Cultivian, Anterra and Open Prairie among investors in $40m biologicals Series B

Cultivian Sandbox Ventures, Anterra Capital and Open Prairie Ventures are among investors in a $40 million Series B financing round announced Monday for Vestaron, a company offering biologic crop protection products.

Led by Novo Holdings – a Danish life science investor affiliated with pharmaceutical company Novo Nordisk – the round also included advanced materials-focused Pangaea Ventures and a number of investment vehicles devoted to supporting economic development in Michigan.

Vestaron chief executive Anna Rath told Agri Investor that capital will be used to support commercialization of the company’s existing offerings and secure regulatory approval in new markets.

Headquartered in Kalamazoo, Michigan, Vestaron uses a proprietary yeast-based fermentation to replicate optimized peptides at high volumes, producing crop protection products that currently include distinct biopesticides for greenhouse and field use and a bioinsecticide formulated for field use.

At the Agri Investor Forum in November, Rath highlighted that young companies often find it challenging to secure investment from capital sources better-placed to assist in the effort to commercialize existing products.

For example, she said that while Vestaron did speak with multiple life science investors in its fundraising, most were uncomfortable investing in a sector they had little experience in. Novo Holdings, she explained, had already decided to enter agtech and derived additional comfort from the firm’s familiarity with Vestaron’s existing investors and its own previous experience in fermentation-based manufacturing.

“The pool of lifescience investors is so much larger – particularly for later-stage, larger rounds – than the pool of agtech investors,” said Rath. “In order for the agtech industry to really grow and flourish, there is going to need to be that kind of cross-over.”

Demand for biological crop protection products is fed, Rath said, by regulatory pressure on existing crop protection offerings and consumer demand for supply chain transparency. Another factor, she said, is the increasing incidence of insect resistance, such as that of the diamondback moth, which has developed resistance to more than 40 insecticides since the 1960s.

Among the most important pests in the greenhouse context, Rath said, are thrips; minute insects that generally develop resistance to new insecticides within about 18 months.

“More and more, you are finding pests that can’t be controlled with pesticides that used to effectively control them,” Rath explained. “Growers are hungry for new solutions, either to be able to kill pests that have already developed resistance or to be able to rotate with other chemistries in order to prolong the effectiveness of those chemistries and keep the insects from developing resistance.”

The current state of development within agricultural chemicals market mirrors an earlier stage of the pharmaceutical industry, when a similar change from small molecule synthetics to biologicals led to the creation of new categories of drugs, Rath pointed out.

In pharmaceuticals, she explained, biologic alternatives came to replace drugs derived from small molecule synthetics that had begun to create adverse health effects in patients, forming the basis for what are now publicly-traded companies valued in the tens of billions.