BioConsortia taps existing investors for $10m

BioConsortia, a Davis, California-headquartered research company developing agricultural inputs derived from groups of microbes found in plants, has secured $10 million in Series D funding.

Sourced from Khosola Ventures and Otter Capital, both existing investors that also participated in an $8 million Series C financing round for the company in late 2016, the capital will be used to support existing research, development and commercialization efforts.

The initial focus will be on products offering natural plant trait enhancement and yield improvement for corn, wheat and soy. The company is also in the process of developing biopesticides designed for use in tomatoes and leafy vegetables.

Chief executive Marcus Meadows-Smith told Agri Investor that BioConsortia’s research begins by growing plants under stressed conditions, such as drought or pest pressure. After identifying groups of microbes producing the strongest resilience within those plants across several rounds of testing that utilizes machine-learning and genomics, Meadows-Smith said the company uses fermentation to replicate those microbes into marketable products in a process he described as similar to wine production.

After developing and testing its products internally, BioConsortia introduces its offerings to seed and fertilizer companies, as well as crop protection and input providers.

Meadows-Smith declined to identify which companies are currently testing BioConsortia’s products, but did say that some are currently entering the third year of field trials, a step that often immediately precedes a commercial order. In addition, Meadows-Smith said that BioConsortia is currently internally testing a series of products designed to increase efficiency of water use and drought tolerance while stimulating yield increases.

“Oftentimes people have talked about a win-rate of 70 percent. We’re looking with our consortia approach – i.e. several microbes within the treatment – for a higher level of consistency than these sorts of products have traditionally seen,” said Meadows-Smith, who estimated an achievable win-rate at around 90 percent if the product has been applied correctly.

Meadows-Smith said, while BioConsortia’s continued support from its existing investors has meant the company has not had to raise capital from outside investors recently, his work as a consultant with smaller, non-competing companies has given him a view of how the investor demand to access such companies has developed. Such companies in the biologicals space have found it “relatively easy”, Meadows-Smith said, to get fair to good valuations in the current market.

He explained that after a number of high-profile microbial acquisitions a few years ago – such as Bayer CropScience’s $425 million purchase of AgraQuest and BASF’s $1.02 billion acquisition of Becker Underwood – several private equity investors that were not particularly knowledgeable about agriculture were attracted to the space.

The companies supported by these initial investors, according to Meadows-Smith, developed products that ranged from the very useful and informed technologies to others that are “completely naïve, [and] looks like it was written by a geek that has never been on a farm in his life.”

More recently, he said, most microbial and agtech companies are securing funding from investors with a stronger background in the industry.

“If you are looking at a big data or an IT company for ag, you want to make sure that on the team there are some people with strong ag experience and a science advisory board with people that have a lot of experience in agriculture,” he said.