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pulling the trigger on two. That doesn’t mean that the 200 we look at is “No, not ever.” Maybe it’s a little too early, maybe we ask them to do a couple of experiments, maybe we say check back in in six months. Maybe it’s off our radar now, in terms of our key investment thesis. We try to leave every relationship we touch better than it was before. So hopefully, everyone that interacts with us, even though we might not invest, they leave with a better understanding of what they need to do.
We’ll do two to four [investments] a year. We should be able to have a couple of deals, for sure one deal announced in the first quarter of 2018. We bifurcate the types of deals we want to look at: AgTech Accelerator launch and AgTech Accelerator venture development. Launch is really early stage, we bring it in, we help you get to be venture fundable. But first, here’s a half million dollars, let’s get you started. We could do a few of those a year, those lighter touches. And then do one or two big venture development ones, like Boragen. The strategy is to create our own pipeline where we have more shots on goal from an earlier launch perspective that feed into our venture development.
X: That sounds a lot like a pharma approach.
X: RTP is a hub for pharma and IT, as well as ag. What are you learning from the other industries here?
JD: Art Pappas (managing partner, Pappas Ventures) and Ken Lee (general partner, Hatteras Venture Partners)—those two gentlemen have seen it all. They’ve done it all. I just ask them my dumb questions and they give a response—
X: What are some of those dumb questions?
JD: When is a company investable? How do you know when it’s a science experiment versus a company?
X: Is it a different answer in biopharma than it is in agbio?
JD: I listen to their biopharma answers and then I try to translate how it works in ag back to them. Then they go, “Oh, if it works that way, then I would modify your approach to this.” Back to the build-to-buy example, if we come across a cool technology that one of our strategic partners is excited about, we can say, “What if we develop it to this endpoint?”—which happens a lot in biopharma. I didn’t know that. That model doesn’t exist yet in ag. They’re called bio-buck deals. Maybe we could transfer that model to ag. If we can do a build-to-buy bio-buck type of deal, and transform that model from biopharma into ag, you move the decimal point over a bit, maybe, but it still makes sense. The economics can still work out.
X: How are the needs for agtech startups different than in biopharma?
JD: We have very similar programs if you think about it at a high level. The economics might be different but knowing that there are parallels, you can isolate and learn how good companies see development in biopharma. The greenhouse piece fits right inside where you might be doing mouse models in biopharma. Our mouse is a plant. We’ve got to talk to the plant and see what the plant says about how well we’re doing. To do that in a greenhouse first is so crucial because it allows you to avoid mistakes in field testing. In field testing, you pretty much have one shot.
X: So that’s why getting that greenhouse space back in June was so critical to Boragen?
JD: We learned things in the greenhouse that allowed us to refine exactly what we want to get out of our field trials in South America. The greenhouse trials changed the way we developed our protocols and our formulations for what we’ll do in the field this winter.
JD: We saw that one as a big, unmet need—compliance with drug delivery for pets. When they get sick or have some procedure done, it’s no longer acceptable for them to be in pain. Antibiotics, cardiovascular, and pain—post-surgical pain particularly—the compliance of drug administration is very low. We wanted to get a couple of our first portfolio companies that were maybe a bit later [stage] that could show some early wins. Also, Elanco said, “We need this. If you guys can solve this, it could have applications in farm animals.”
X: So when you’re scouting technologies, your strategic partners are in your ear about who to talk to or what you should be looking for?
JD: We get constant feedback. We have quarterly investment calls that all the strategics are invited to. We have quarterly board meetings. And monthly, our whole team hauls ourselves to our strategics and we spend half the time talking and half the time listening.
X: What are the hot areas of agtech or agbio that you see?
JD: The democratization of gene editing, I think, will cause there to be huge proliferation of new technology. The ability to accelerate the breeding cycle, the ability to create new traits that they otherwise haven’t been able to. Every trait, so far, has been aimed at farmers to be more efficient. There’s been very few that allow the consumer to have benefit. I think gene editing will democratize that, and allow that to happen. What we have to do is make sure that consumers don’t fight against gene editing like they did GMOs. I would say that argues more for smaller companies having to interface with consumers, to show them the benefits.
X: What else?
JD: I think indoor growing is going to be really interesting in new ways—a lot of different integrations of technologies that will be evolving.
JD: The question becomes, what can be the key differentiator? Streaming music is a crowded space. Spotify didn’t invent streaming music. In fact, Apple didn’t invent streaming music. It was Napster. But Apple came along and did the Apple iTunes store. And then you had Pandora do algorithms for what kind of station do you want to listen to. What [Spotify] did was combine the best of both and become the best at it. It’s a crowded space where you have an ability to differentiate.
When we look at indoor growing, we ask ourselves how can we be Spotify. Enough said. More later.