There’s a wide range of innovative new ideas funneling toward agriculture these days, as investment in the industry continues. Yet, there’s a kind of startup conundrum in the market, too.
A startup can have a great idea and get going with initial funding, but the leap to access from venture capital funding can sometimes be too much. Why farmers should care is that good ideas can sometimes go wanting.
The Wells Fargo Foundation created the Wells Fargo Innovation Incubator, which is co-administered by the National Renewable Energy Laboratory, and has worked in funding startups in the commercial building industry. For 2019, however, the organization — also known as IN2 — branched out and opened a program for ag-tech startups.
“In 2017, we hosted a summit with a wide variety of stakeholders to evaluate our model then,” says Ramsay Huntley, vice president and Clean Technology and Innovation Philanthropy Program officer, Wells Fargo. “We were evaluating the program, asking that group if the process worked. The resounding answer was ‘yes,’ and we asked, ‘Where else we could apply this model?’”
Ag ‘won’ funding round
The foundation and NREL looked at several industries, including several surrounding what he called the food-energy-water nexus — and agriculture was a “winner” for the next funding round. To make that work, IN2 partnered with the Donald Danforth Plant Science Center, a St. Louis-based nonprofit with a stated mission to improve the human condition through plant science.
The IN2 program solicited referrals from its network of channel partners — technology incubators, accelerators and universities — and received 36 for companies deemed workable given the parameters of this founding round.
Trish Cozart, IN2 program manager, NREL, explains that a larger number of ag-tech companies was referred, but the field was narrowed to 36 — based on a rigorous review process where the program wanted to see a good fit. She says there were three main criteria for the program candidates.
First, the impact had to be important. “For the Wells Fargo Foundation and IN2, they wanted to choose companies that have a potential for a good long-term impact on an environmental concern such as water or emissions,” she says. “We wanted to make sure the companies that would be in the program would have some sort of positive impact.”
Second, the company had to have a technical fit. “They needed to be a technology fit for incubation with the expertise and facilities that are offered at the Danforth Center,” she adds.
Third is the company’s potential in general to succeed.
The 36 candidates were reviewed. Through a rigorous process with a diverse panel of judges and a specialized scoring system, five were selected to receive up to $250,000 in non-dilutive funding and hands-on technical assistance to further develop and validate their technology. The five include:
• Aker Technologies. This Chicago-based firm that’s developing an automated crop-scouting process that can capture and analyze the presence and intensity of pests and pathogens below the crop canopy. Malia Gehan, Ph.D., and Rebecca Bart, Ph.D., of the Danforth Center will serve as principal investigators.
•CoverCress. The St. Louis-based startup is developing a new winter crop designed to survive harsh conditions and could provide a third crop in a two-year corn-soybean rotation. Dmitri Nusinow, Ph.D. and Dilip Shah, Ph.D., of the Danforth Center will serve as principal investigators.
• Intrinsyx Bio. The business, based in Los Altos, Calif., develops probiotics for plants that can help increase crop yields, reduce excess fertilizer use and improve soil and water conditions. Ivan Baxter, Ph.D., and Rebecca Bart, Ph.D., of the Danforth Center will serve as principal investigators.
• RNAissance Ag. This St. Louis, Mo.-based firm is developing a safe insecticide technology using RNA interference tech for precision pest management. Noah Fahlgren, Ph.D., of the Danforth Center will serve as principal investigator.
• SolGro. The Arlington, Texas-based business is developing a nanoparticle film for greenhouses that can boost crop productivity through light conversion. In essence, the film turns more sunlight into the red and blue spectrum, which has been shown to boost plant performance. Ru Zhang, Ph.D., and Jim Umen, Ph.D., of the Danforth Center will serve as principal investigators.
Sam Fiorello, COO, Danforth Center, says that while there is funding for basic research in the lab — which happens at places like the Danforth Center and national labs — it’s a challenge to bring new technology to market. “When a company wants to move to the next step beyond early discovery on the path to commercialization, there can be a funding gap,” he explains. “This is where these enterprises often die, which is unfortunate, because often they have a really promising idea.”
What those companies often need are more data about product performance — perhaps beyond a model plant or a single location. That can be difficult to do, or generate, without help. But often venture capital firms won’t provide funds without more “proof of concept” work. They’re cautious about putting money into something that may not work, and want more data.
The IN2 program will be a way to get that information. Each of the five selected companies is linked with a principal investigator at the Danforth Center. The aim is to help pull together that key information these startups can use to link up with the venture capital market.
Value to the farm
Fiorello notes that he spends a lot of time talking to farmers, taking the pulse of the market on key issues. He observes the tough times in ag today but adds that the startups at work in the market — including these new IN2 candidates — can offer ways to provide new income sources, more precisely control pests or reduce inputs used for raising crops. All of these benefits can add to the bottom line.
“The only way we will help [these farmers] is to come up with solutions that reduce input costs, boost plant vigor, improve nutritional traits or increase the quality of crops,” he concludes.