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include agbio investments. At Xconomy’s request, the NVCA calculated agbio investment data for the last five years. From 2009 through the third quarter of 2014, the NVCA, using data from Thomson Reuters, counts just 27 agbio companies that received venture funding. Those companies attracted a total of $203.2 million in venture capital over those five years. By comparison, venture investments in life sciences companies—drug and medical device developers—totaled $491 million in 74 deals in the third quarter of 2014 alone.
State agbio activity
Public-private partnerships aren’t new—government, universities, and industry joined together to form Research Triangle Park in 1959—but it’s an idea that’s finding new life in agbio efforts around the country.
The Indiana Food and Agriculture Innovation Initiative is rebranding with $1 million in new funding from business, government, and Purdue University. Now called AgriNovus Indiana, the initiative supports food and agriculture companies in the state and helps create new companies. An economic partnership has formed in Iowa focusing on the region between Des Moines, IA and Ames, home to Iowa State University. Dubbed the Cultivation Corridor, the initiative supports growth of agribusiness in the region. For example, DuPont Pioneer—one of the agbio big six—is investing $50 million in a multi-phase expansion at its Des Moines-area headquarters, following the award of $3.6 million in tax incentives.
In California, the Steinbeck Innovation Cluster is fostering agricultural technologies in the agriculture-rich Salinas Valley. The nonprofit organization was founded by John Hartnett, a partner at San Jose, CA venture capital firm SVG Partners and the former Salinas, CA Mayor, Dennis Donohue. Steinbeck pledges to offer a range of support for emerging agricultural technologies, including access to an innovation fund that provides financing to new companies. The financial support could fill a gap facing agbio startups in that region.
The Biotech Center’s AgBio[sphere] has no money to invest in companies, though the legislature this year added another $1 million to the Biotech Center’s budget earmarked for biodefense and agricultural projects. Riddick says AgBio[sphere] is financed with about $1.75 million, funds that include some public dollars as well as private donations. Companies seeking economic incentives can turn to the state’s Department of Commerce, which can offer tax breaks for companies that relocate to North Carolina or expand their operations in the state. But a company’s job creation target must reach into the hundreds in order to qualify for such incentives. Startups fall far short of that threshold, which was set with large, well established corporations in mind. Bayer CropScience and Syngenta (NYSE:SYT), for example, qualified for state and local incentives for their RTP expansions.
Big ag is key
Of the big six global agbio companies, RTP has headquarters for three. Bayer CropScience operates its Americas and global seed headquarters from the Park. BASF Plant Science, a subsidiary of German chemicals company BASF and Syngenta Biotechnology, the biotech division of Switzerland-based Syngenta, are also both headquartered in RTP. The largest of the big six, St. Louis, MO-based Monsanto (NYSE: MON), is partnering with enzymes giant Novozymes (NASDAQ OMX: NZYM) on agricultural microbials, an effort that includes plans for a new microbials R&D lab near RTP.
The concentration of large agbio companies in RTP today is largely the result of spinoffs and acquisitions; originally, they were agricultural divisions of larger chemical companies, says Preston Linn, who is now vice president of alliances at AAD and previously worked at the RTP site of chemicals company Union Carbide in the early 1980s. Bayer CropScience’s RTP location traces its legacy to the Union Carbide facility where Linn once worked. BASF had crop protection work in North Carolina prior to establishing its RTP R&D operations in 1999. The company relocated its global plant science headquarters to RTP in 2012. Syngenta’s North Carolina roots date to 1983, when a predecessor company, CIBA Geigy, opened RTP labs.
Riddick sees the large agriculture companies playing a role in spurring startup activity. Syngenta, for example, invests in early-stage companies through its Syngenta Ventures arm. Riddick adds that big agriculture companies are starting to mimic the investment trends of their big pharma neighbors—finding innovation via acquisition.