Inside Miraterra’s Unique Bet on Soil Intelligence

Index:

1. Overview

2. Trace Genomics Challenges

3. Economics and Change

4. Shopify-ication of Agriculture Service Providers

5. A look at Miraterra

6. Final Thoughts

Overview

This week Miraterra announced the acquisition of Trace Genomics assets:

There are two notable angles with this news:

1. A look at the challenges for Trace Genomics

2. A look at Miraterra, current capabilities and acquisition rationale

Trace Genomics Challenges

Trace Genomics was a soil testing company that provided soil microbiome analysis using genomics. Their core offering was a soil test that looked at microbes, pathogens, and other soil indicators, delivering information to farmers and agronomists for making fertility and crop protection decisions. Trace also had a well built customer facing software to look at testing data.

There had been ongoing conversations within the industry about the financial challenges of Trace Genomics. The acquisition price was not disclosed, but we can gauge from founder and CEO of Trace Genomics, Poornima Parameswaran’s Linkedin post that the sale was not optimal— anytime a start-up sells to another one, it’s a sign of challenges.

In March I wrote What the Fall of 23andMe Could Signal for Soil Genomics Companies in Agriculture, but I have previously stated my bullishness for companies like Trace Genomics— from an agronomic perspective, I love the concept.

A deeper understanding of the soil, particularly surrounding biological parameters and fungal/bacterial pests has upside for agronomic decision making:

However, the question I poorly considered initially was: “At what cost?”

Economics and Change

Start-up soil testing companies have challenging economics, something I broke down early last year after Trace announced a Series B raise.

With any soil lab business, there are high fixed costs.

Even more when adding the genomics testing capabilities on top, which means they become a through-put business. Large volumes are required to spread out the high fixed costs.

But getting the volumes up at a manageable customer acquisition cost is difficult, making the unit economics a hurdle.

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