By: Andrew Pollack
Compared with medicine, where small companies often lead in turning cutting-edge science into new drugs, agriculture has never had much start-up activity. Agricultural biotechnology, for instance, has been dominated by six giant seed and chemical companies, including Monsanto and DuPont.
But new technologies are opening up new opportunities, and investment in early-stage agricultural companies is springing to life.
One sign of that is the announcement being made Thursday of a new “accelerator” to assist fledgling agriculture companies. Its backers include two big agrochemical and seed companies, Bayer and Syngenta, and some venture capital firms that typically focus on pharmaceuticals, not farms.
“The time is really right for early-stage ag investing to come to life,” said John Dombrosky, chief executive of the new organization, called the AgTech Accelerator. “It’s happening before our very eyes.”
Some 499 agricultural technology companies attracted $4.6 billion in investments last year, nearly double the $2.36 billion in 2014 and way up from about $500 million in 2012, according to AgFunder, an organization that helps connect investors with agricultural companies.
Companies based in the United States raised just over half that total, or $2.4 billion.
About $1.65 billion of the 2015 global total was for food e-commerce companies, which some might not consider agriculture. But there was still a big increase in other sectors as well. Monsanto, for instance, now has its own venture capital operation.
Agricultural biotechnology once meant mainly genetically modified crops. Because of regulations and consumer opposition, these often required many years and tens of millions of dollars to bring to market. So genetic engineering was dominated by big companies working on major crops like corn and soybeans.
But now there are new, less expensive techniques for providing crops with new traits, such as the Crispr gene editing approach, which might not even be regulated. This could open the market for smaller companies working on less widely grown crops.
There is also a lot of development of so-called biological products such as living microbes that can kill pests, or ways to improve the health of the “plant microbiome,” the community of microbes that live in, on or around a plant.
A plant microbiome company in North Carolina called AgBiome raised $34.5 million last year from investors including Monsanto, Syngenta, some venture capital firms and the Bill and Melinda Gates Foundation.
There is also a huge effort now to apply electronic technology to the farm, including sensors, robots and drones, and big-data approaches to advise farmers what crops to plant on each small parcel of their land and how much water and fertilizer to apply to each spot.
“Now you have biologicals and digital, which are not as much impacted by those long time lines and high costs,” said Derek Norman, head of corporate venture capital for Syngenta.
The AgTech Accelerator will be based in Research Triangle Park in North Carolina, where Bayer and Syngenta have their main United States crop research operations. New start-ups will be able to work in the accelerator’s building and take advantage of its management.
The accelerator is starting with $11.5 million, but that will be increased later this year, Mr. Dombrosky said. Besides Bayer and Syngenta, investors include Arch Venture Partners, Flagship Ventures, Harris & Harris Group, Hatteras BioCapital, Mountain Group Capital and Pappas Capital.
An investor and driving force behind the accelerator was Alexandria Real Estate Equities, which develops life science research facilities. Alexandria is also involved with Accelerator Corporation, which helps nurture new medical biotechnology companies in Seattle and New York.
The agricultural accelerator will get ideas for new companies and expert advice from various universities, including Duke, North Carolina State, Pennsylvania State, Purdue, the University of North Carolina, Washington State and the University of California, Davis.
View source version on The New York Times.