This opinion piece, by TechAccel President and CEO Michael Helmstetter, first appeared in Forbes June 26, 2018.
Venture investors poured more than $4 billion* into agtech last year, and we are on pace to match or exceed that this year. The convergence of AI, cloud computing, big data and gene editing, with applications from soil to plants, foods to medicines, farm to table are driving investments. Discerning startups and investors will capitalize from the market’s current, numerous opportunities.
From my vantage point at TechAccel (full disclosure: I’m the CEO there), part of our business is to scan the horizon for scientific innovations in agtech and animal health, and then help bring the most promising to market. While we don’t work with all highly funded niches, such as those related to consumer meal delivery (Blue Apron, for example, received $199 million in funding), we are “on the ground” with any technology that directly impacts farmers and ranchers.
Here are five of the most promising ag and animal health technologies, and, by association, biggest startup opportunities we are seeing right now:
1. Gene editing and cloud biology
Plant breeding is nothing new. But the CRISPR technology applied to plant science is driving a new revolution in genetic editing.
Gene editing is different from creating a GMO, which introduces genes from another organism. You can think of gene editing like the “cut and paste” function in word processing, only the editing occurs by rearranging or deleting sequences of the genome instead of letters, words or sentences. The technology has become so readily available that we’re seeing gene editing projects in high school science fairs.
While CRISPR-Cas9 currently leads the pack of gene editing tools, alternative technologies including eMage (eukaryotic multiplex genome engineering), ZNF (Zinc Finger Proteins), TALEN (Transcription Activator-Like Effector Nucleases) are also competing for widespread market adoption. There’s room for more than one, and the race is on for precision, accuracy and ease of use. The IP battles for CRISPR showed how high the stakes are: hundreds of millions of dollars riding on patent rights.
With the global population projected to reach 8.5 billion by 2030, and climate change stressing crops and animals to the point of illness and degradation, gene editing will become central to the development of more tolerant crops with higher yields.
Another innovation, known as cloud biology, is used hand-in-hand with gene editing. Cloud biology combines artificial intelligence, DNA data, machine learning and analytics to reduce the time needed to breed new crops. As Andreessen Horowitz (an early VC investor in cloud biology) notes, it’s biology that works like programming, with experiments run through software. With cloud biology, the process of finding an ideal genetic signature can be accelerated from years to a matter of weeks. Using cloud biology to inform the gene editing process, we are on the cusp of a new wave of green, purpose-built crops to address disease, climate change, pestilence and the other factors that limit food production.
2. Alternatives to Antibiotics
Antibiotic-resistant bacteria aren’t just a threat to human health. Animals, too, face superbugs that have evolved to resist agents designed to cure or prevent disease. As consumers become aware of antibiotic resistance as a public health problem, shopping habits shifted to avoid antibiotic-filled poultry, eggs, dairy and meat.
The human and animal health research community is working on alternatives to antibiotics, including ways to tap an animal’s innate immunity. Instead of destroying intended and unintended bacteria the way antibiotics do, alternatives look to power-up an animal’s existing immune system to fight off invading pathogens. Some promising options include phage technology, improving feed by manufacturing proteins and enzymes within crop plants, and microbial research to develop new therapies.
- Phage vaccines: Bacteriophages (or viruses of bacteria) can be used to deliver DNA vaccines. Phage-based vaccines are effective and highly stable (even under harsh conditions), relatively simple and inexpensive to produce in large quantities, and have a high safety profile. Our portfolio company EpiBiome is focused on developing these naturally occurring bacterial viruses as approved antibiotic replacements. This area of animal medicine is also showing potential to expand into anti-parasitics, anti-inflammatories, anesthetics, pain medications and specialized products for managing the reproductive, cardiovascular or metabolic conditions of animals.
- Plant as manufacturing system: Feed additive producerAgrivida, another of our portfolio companies, has developed a platform for using plants to express proteins and enzymes directly. Deploying plants as the manufacturing system means delivering essential nutrients to animals directly in their feed, minimizing the need for industrial chemical manufacturing of enzyme and protein facilities. This platform technology is a promising way to keep animal populations healthy at a far lower cost, with less environmental impact.
- Microbiome editing: Research is unlocking the secrets of the microbiome in plants, insects, and animals, includinghumans. Probiotics, biological medicines and treatments to adjust the balance of bacteria are yielding positive results. The microbiome could be key to unlocking an array of diseases, spanning behavioral health (autism, depression) and medical health (AIDS, obesity, cancer, diabetes). Note the entrance of VCs, looking at diagnosis, preventives and therapies as an indicator of opportunity in human health, agriculture and animal health.
3. Soil Biologicals
Farmers have long used chemicals to add nutrients to soil or to fight pests and weeds. But standard agricultural chemicals have created run-off waste, water pollution and topsoil depletion. As understanding of the human microbiome advances, so also does the research into the microbiome of soils. The same tools examining the bacteria in the human gut can be applied to fine tune the microbes that help germinate seeds, grow root systems and provide plants protection from disease or drought.
As with advances in the human genome, it all starts with decoding the soil. Trace Genomics, a kind of 23andMe for soil, helps farmers understand what is in their existing soil microbiome. This differs by region and crop, and the decoding is an important first step. The logical next step is aligning crops to the soil or adjusting the soil microbiome to suit the needs of the specific crops. Expect to see a host of biological fertilizers, herbicides, fungicides and pesticides coming to market in response. The popularity of the Earth Microbiome Project may spur additional start-ups and investments.
From oyster harvests to farm-raised tilapia, aquaculture has fed humans for centuries. Innovation-wise, however, aquaculture is still relatively young. Aquaculture startups garnered a reported $193 million in 2016 targeting areas such as aquaponic technology, data analytics, insect farming for fish feed, algae production and supply chain technology.
Innovations are focused on optimizing production, minimizing losses and waste byproducts while meeting growing demand for healthy seafood. Notable startups operating in this area include ShellBond,Vaksea, NovoNutrients and OneforNeptune.
One particular opportunity is the development of oral, or feed-based, vaccines. Currently, fish are immersed or vaccinated by hand, one by one. Injection is not a particularly cost-effective process, and it can damage the quality of the final product with discoloration at the injection site. Putting immunity and nutrients into feed would go a long way toward keeping fish healthy and reducing losses. Because aquaculture is behind the innovation development curve already, it is ripe for transformative technologies that would significantly advance the quality and production of seafoods.
5. Post-Harvest Technologies
Post-harvest technologies include everything that could happen to food after it is picked, plucked, reaped or gathered. Companies innovating in this space are considering food safety monitors and packaging, enhancements to shelf life, and traceability – knowing every step in the path of each fruit, vegetable, meat or poultry from farm to table. Traceability and transparency requirements meet consumer and regulatory needs and are prime applications for blockchain technology.
The boom in post-harvest technology covers all the steps in a product’s lifecycle:
- the origins of food;
- cultivating crops in media specifically for each plant or animal;
- maximizing the size and quality of the harvest;
- managing transportation and processing;
- extending shelf-life;
- reducing waste overall.
Companies such as General Mills and Tyson are interested in technological improvements post-harvest, and startups in this space have a ready audience for a potential exit.
A Promising Future
With advancements in science creating opportunities like these, the investment flow only makes sense. And we’re only scratching the surface–the next tier of the agtech ecosystem will also create innovative products and services to feed the population and grow new markets. A promising crop, indeed.
*Clarification: The original statement of “more than $1 billion,” based on Pitchbook numbers, has been revised to “more than $4 billion” to reflect data in the AgFunder AgriFood Tech Investing Report, 2017.