Food and ag-focused growth capital investor Pontifax AgTech has helped lead a $10 million Series A round for Tropic Biosciences, a UK-headquartered plant breeding company using gene editing technology to develop tropical crops.
Santa Monica-headquartered Pontifax co-led the round with Five Seasons Ventures, a food-tech-focused venture capital fund headquartered in France. Co-investors in the round included Tekfen Ventures, Bits x Bites and a pair of family offices.
Capital for Pontifax’s investment came from its debut fund, which surpassed an initial target of $100 million before closing on $105 million in October. Co-founder Phil Erlanger told Agri Investor at the time that investors in the vehicle included a large insurance company, a large university endowment, a fund of funds and multiple family offices, among others.
Tropic Biosciences was founded in 2016 by former Pontifax senior investment associate Gilad Gershon and a pair of partners with experience in ag-related research and development. Headquartered in Norwich, the company utilizes plant breeding and CRISPR gene editing technology to develop commercial varieties of tropical crops.
The capital collected in the Series A round led by Pontifax will be used to support commercialization of Tropic Biosciences’ coffee and banana varieties and fund the company’s expansion into other crops.
Pontifax managing partner Ben Belldegrun told Agri Investor that Tropic Biosciences’ work thus far has focused on shelf-life extension and black sigatoka resistance in bananas, natural decaffeination of coffee and improving bean yields. He explained that the standard decaffeination process increases growers’ costs and has a negative impact on taste that can be avoided through gene editing technology, which keeps the caffeine from being produced.
While the combined global markets for coffee and bananas is valued at approximately $50 billion, Belldegrun said, Pontifax’s research into the intellectual property and investments associated with the crops suggested it was an opportunity being overlooked.
“While these are, in our view, huge markets, they are probably not the broad-acreage, row-crop markets that are the low-hanging, interesting fruit today for the large strategics,” said Belldegrun. “We see them [strategics] as maybe interested in these areas, but not really focused on building those as a priority in their pipeline.”
Belldegrun declined to identify what other crops Tropic Biosciences might look to develop in the future using the capital provided by Pontifax and its co-investors, but did say that part of the capital would go towards demonstrating trait value to growers and processors by getting the banana and coffee crops into field trials.
“It’s very clear: the value potential for something like shelf-life extension, that kind of variety and trait needs to be now demonstrated and commercialized through collaborations with leading nurseries,” said Belldegrun.
Another fund manager who said they had considered investing in Tropic Biosciences told Agri Investor the company “has a good shot.”
“Their challenge will be that it’s kind of a feast or famine thing,” the manager explained. “The banana industry is highly, highly consolidated and they will either get dramatic adoption or they’re not going to get any at all.”
Many industry strategics have invested in gene editing, either directly in outside companies or through research and development investments within their companies, Belldegrun said. Such investments are just one example of the ways in which the lines that used to separate different types of agtech investors are being increasingly blurred, he added.
“Biotech investors today are very interested in the food, ag and animal health sector, and that’s a very new trend,” said Belldegrun. “There’s been very little interest, historically, in the food and ag space. Gene editing specifically is the technology that has sucked in life science and biotech investors, which is why you see a lot of interest in agtech today; larger rounds, larger investors, specifically around biologicals and gene editing.”