Agricultural biotechnology refers to all technologies that involve biological or chemical processes applied to farms. This is a broad category that spans many different types of technologies and disciplines, including breeding, genetics, microbiome research, synthetic chemistry, and even animal health, to name a few.
For decades, large agricultural companies have been innovating in biotechnology to enhance and protect crop yields by synthesizing crop protection products such as fertilizers, pesticides and genetically modified seeds. The six agribusiness companies that were once Monsanto, BASF, Bayer Crop Science, DuPont Pioneer, Dow Chemical and Syngenta created a multi-billion dollar crop science business that dominated the agricultural biotech market for decades.
Now startups are also embracing and developing new capabilities in fields such as plant breeding, gene editing, biologics, microbiome research to create new and more sustainable agricultural products, such as agricultural biotech startups in animal health The use of antibiotics will be reduced by creating alternative treatments.
With the merger of Dow Chemical and DuPont, the merger of ChemChina and Syngenta, and the merger of Bayer and Monsanto, this series of mergers and acquisitions has turned the "Big Six" agricultural companies into the "Big Four", and the status quo of the industry has changed. This new landscape creates interesting opportunities for startups to build businesses.
There have been a lot of entrepreneurial activities in the field of agricultural biotechnology. For example, as early as 2012, Bayer acquired AgraQuest, a biological pest control company, for $425 million. It has received support from investment institutions such as Finistere Ventures, Otter Capital, Generation Capital and TPG Growth. . Another example, Becker Underwood, a biological seed treatment company, was also acquired by BASF for $1 billion.
Let's take a look at the key technologies in agricultural biotechnology:
Improve livestock and crop productivity by studying genes and applying tools. Such technologies can identify traits that benefit or inhibit crop growth, and the resulting information can be used in breeding or genetic engineering programs, or the discovery can be licensed to other companies and institutions. One such example is genetic platform startup Benson Hill Biosystems, which uses its bioinformatics and machine learning-enhanced CropOS platform to discover traits and crops.
After identifying genes that are beneficial or detrimental to crop growth, gene editing is used to alter or enhance beneficial traits. Caribou Biosciences has previously achieved enhanced benign traits in crops through a partnership with DuPont Pioneer. In animal health, Recombinetics uses gene editing to breed livestock with desirable traits, such as the ability to withstand hot climates.
There are several different gene editing tools; the most famous is CRISPR-Cas9, or TALENS, etc. The difference between these gene editing tools is the enzymes used to track and cut DNA for editing.
Similar to gene editing, but with the difference that foreign genes are inserted to enhance the traits required for crop growth. Startup ZeaKal is an example of using GMOs to make soybeans produce more oil. Another example is AquaBounty, which is working on breeding genetically modified salmon that is now approved for human consumption.
GMO salmon bred by AquaBounty
Since the Green Revolution of the 1960s, advances in chemistry have enabled the production and adoption of fertilizers and pesticides on a global scale, not just in developed markets. Today, agrochemicals are still widely used and are often used with genetically modified crops. Genetically modified crops are engineered to resist a wide range of herbicides without damaging the crop.
In recent years, however, consumer and industry tolerance and acceptance of agrochemicals has declined as environmental and health concerns have grown, so much so that there are not many startups in this segment. Startup Crop Enhancement is one example, using what it calls "sustainable chemistry" to fight tropical crop pests and increase crop yields. In fact, its core is still to minimize the use of pesticides and reduce the impact of pesticides on the surrounding environment.
Concerns about the overuse of chemical products in agriculture have led to an increasing number of companies investigating naturally occurring biologics, especially microbial or bacterial solutions. The study of a plant's microbiome (the environment of bacteria and microorganisms in and around plant roots) has accelerated in recent years as scientists continue to understand how microbes contribute to crop growth and soil health.
For example, AgraQuest, one of the first startups to develop agricultural biologics, was acquired by Bayer in 2012 and forms the basis of the German agribusiness’s biologics platform today.
Other startups are trying to identify and isolate the microbes that are most beneficial to plant growth in different environments and create products based on them. For example, Indigo Ag released its first product in 2016, a microbial seed coating for cotton to promote crop growth in drought conditions. Other examples are Concentric Ag, Aphea.Bio and NewLeaf Symbiotics.
There are also biologics in crop protection, including biopesticides, designed to drive the trend toward organic and pesticide-free foods. Vancouver, Canada-based startup Terrarama provides biological solutions for pests, using molecular delivery systems to enhance the efficacy of biological pesticides.
Examples of other types of startups are Biome Maker, a company that studies the soil microbiome and uses bioinformatics to create a microbial database service for vineyards. In animal health, Bactana Corp uses molecular biology and DNA sequencing to develop microbial products to improve animal health, increase the efficiency of dairy and beef cattle, and promote weight gain and reduce disease susceptibility.
This area of agricultural biotechnology covers a range of different technologies and processes, focusing primarily on improving feed efficiency and animal health. For example, Agrivida, an animal feed additive start-up, uses corn to produce enzymes to improve the efficiency of poultry, swine, dairy and beef cattle; and Calysta produces feed and materials for energy and other industries through biotransformation and gas fermentation of raw materials .
Investments in the agricultural biotechnology category have grown from just 3 financing deals in 2019 to 25 in 2020, with the largest round being the RMB 800 million Pre IPO round of “Beijing Boao Jingdian” . The company develops food safety and molecular breeding solutions. In recent years, the strengthening of environmental protection has created opportunities for emerging agricultural biotech startups. Undoubtedly, the various factors driving agtech are also at work in the biotech space, where more talent and startups are expected to enter the field.