Sowing the seed: cultivating relationships with agtech start-ups

Sam Fiorello is chief operating officer for the Danforth Plant Science Center, an independent research institute focused on plant science that opened in 2009 and that has attracted funding from the likes of the Gates Foundation. He is also president of the affiliated BRDG Park, a research facility and hub for plant tech, ag tech and life science companies.

He tells Agri Investor about how to attract the best start-ups from around the world, his local community seed stage and VC funding connections, and the limits to the risk that Danforth and the research centre can afford to take.

So what is the research centre for start-ups and the park about?

The research park is the first of three buildings. It’s basically full with 15 different enterprises. They range from a partnerships with the community college here in St Louis to train lab technicians, to multinational companies like KWS, the German seed company.

About half the companies come from our region, including home-grown spin-offs from the Danforth Center, and the rest are from Germany, Israel, India and then from across the US. They rent the space in terms of payment from the real estate developer, Wexford Science and Technology.

What was it like building a research centre?

There are a lot of failed research parks out there, where they looked at the research park as a real estate play. We [needed] to provide research, resources and relationships. Before the building even opened we put together a conference [the Ag Innovation Showcase].

Then there’s the region. There are more plant PhDs here – over 850 – than in any other, and we have the Danforth Center and a college as some of or neighbours. That is access to intellectual capital and research.

Who are some of the companies you have there and how did they come to work with you?

When we first touch point with companies they are normally at seed stage. We help them get in front of potential investors for that A and B round. But it varies.

I took a trip to Israel last spring and we have now three Israeli companies that have established operations here to cover North America. There was a lot of face-to-face contact. Two were at seed stage and one was already on the Tel Aviv stock exchange.

We have a company in the biological space that we recruited right when we opened in 2009, called SyMyCo, from Delhi in India. They make fungi that you apply to make a symbiotic relationship with the plant roots and improve drought resistance.

They were family-funded when we met them at our first ag showcase. Last year they signed a strategic relationship with Valent Biosciences Corporation, a subsidiary of Japanese multinational Sumitomo.

New Leaf Symbiotics we also met early on, and they had heard about our park through some other companies and an ag showcase. They had some early funding support from local angels and quasi-governmental moneys from organisations like the Helix fund, across the parking lot from us. The fall of 2014 they raised $17 million dollars in a B round.

Where was it really competitive for you?

KWS, a big firm, decided that they wanted to create a North American research headquarters. I heard from someone who used to work in St Louis that they had engaged a site selection firm.

I quickly reached out to them and said we wanted to make a strong case here too. We got onto a finalist list of eight. Then in December 2014 we decided to get on a plane to Einbeck, Germany. We sent a message that we were very serious, hosted them here for two days, and kept engaging them until we were selected in March 2015.

What risk do you take when it comes to the companies you let in and expect to succeed?

The Danforth Centre is a not-for-profit and we don’t take the kind of risks that a VC would. The developer has the risk for the real estate which we have given land access. We don’t have any ownership in these companies. The VCs and other funders we bring in do, but we need a strong record.

We are good at vetting. We look at the people, science and business. We understand that there are going to be failures, but while some VC guys might even say 90 percent can fail, we look at much less than that.

Since 2009 we have had 25 companies and two, to a maximum of five, could be said to have failed. Out of 25 some are still in the ongoing 15 – they haven’t had a big liquidity event. It is early days for reliable statistics.

Our first tenant, Divergence, which came out of Washington Medical School doing plant nematodes, was acquired by Monsanto several years ago in a successful exit, but we had a company called Phycal, which was looking to take algae and make bio-fuels, that did not make it.