**UPDATED October 31, 13:51 ET: Adds Board Seat representation details that Bayer had not disclosed when AgFunderNews first went to press.
If you talk to new Bayer employees, the relief that the long journey to the acquisition of Monsanto is over is slightly overshadowed by the wide-eyed anticipation of the years of integration work yet to come. Details are few and subject to change across the board.
Venture capital at Bayer Crop Science, which has until now focused mainly on investing in external funds, is just beginning to firm up with the creation of Bayer Growth Ventures (BGV) — a venture capital investment office under the umbrella of Leaps by Bayer, the company’s existing venture outfit. The name is a copy of Monsanto’s well-established venture arm: Monsanto Growth Ventures (MGV).
BGV will invest much like MGV did, which was very similar to a traditional venue office investing smaller check sizes in relatively early rounds, and occasionally leading later-stage rounds. One notable counterexample is Monsanto’s investment in Pairwise, an independent gene-editing startup that the MGV team built internally, though it was not the sole funder.
We spoke to interim head of BGV Jürgen Eckhardt, a longtime venture capitalist focused on life sciences, to find out more about the company’s new approach to venture capital. But one thing that remains unclear is the fate of MGV’s portfolio.
Board Seats and Follow-Ons
The potential for BGV to invest in the future funding rounds of its existing MGV portfolio — called follow-ons — was called into question after BGV was noticeably absent from the $70 million Series B round of microbial crop inputs company Pivot Bio earlier this month. Billionaire-backed clean energy fund Breakthrough Energy Ventures led the round alongside Singapore state fund Temasek. Some commentators wondered if Bayer’s microbe-focused joint venture Joyn Bio would create a conflict. Eckhardt responded to say: “We don’t necessarily divulge every detail of our investments. Bayer Growth Ventures supports both Joyn and Pivot, as they each are pursuing important innovation for the agricultural industry.”
There was uncertainty around the uptake of board directorships at MGV portfolio companies after the team of MGV — Kiersten Stead, John Hamer, and Ryan Rakestraw — recently stepped down from their board seats in the wake of the closed deal. When they left MGV a few months ago, the plan was for them to continue to manage the portfolio and retain their seats — often board members will manage out their portfolio to provide continuity for the startups — but the plan clearly changed.
Bayer has now confirmed that replacements have been found for each portfolio company. They are as follows:
|Company||Location||Board Role||BGV Board Representation|
|Arvegenix||St. Louis, MO||Director||Jak Knowles|
|Atomwise||San Francisco, CA||Director||Axel Bouchon|
|Resson||Fredrickton, NB, Canada||Director||Axel Bouchon|
|Understory||Madison, WI||Director||Axel Bouchon|
|FarmLead||Ottawa, Ontario, Canada||Director||Juergen Eckhardt|
|Pairwise||RTP, NC||Director||Juergen Eckhardt|
|Plant Response||Madrid, Spain||Director||Juergen Eckhardt|
|AgBiome||RTP, NC||Observer||Lucio Iannone|
|Pivot Bio||Emeryville, CA||Observer||Jak Knowles|
|NewLeaf||St, Louis, MO||Observer||Jak Knowles|
A notable change is that BGV no longer has a board director role at Pivot Bio, AgBiome or NewLeaf.
Karsten Temme, CEO of PivotBio told AgFunderNews: “We haven’t disclosed the participants of our Series B outside of Breakthrough and Temasek. We did disclose that our board composition changed and does not include a BGV representative.”
Eckhardt told AgFunderNews that no deal was off the table, which is an important detail since the Final Proposed Judgement regarding the Bayer-Monsanto deal, as released by the US Department of Justice, threw up another uncertainty for the future of MGV’s portfolio. The Judgement made several stipulations that could interfere with existing and future venture investments at the newly-merged company, essentially ordering Bayer, for the next 10 years, to notify the US Department of Justice 30 days in advance if it intends to “directly or indirectly acquire a financial interest … in any company that researches, develops, manufactures, or sells digital agriculture products or soybean, cotton, canola, or corn seeds or traits.”
Eckhardt told AgFunderNews that this fact will not hinder investments in any technology category.
“Obviously we will follow the guidance of the DoJ if and when we invest in such an area. On first sight, it looks like this is absolutely doable… In my 16 years of venture capital, I’ve never seen a round close faster than 30 days,” he said with a laugh.
Rob Leclerc, CEO of AgFunder, is less sure about what the ruling means.
“Agriculture may not be like other industries and we already saw the DoJ reject the sale of Precision Planting from Monsanto to John Deere last year. It will be interesting to see how the DoJ reacts. If the DoJ restricts Bayer and BGV from investing in and acquiring agtech startups, Bayer could quickly lose its leadership position in digital agriculture.”
What We Do Know
Bayer CropScience CEO Liam Condon said in June that the shape of venture capital in the newly integrated company was a “hotly debated topic” internally, and it wasn’t clear initially which direction the company would take.
But the company seems to have now landed on a strategy of compromise with Bayer BGV bringing the MGV style of investing to Bayer.
“By bringing both approaches together under the roof of one organizational unit, we do now avail of all tools in equity management that are necessary to foster disruptive innovation, capture trends and tap into external innovation potential,” said Dr. Axel Bouchon, head of Bayer AG’s venture activities in a press release.
The clear difference with a traditional venture capital firm is Bayer’s angle and motivation for venture investing, said Eckhardt, who joined Bayer in 2016.
“We come from the problem. We have identified a few of the biggest problems that humanity is facing and then we think through which technologies can help solve those problems. It’s a very targeted approach from a traditional venture capitalist who may review 1,000 business plans per year and then pick a few,” explained Eckhardt. “We come from the other end of the deal flow, so to speak,” he said.
Another key aspect of BGV, and the reason that the news came from Bayer AG, and not Bayer Crop Science, is that BGV will make investments in life sciences technologies generally, as well as agriculture technology.
“BGV spans across the innovation of agriculture and life sciences, ‘cross-pollinating’ the two disciplines where those opportunities exist. This is one of the reasons we’re particularly excited to not only keep the former MGV’s innovation engine running, but to take it to the next level and solve some of our world’s greatest challenges,” said Eckhardt.
BGV is Hiring
What Eckhardt could say for absolutely sure is that the outfit will need to increase the size of its team to handle a diverse portfolio of technologies across life sciences and agriculture; “We are looking for people with relevant backgrounds in the next three to six months.”
Eckhardt said he would be looking for people with venture capital backgrounds, science training, and preferably experience in both agriculture and life sciences technologies.
A new managing director will be hired in that same three to six-month timeframe.
Bayer’s press release lists four cities as sites for the new entity including Berlin, Boston, St. Louis, and San Francisco — each of which represents existing Bayer facilities. The company hasn’t yet decided where the bulk of the staff will be located.