Upstream Ag Insights - July 29th 2024

Essential news and analysis for agribusiness leaders.

July 29, 2024 • Read Time: 20 minutes

Welcome to the forefront of agricultural innovation and strategy with the 226th edition of Upstream Ag Insights, where over 17,200 agribusiness leaders start their week discovering the latest industry news and learning about the latest innovations and business strategies shaping the future of agriculture.

With curation and analysis from Shane Thomas, each edition delivers insights and analysis crafted for the practical agriculture professional, empowering you to be among the best informed in the industry and make superior business decisions.

Whether you're a new subscriber or this email was forwarded to you, Upstream’s field-tested frameworks and in-depth examinations equip you with the knowledge and foresight to seize opportunities and catalyze growth in your business and career.

Notable Takeaway of the Week

Last week, agtech funding announcements totalled $200 million, including releases from InnerPlant, Micropep, Monarch Tractor, Pherosyn, and Agrobiomics, making it a significant week for funding. Additionally, AgFunder announced the close of their Fund IV, which raised over $100 million.

Index:

  1. InnerPlant Raises $30 million Series B, Led by North American Farmers: Highlights and Analysis

  2. The Insight is the Edge: Switch Bioworks

  3. Micropep Raises $29M in Series B Funding and Unveils Krisalix, its Proprietary Discovery Platform: Highlights and Analysis

  4. Monarch Tractor bags record $133m, eyes global expansion for its all-electric, autonomous machines

  5. AGCO to Sell Majority of Grain & Protein Business for $700 Million

  6. Agriculture’s Misunderstanding of Data — ‘Battling Big Ag: Safeguarding farmers from data exploitation and US farmer: ‘Theft of my data could deprive me of my competitive advantage’

  7. 54 Questions to Ask about your Biostimulant or Biopesticide

  8. Why Syngenta is Investing in Soil Health with Matt Wallenstein

  9. Upstream Ag LLM Research Tool

  10. Other Interesting Ag Articles (9 this week)

This week’s edition of Upstream Ag Insights is brought to you in partnership with The Combine

It’s a wrap for our 2024 campaign with The Combine, but that doesn’t mean you should miss out on the latest AgTech advancements in the Midwest and beyond. Stay in the loop with the diverse array of AgTech startups in The Combine’s ecosystem and discover how they are transforming livestock operations, synthetic biology, crop production, and more.

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1. InnerPlant Raises $30 million Series B, Led by North American Farmers: Highlights and Analysis - Upstream Ag Professional

InnerPlant, today announces a $30M Series B funding round led by an alliance of large North American farmers headed by Coutts Agro, an operator and agricultural investor. Joining the round is Systemiq, as well as previous investors Deere & Company and Bison Ventures. 

InnerPlant genetically engineers plants to emit distinct optical signals when the plants are under stress, such as when they lack nutrients or are under fungal pressure or attack from insects. The signals are detectable from via sensors, such as satellites or on tractors, and visualize stress as much as three weeks before the human eye can see, giving farmers and early warning system to proactively protect their crops.

Co-founder and CEO of InnerPlant Shely Aronov shared the following on the news:

We’re very proud that this round is being led by the people who best understand what’s needed on the farm and what innovation in agriculture actually looks like….We’ve always put farmers at the center of everything we do and this investment validates that farmer-centric culture and our technology.

It’s not common to see farmers leading a round of this magnitude.

At its most simple, the investment group is a consortium of progressive farmers identifying a technology that can help them be more profitable in their operations that want to see the technology become a tool they can access.

But it’s more sophisticated than that, too.

Matt Coutts, Chief Investment Officer of Coutts Agro leading the raise and InnerPlant board member, shared a Linkedin post highlighting the rationale for investment:

We believe InnerPlant has the last mover advantage by deriving plant stress information directly from the plant, and not a sensor based on secondary information.

Agronomy has been a lot of gut feel and guessing. InnerPlant is changing that.

Traditional sensors are a proxy for what a plant might be experiencing, or could be experiencing— InnerPlant plant sensors can qualify, and quantify, in real-time what a plant needs, or doesn’t need, ultimately aiming to drive better agronomic decisions and more profitable farms.

Matt sharing his investment logic on “why now” is an astute application of Carlotta Perez’s framework that has been emphasized in Upstream before:

We believe precision agriculture is turning from an installation phase, funded by financial capital to the deployment phase led by production capital (leading incumbents and farmers). The pathway to market gets less risky every single day as the company can leverage the “pipes” that have been laid (at a great cost) in digital ag and satellite image capacity in addition to the precision application tools that continue to grow market share.

This comment ties back to a comment Matt made on The Business Breakdown Podcast: John Deere where he stated the following (emphasis mine):

In a lot of industries you may debate when the instalment period ends and deployment period begins. And in agriculture, it's kind of like when Deere says so.

His insight is reinforced by Deere & Co. being a co-investor in this raise along with previously leading InnerPlant’s Series A, and having a three-way partnership agreement between themselves, InnerPlant and crop protection behemoth, Syngenta.

When the John Deere and Syngenta announcement came out I stated the following:

There aren’t many agtech start-ups collaborating in a consortium fashion with not one but two leading agribusinesses. InnerPlant is unique in enabling ecosystem collaborations with industry incumbents.

InnerPlant now partners with or has investment from a notable trio of agribusiness groups:

  • the largest equipment manufacturer

  • a top crop protection manufacturer

  • some of the largest farmers in North America

Not to mention, their partnership with top 3 CropLife 100 retailer, GROWMARK.

For a deep dive into the difference and importance between data traits vs. resistance traits and a sneak peek of what InnerPlant’s new product, CropVoice, can mean for farmers and agribusiness professionals, become an Upstream Ag Professional member:

Disclosure: Upstream Ag Ventures Inc. is an investor in InnerPlant.

2. The Insight is the Edge: Switch Bioworks - Upstream Ag Professional

*The full article on Switch Bioworks is free to all Upstream Ag Insights subscribers at the link immediately above*

Insights are fundamental for the success of any business.

An insight is defined as:

the capacity to gain an accurate and deep intuitive understanding of a person or thing.

This can be into a customer, a technology or a market for example.

An insight that is actionable is what differentiates a business. Acting on an insight allows a company to be different and create value, or capture value in unique ways— Switch Bioworks stands out, taking a unique insight surrounding challenges with soil applied microbes and building technology and a business around it— in this instance, specific to maximizing microbe efficacy, specifically starting with precision engineered nitrogen fixing microbes.

Nitrogen Fixation

Nitrogen-fixing microbes beyond legumes have immense potential in agriculture.

Crops like corn or wheat fixing even a portion of their Nitrogen needs can increase yields and quality, minimize costs, decrease deleterious environmental impacts of synthetic nitrogen fertilizer plus streamline logistical costs and efficiency across a farm operation by minimizing application needs.

In the US there is more than 13 million tons of Nitrogen fertilizer applied every year, with over 6 million applied to corn alone.

The agribusiness and venture capital world knows the potential in providing a less bulky and logistically demanding product that has a lower environmental footprint, too:

The maker of nitrogen-fixing product ProveN 40, Pivot Bio, has raised over $617 million to date and has its products on millions of acres.

Sound Agriculture, the maker of Source, has raised over $150 million.

Kula Bio has raised over $74 million.

Corteva Agriscience purchased biological company Symborg in 2022 (for an undisclosed amount), a company whose most prominent product has the active ingredient Methylobacterium symbioticum, a nitrogen-fixing bacteria.

The list of companies is quite large, too:

In the full article, available to everyone at the link in the title heading, we dive into the challenges of achieving high rates of microbial N fixation, the unique insights that Switch Bioworks has catalyzing their technology and business, what their technology entails, how to calculate N fixation rates, and what their technology can be useful for in the future.

Micropep Technologies (Micropep), the global leader in micropeptide technology, today announced a $29 million Series B funding round along with its proprietary discovery platform, Krisalix. The round was led by Zebra Impact Ventures, and BPI Green Tech Investment. All existing investors, Fall Line Capital, FMC Ventures, Sofinnova Partners, Supernova Invest, and IRDI Capital Investissement also participated, bringing the company’s total funding to more than $51.8 million.

Micropep plans to use the Series B funding to accelerate go-to-market strategy through partnerships, complete the regulatory studies of the first biofungicide molecule, and expand its pipeline of micropeptide active ingredients on the Krisalix™ platform.

Micropep was founded in 2016 as a spin-off of Plant Science Research Laboratory in Toulouse (LRSV) and Toulouse University. 

After raising this Series B, Micropep has now raises almost $52 million.

What is a Micropeptide and What does Micropep do?

Micropeptides are natural molecules encoded in plant genomes. They are made of about 10 to 30 amino-acids, the natural building blocks of life. There are 20 different natural amino-acids, which give about 10 trillion different combinations possible to make 10 amino-acids long peptides.

What distinguishes Micropep’s peptides from others are their size:

The Micropep platform, Krisalix, leverages computational biology and AI to browse genomes and identify potential micropeptides sequence candidates. The Micropep algorithms help select candidates according to their predefined criteria— the peptides provide control by disrupting specific physiological processes in pests.

Micropeptides have the potential to deliver the efficacy of synthetic chemistry with the environmental footprint of microbials and with less limitation than RNAs, offering better plant penetrability and supply chain/environmental stability.

For an overview of the challenges with peptides, the opportunities in peptides, an overview and image of the most important peptide companies in agriculture, a highlight of Micropep’s pipeline and patents and potential revenue streams, become an Upstream Ag Professional member:

California-based Monarch Tractor has raised a $133 million Series C round to support expansion of its all-electric autonomous tractors.

Astanor, which led Monarch’s Series B raise, co-led this fundraising alongside HH-CTBC Partnership, L.P. At One Ventures, PMV, and The Welvaartsfonds also participated.

A $133 million raise is notable for Monarch Tractor, which has tractor products that are focused on orchards and vineyards (a natural starting place for an electric tractor company) and brings its total funding to more than $220 million.

I used to think that CNH Industrial would end up acquiring Monarch Tractor— CNH has a strong presence in the small tractor market plus CNH Industrial has:

  1. a minority investment in Monarch

  2. established a licensing agreement for its modular electrification platform for small tractors

  3. a financing agreement for Monarch customers to purchase their tractors through CNH Capital.

This is a tight tie between otherwise competitors.

For more on whether it makes sense, or not, for CNH Industrial to acquire Monarch Tractor, how many tractors Monarch has sold to date, what they need to do to be successful and where most tractors are likely to be to be sold, become an Upstream Ag Professional member:

For more, check out Rhishi Pethe’s breakdown of Monarch Tractor in Software is Feeding the World here.

AGCO announced a deal to sell the majority of its Grain & Protein (eg: grain bins like GSI) business to American Industrial Partners, a Private Equity firm, in an all-cash transaction valued at $700 million. AGCO expects to incur a loss on the sale of the business of ~$450 million.

AGCO said it will use the proceeds from the transaction for debt repayment— in large part to pay down that attributed to their PTx Trimble announcement last year. The rationale for the deal likely has a lot to do with them doubling down on their retrofit and technology strategy with PTx Trimble. The grain asset business was likely viewed as a distraction and not worth pursuing while leaning into technology.

The transaction excludes AGCO's Grain & Protein business in China.

There were two article in Future Farming talking about data risk. Both these articles reinforced to me the ag industry still grossly misunderstands data and where competitive advantage comes from.

Quote #1:

Farmers often don’t know how their data is used, allowing large corporations to exploit it for profit. For instance, if a company learns from farmers’ data that a region has a high crop yield, it might manipulate market prices downward. This can harm farmers who unknowingly consent to data collection without fully understanding its implications.

There is of course risk of big companies behaving unethically. I do not think the above is an example of it, though.

Matthew Pryor, Partner at Tenacious Ventures wrote the following in The Factory Has No Roof:

Anyone who wants to know what is happening on a farm already can — they don’t need farmers to generate or provide it.

It is increasingly the case that farm activity is observable and basic knowledge can be obtained at low cost and in real-time for most agricultural production.

For more on why companies already have the data the need (for low cost), what makes data valuable and why data is not a competitive advantage in farming, become an Upstream Ag Professional member:

Layne Harris at Foresight Agronomics constantly shares insightful content relevant to the bio space. She brings a deep scientific perspective that also delivers practical insight for any agribusiness professional.

This week she shared a list of 54 questions to better understand the products and molecules that a company is promoting— all very well thought out.

I think her list is highly useful and pairs well with other business and commercial questions, like the ones I highlighted previously in Upstream.

This podcast is a good listen for those wanting to learn more about soil, along with how Syngenta thinks about soil in relation to their business. Matt Wallenstein is an incredibly articulate and insightful individual on soils, which makes the podcast worth a listen.

I have continually emphasized my view on the importance of starting with the soil. Soil drives everything in crop production.

Yet, until recently, most crop protection and seed companies have had virtually no emphasis or deep understanding of soil dynamics— whether, physical, chemical or biological.

Today, soil is being emphasized, particularly by an entity like Syngenta that hired Matt as its Chief Soil Scientist in 2022.

I have talked about crop protection companies like Syngenta not having soil knowledge as a core competency (specifically in North America) and the opportunity in this whether in biostimulants, crop protection, seed, fertilizer and more to differentiate Syngenta long term.

For more on. what a core competency is, what Syngenta is doing to improve their core competency in soil and why it matters, become an Upstream Ag Professional member:

Non Ag Article

Don’t work on creating an innovation. Work on being an innovative company. If your goal is to create an innovation, if you succeed in the task, you will likely rest on your laurels exploiting your singular innovation. If your goal is to be an innovative company, when you create an innovation, you will immediately ask: OK, what innovation is next?

Other Interesting Ag Articles

Better Isn’t Good Enough - The Daily Scoop

Patent cliffs and "value" innovation - Software is Feeding the World