$20m Series D backs pongamia tree expansion

TerViva, an Oakland, California-headquartered startup focused on propagating the pongamia tree as a sustainable source of plant protein and vegetable oil has raised $20 million in a Series D round finalized last week.

Led by agriculture-focused family office Evans Properties, the investment round also included the Jeremy and Hannelore Grantham Environmental Trust and a group of Florida-based family offices. Existing investors in the company include the Yield Lab, the Elemental Excelerator and Howard Fischer of Gratitude Railroad, among others.

Native to India, South-East Asia and Australia, pongamia trees produce an annual harvest of seeds similar to soybeans that can be used to produce vegetable oil, biofuels and plant protein. TerViva, which was founded in 2010, has collected an exclusive library of high-yielding, patentable pongamia genetics from around the world.

The company currently sells pongamia cultivars to producers, which are raised with little or no pesticides or fertilizers on underused land in Florida and Hawaii. TerViva then purchases the crop from producers before processing the pongamia into plant protein, livestock feed and high-oleic oil.

Chief executive Naveen Sikka told Agri Investor that while much of TerViva’s early support was from what he labelled “climate smart” investors like Jeremy Grantham, the company was introduced to a different category of LP after it began planting test plots of pongamia trees in Florida.

After observing development of plants, Sikka said, local producers approached the company about expanding the acreage planted with pongamia and investing in the company directly.

The approximately 10 large Florida-based family offices that participated in the Series D round, according to Sikka, own a combined 500,000 acres of tillable farmland in the state, which has seen a dramatic decline in citrus production due to citrus greening disease.

“They are literally looking for a solution on their own land,” he said. “They are also sophisticated, broad investors who see the potential return on the company’s technology itself.”

TerViva does not genetically alter the pongamia trees, Sikka said, but it does use genomic markers to select the best-performing seeds. The company also has proprietary techniques to process pongamia’s bitter, unpalatable seeds into food ingredients, according to Sikka.

Capital from the Series D will allow the company to produce and deliver 150,000 pongamia trees in Florida, according to Sikka. He added that the company also plans to form partnerships to facilitate processing and product distribution and take steps towards establishing a supply chain in India, where the crop is widely used.

Because the crop can be harvested mechanically, Sikka explained, the switch from citrus requires little by way infrastructure investment and offers farmers an opportunity to lower labor costs.

TerViva has been in discussions with a wide variety of institutional investors interested in pongamia’s potential, Sikka said, including extensive discussions with a private equity firm he described as “one of the largest in the world.”

“They said: ‘Whoever figures out what to re-plant on all this abandoned citrus is going to make a lot of money,’” Sikka relayed. “You need to have a very scalable crop, market-wise and growing wise. You can’t grow some kind of a niche crop on 700,000 acres.”