AgriPulse‘s Sara Wyant published a detailed roundup on the entrepreneurs, researchers and emerging firms vying for leadership in the emerging field of precision breeding in AgTech. Her wide-ranging report was one of a series in The Breeding Edge, which asks: Will the breeding evolution lead to the next green revolution? The article included comments from our own Brett Morris, CFA®, Principal-Manager, Investments.
Here is an excerpt from the article:
Changes in technology have dramatically lowered the cost to enter the market, said Brett Morris, a principal with Technology Acceleration Partners (TechAccel).
“This is especially true in ag-biotech, where a range of once-daunting capital requirements have plummeted in cost. The cost of genome sequencing has declined from $100 million per genome in 2001 to approximately $1,000 per genome in 2015,” Morris wrote in a blog for GlobalAg Investing.com.
“Cheap cloud storage now allows companies to host, analyze, and reproduce huge data sets. Computing power has significantly increased and enabled advances in artificial intelligence and machine learning. As a result, companies are observing phenotypic characteristics in the lab versus the field, and continuously improving outcomes by feeding more data to smarter algorithms. And the insights these start-ups are producing are moving into development faster, thanks to high-throughput automation. In simple terms, this means it’s easier to start a company today than ever before.”
Still, much of the basic research starts on university campuses and then, through business incubators, collaborations with other companies and licensing agreements, the research into both agriculture and human health, spreads like a spiderweb – ultimately connecting in myriad directions and levels of investment.
The article details the patent struggles surrounding CRISPR-Cas9 and the interest in many related gene-editing tools. The article explains:
Given all of the various investments and licensing agreements, it’s difficult to identify just one industry leader at the top of the precision breeding space – partly because investors range from small individual start-ups to large agribusinesses which may be investing or partnering in start-ups and technology companies on their own.
Jim Carrington of St. Louis-based Danforth Center for Plant Science is quoted:
“Here’s the thing about gene editing. Everybody is using it. It is a ubiquitous tool in any company that is doing crop improvement. It’s a ubiquitous tool in all research institutes and universities that work on or have a focus on plant science,” said Jim Carrington, president of the Donald Danforth Plant Science Center in St. Louis. “But everyone uses it, because the tools are available to everyone and they’re simple to use. And they work really well. So, it’s hard for me to say who the leaders are.”
The article then notes TechAccel’s contribution to the understanding the plant breeding ecosystem:
Several venture capital and research firms are tracking the leading firms and their interrelationships. For example, TechAccel is a venture and technology development organization which tracks both the plant and animal investment landscapes. As can be seen from the diagrams below, gene editing is just one part of a much larger “pie” of technological advancements underway.
Even though there’s no shortage of investors and firms looking to see which technologies are likely to deliver the next financial blockbuster, there have been shortages of investment funds for ag tech at some entry levels, said TechAccel’s Brett Morris. It’s a funding gap that he noticed early in 2017, when he was approached by several CEOs seeking additional funding for their start-ups.
Morris said he noticed agtech-angel/seed funding was recently on the rise, while more valuable Series A funding showed a sharp decrease in 2016 from the previous year.
“This is nothing out of the ordinary for venture professionals, as we see hundreds of deals come across our desk annually. These conversations, however, were different from the previous year. Most of the entrepreneurs were struggling to find investors with an appetite for early-stage risk,” Morris wrote in a blog for GlobalAgInvesting.com.
“More start-ups competing for a limited amount of funding at the next stage presents a problem for many founders,” he added. There were also more entities helping start-ups get established, as AgFunder reported in their 2016 Annual Report (See below).
Another issue: Morris said that “generalist investors and individuals tend to shy away from early-stage risk if they don’t understand the industry or underlying science.
“If generalist funds are hesitant to back a play because they don’t understand the science behind it, then companies that can perform financial and scientific due diligence have an advantage,” Morris said.
“Corporate venture models, such as Monsanto Growth Ventures and Syngenta Ventures, can efficiently de-risk opportunities because they have large R&D departments and scientists to help with diligence. They also have large-scale plots of land to perform high-powered statistical proof-of-concept studies to validate technologies. And by providing exit opportunities and ongoing business relationships with the start-ups in which they invest, these corporate ventures are able to further reduce risk.”
The article goes on to review a report of 20 years of IP assets related to gene editing techniques, as well as the continuing investments. The article includes details on the global investments in gene editing, noting the massive commitment in research spending in China:
Last fall, over 60 organizations signed a consensus document, calling for an annual $6 billion goal for USDA food and agricultural research over fiscal year 2019 to 2023.
“The U.S. has been second to China in total public agricultural research funding since 2008. By 2013, China’s spending on public agricultural R&D became nearly double that of the U.S.,” the letter noted. “Though public funding for other forms of domestic research has risen dramatically, the U.S. agricultural research budget has declined in real dollars since 2003. This is an area of R&D where return on investment is estimated at 20 to 1.”
Read the full article here: https://www.agri-pulse.com/articles/10623-who-is-leading-the-charge-for-new-precision-breeding-tools?
