Startups attracting venture capital

By Tri-State Neighbor

Editor’s note: This is part 1 of a three-part series featuring agricultural-startup companies and investment in them by The Yield Lab of St. Louis.

The Yield Lab was launched in 2014 because its principals saw a need … venture capital for early-stage agriculture technology companies that could help provide solutions to feed a growing population. Based in St. Louis, The Yield Lab is a business accelerator providing capital and support to agricultural startups.

“Agriculture is the world’s largest employer but agriculture – as part of total investment dollars – is small,” said Matt Plummer, principal at The Yield Lab. “It’s a fraction of what it should be.”

And agricultural technologies will be needed to efficiently and sustainably produce enough food for the world’s growing population. Even with their large pipelines of technologies, multinational companies don’t have all the resources they need to keep pace with growing demand, Plummer said. Those companies also increasingly look to startup technologies to maintain a competitive advantage.

The Yield Lab solicits startups to apply to its cohort every September. The accelerator’s team then reviews those applications and usually selects about six companies per year to participate. The Yield Lab invests $100,000 in each of those companies. Its team of agribusiness professionals also provides mentorship.

“We expose startups to customers, collaborators and capital,” Plummer said

The accelerator focuses on startups in six areas.

crop protection and productionanimal health/nutritionsupply chain and logisticsprecision agriculturefood ingredients sustainability

The Yield Lab has enlisted the help of a few farmers to evaluate startup applications. Adam Gittins, general manager of HTS Ag in Harlan, Iowa, started serving as an adviser on The Yield Lab team in fall 2017. A farmer himself, Gittins has experience testing new technologies in farm settings. He also has several years of testing global-positioning-system and guidance technologies. HTS Ag is an Ag Leader dealership.

“I put new technologies to work on my own farm,” Gittins said. “They must provide a return on investment. I’m not interested in using toys.”

Among the newest companies to receive The Yield Lab’s funding and mentorship opportunities are EIO Diagnostics, New West Genetics and Nutrivert. EIO Diagnostics has developed a system for monitoring cow udders for indications of early-stage inflammation. New West Genetics is focused on improving industrial hemp while Nutrivert has developed non-antibiotic growth promoters for swine, poultry and cattle.

EIO Diagnostics, based in Vancouver, British Columbia, grew out of a conversation between friends Damir Wallener and Cory Spencer. Spencer expressed his concerns about mastitis in his milking-goat herd and about how there were few tools available for real-time monitoring of udder health. Wallener has a background in computer engineering and algorithms. He explained that he was experimenting with a combination of machine vision and artificial intelligence.

Together they developed a prototype that uses multi-spectral imaging to view udder abnormalities as they form. That enables early diagnosis of udder infections such as mastitis.

The prototype is available in two versions – a handheld device and a larger unit that can be mounted in automated milking parlors. The prototype scales to farms of all sizes, Wallener said. Farmers could use the handheld device to inspect udders by walking around an animal. The mounted device could be integrated with robotic milkers, monitoring cows as they enter a milking unit. The device is in the last stages of pre-commercialization. EIO Diagnostics expects to commercialize the technology in the first half of 2019, Wallener said.

About the agricultural-investment climate in general he said, “I’m not sure that it’s ever been better. Large agricultural companies are interested in innovations, and often those innovations are coming out of smaller companies. There’s an appetite for investment in this sector. More money is now being invested in the heartland rather than just on the coasts.”

New West Genetics is focused on improving hemp genetics and production. The company uses conventional plant-breeding technologies to develop hemp varieties adapted to various regions of the United States. It also uses gene-sequencing technologies to help speed development.

The company is contracting with farmers to grow hemp. One of its objectives is to develop hemp for large-scale production. There is great demand for cannabidiol – CBD – because of its anti-inflammatory qualities, said Wendy Mosher, CEO of New West Genetics based in Fort Collins, Colorado. Cannabidiol is concentrated in the hemp plant’s flowers so the company is focused on developing varieties with good flower-harvestability traits.

New West Genetics expects to license technology to seed companies in a few years. The seed will be certified through third-party verification. The company will continue to watch hemp regulations on a statewide basis, Mosher said.

About being selected for support from The Yield Lab she said, “It validates what we’re doing. The Yield Lab is a valuable resource.”

Nutrivert is developing a non-antibiotic feed additive to increase feed-conversion rates in poultry, swine and cattle. Nutrivert of Atlanta is in the proof-of-concept stage. It has conducted studies on swine at the University of Georgia as well as broiler studies at the Southern Poultry Research Group and Auburn University.

“For years venture-capital markets for agriculture had been poorly developed,” said Horace Nalle, principal at Oriole Advisors LLC – a company that provides business consulting in the area of animal health as well as serves as an equity partner. “Investments had been more concentrated on human health. But recently we’ve seen a green shade of spring in venture-capital funding in agriculture.”

This article provided by NewsEdge.