – meaning a billion-dollar problem.”
Because they invest at the Series A round, which is beyond proof of concept, there also has to be a solid team behind the idea.
“There is still much work to be done to commercialize successfully, and there is never going to be a straight path from investment to liquidity that’s easy,” Lockett says. “At this stage, we’re investing in the people as well. Those individuals must have the ability to pivot, understand what the market is looking for, and provide a solution to a very big problem in an economical way that makes sense for the end user.”
To date, the venture fund has seven companies in its portfolio. A number of others are on its watch list, including Phoreus Biotechnology.
“This start-up is a great example of why it makes sense for us to be a part of the Edge District,” Cantrell says. “Being there makes us aware of some very early-stage, cutting-edge technologies that are applicable in our field.”
Founders: Randall Tosh, Michael Coe, and John Tomich
Headquarters: Olathe, Kansas
Background: While trying to develop a peptide-based bioadhesive, KSU scientist John Tomich discovered he’d created self-assembling peptide capsules that were remarkably stable and readily taken up by cells.
Phoreus Biotechnology’s branched amphipathic peptide capsules and lipid-encasing amphipathic peptides substantially increase efficacy in creating and delivering human and veterinary vaccines, cancer therapeutics, alternative antibiotics, diagnostics, and biopesticides. Not only do these nanocarrier platforms enable the development of cutting-edge genetic technologies, but they also have numerous applications in improving the effectiveness and targeted delivery of existing products.
One of its nanocarrier platforms lets less vaccine be used with precise delivery to specific cells in an animal, reducing the amount of active ingredient required while improving results. Another platform has been demonstrated to make delivery of existing pesticides more effective, reducing both costs and off-target environmental damage.
In recent years, Purdue University has also placed greater emphasis on helping talented individuals commercialize their intellectual property. Launched in 2013, the Purdue Foundry was created at the behest of the university’s president, Mitch Daniels. His directive: develop 25 companies a year based on intellectual property coming out of Purdue.
“Before Mitch became president, [the university was]averaging eight companies a year,” says Bill Arnold, managing director, Purdue Foundry. “In the past seven years, we have averaged 23 companies a year.”
Since its inception, Purdue Foundry has enabled the creation of 306 companies. A bit over half are based on university intellectual property. Much of the technology being commercialized is coming out of the agriculture, engineering, and science colleges.
“A lot of that is due to the leadership in those colleges, and their commitment to commercializing the technologies being created, many of which are publicly funded,” Arnold says. “For that publicly funded research to make an impact on society is the conclusion of that value chain.”
As with Fulcrum Global Capital, Purdue Foundry seeks ideas that solve a significant market problem and that has teams in place to turn the concept into a company. “You also have to have access to capital, but only after the first two elements are in place,” says Dan Dawes, entrepreneur in residence, Purdue Foundry.
If the idea is simply that – an idea – the foundry’s Firestarter program can help innovators work through the ideation process. The program averages about 20 cohorts a year with seven ideas running through each cohort. By working with creators to determine whether a product solves a real-world problem and customers exist for that product, the experience ultimately leads to stronger business plans and start-ups.
“There are an awful lot of folks who walk in the front door thinking they have a concept worth commercializing,” Arnold says. “If two companies are created out of seven in a cohort, that’s a big result. It’s often only one that moves forward.”
Founders: Torbert Rocheford, CTO, and Evan Rocheford, CEO
Headquarters: West Lafayette, Indiana
Background: Torbert and Evan Rocheford are a father and son working to transform America’s largest staple crop – corn – into a platform that delivers better nutrition for consumers. Originally developed by Torbert, a professor at Purdue University, to reduce malnutrition in sub-Saharan Africa, NutraMaize Orange Corn is now available in the United States.
“The striking color of our Orange Corn comes from significantly increased levels of carotenoids, the same kind of natural antioxidant pigments that give carrots their orange color and nourishing reputation,” Evan says.
The company does not sell its seed on the open market; instead, it works with potential platform users directly to meet application needs. Yet, a growing line of milled products is being marketed under the company’s Professor Torbert’s Orange Corn brand and are available at professortorberts.com.
“NutraMaize has already demonstrated the ability of Orange Corn to provide value in a wide variety of applications as a platform technology,” Evan says. “For example, when used as a poultry feed, Orange Corn improves both the nutritional quality of and color depth of egg yolks by significantly increasing their levels of antioxidant carotenoids. Orange Corn doesn’t just make eggs healthier, it also makes birds healthier, providing a holistic set of benefits to producers.”
Ag Startup Engine
Founded in 2016, the Ag Startup Engine delivers funding, mentorship, and support to entrepreneurs with promising early-stage ag tech businesses.
“There is a particular set of challenges for developing and successfully launching new agricultural technologies,” says Kevin Kimle, codirector, Ag Startup Engine. “Growing key relationships, finding the right mentors at the right time, and finding the right capital at the right time are the main challenges. The Ag Startup Engine is a platform for overcoming those challenges.”
Based in Ames, Iowa, the Engine works in tandem with the Iowa State University Startup Factory, Iowa State University Pappajohn Center for Entrepreneurship, and the Iowa State University Agricultural Entrepreneurship Initiative.
“It is developing a process unique to itself, to the Iowa State University Research Park, and to agriculture in the Midwest,” Kimle says. “Our aim is to provide a rich array of relationships, connections, ideas, and alternatives to portfolio businesses so that good choices are made in those key moments.”
Since launching, the Ag Startup Engine’s portfolio has grown to 12 companies. Two of those – Smart Ag and Performance Livestock Analytics – were recently acquired by Raven Technologies and Zoetis, respectively. Another start-up, Distynct, is quickly gaining traction.
Founders: BJ Brugman, CEO, and Thomas Hornbeck, CTO
Headquarters: Ames, Iowa
Background: Launched in 2020, BJ Brugman and Thomas Hornbeck recognized a gap in the availability of reliable, accurate, and real-time data at swine production facilities.
“Data on inventory, temperature, manure pit levels, water consumption, feed availability, and more rely on a human to manually collect and report this information, typically with a pen and paper,” Brugman says. “That data rarely makes it back to someone who can turn it into insight. If the information does make it back, the pigs have already been harvested, so there is no action a producer can take.”
By connecting unlimited devices, Distynct automates data collection and reporting that are most important to a producer. Information flows from the barn back to a customized user interface where insights can help direct daily chores more efficiently. It also enables producers to intervene earlier when health issues arise.
For the past six months, the company has been piloting the technology on commercial farms in central Iowa. “Our first tests used artificial intelligence and computer vision to identify and count pigs. We were successful, but customers continued to ask even more foundational questions about the barn,” he says.
In early spring 2020, sensors to monitor manure pit levels, temperature, humidity, water consumption, and feed levels in the bin were deployed. The start-up continues to test other sensors to answer even more questions about swine production.