The Role of Investors & Industry in Supporting Innovators: Pasteuria Bioscience
With agriculture emerging as an asset class of great interest to investors across the board, we can look to identify success stories within this space to understand not only exit strategies but also the impact of investment and the financial fruitfulness of the sector. Pasteuria Bioscience, a 2012 Ag Innovation Showcase presenter commercializing new biological pesticides, was recently acquired by Syngenta for $86 million with up to $27 million in additional deferred payments. We talked to Kelly Smith, CTO, to find out more about the company’s journey from start-up to acquisition. Founded in 2003 in University of Florida’s Sid Martin Biotechnology Incubator, Pasteuria develops biological pesticides for controlling nematodes in crops. Causing over $100 billion annually in worldwide crop damage, nematodes are agriculture’s largest unmet pest control need. Currently, conventional treatments are either too expensive, or too toxic to use, even when farmers are aware of a problem. In contrast, Pasteuria is commercializing solutions that use naturally occurring bacteria for a safer control mechanism of nematode damage in crops.
Following their seed funding in 2003, Pasteuria raised a Series A round in 2004. “The series A infusion allowed us to keep operating, and purchase equipment for the lab to test our ideas on how to scale up the fermentation process,” Kelly said about the role of investment in advancing the company’s technological breakthrough. She also attests that the advice and counsel of one of the angel investor’s was absolutely critical to educating the Pasteuria team on the business strategy in this market.
Having the expertise of an angel investor was key when Pasteuria negotiated term sheets for their Series B funding round in 2007. While fundraising, the company simultaneously focused on refining their technology and scaling up their production process to be able to deploy the product on a commercial scale.
This scale up initiated the launch of their first commercial product in 2010 to control nematode damage for turf grass in golf courses. Though this product is no longer on the market, Kelly counted it as a significant milestone in the company’s growth, as this was the first time a product using this type of bacteria was registered as a pesticide. This was critical to lay the foundation for the adoption of the core technology to different crops in the future and show the industry that the government would allow this product to be sold as a pesticide.
That same year, Pasteuria Bioscience presented its technology and business at the Ag Innovation Showcase – this would prove extremely valuable to the development and progression of the company. Kelly told us, “The Showcase was really informative in its content and there was definitely a lot of value in presenting. It had a good mix of people worth meeting, and the networking was great. As someone interested in a potential Series C round, I talked with a lot of Venture Capitalists that I could have pursued had we chosen to go that route.” Right after the Showcase, Pasteuria negotiated a joint development agreement with Syngenta. The collaboration was a testing relationship, where Syngenta had the exclusive rights to Pasteuria’s product for a certain period of time, and they provided the funding for larger scale field testing and scaling up the fermentation for the manufacturing process to meet commercial production needs.
With the relationship proving to be extremely beneficial to both parties, Pasteuria Bioscience was later acquired by Syngenta in 2012. The acquisition will allow Pasteuria to leverage this revolutionary, safe pesticide for nematode control in many more crops past their initial target market of soybeans, with downstream benefits for numerous more end users.
Pasteuria Bioscience is only one example of the many companies with disruptive technologies that can change conventional paradigms in agriculture, especially when supported and nurtured by large industry players and investors. With these influencers taking an increasing interest in AgTech as a viable means of getting involved in this space, success stories such as this one are critical to showcase returns on investments. We invite you to catch the Ag Innovation Showcase panel at the GAI AgTech Investment Summit to hear more on today’s brightest innovators in conversation with Ag financiers as they jointly seek to meet global needs and take agriculture to the next level of productivity and sustainability.