Alexandria Real Estate Equities, the real estate investment trust (REIT) focused on life sciences and technology campuses, has launched a multi-faceted agtech investment strategy including physical facilities for agtech businesses to operate out of and an early-stage funding platform.
Based in Research Triangle Park (RTP) in North Carolina, Alexandria and its venture arm Alexandria Venture Investments will syndicate investment in seed stage agtech companies to a range of corporate and financial co-investors, creating and incubating agtech businesses through its LaunchLabs accelerator program. The group has constructed 175,000 square feet of laboratory, greenhouse and office facilities for portfolio companies and others to lease, dubbed The Alexandria Center for AgTech. It intends to build another 160,000 square feet property to join this “campus” in 2020.
AgTech Accelerator Becomes Seed Capital & LaunchLabs
As part of this move, the group has absorbed AgTech Accelerator, the venture development organization, and its CEO John Dombrosky, who is now senior vice president of agtech at Alexandria Real Estate Equities and Alexandria Venture Investments. Since launching in 2016, AgTech Accelerator has deployed $20 million in five portfolio companies, after raising funding from a bevy of corporate and philanthropic investors including the Gates Foundation, animal health group Elanco, and agribusinesses Bayer and Syngenta, as well as Alexandria and a group of venture capital investors.
Under Alexandria’s Seed Capital Platform, these partners will no longer be required to commit capital to a portfolio in a typical fund model, but will instead be offered allocations to the range of deals Alexandria chooses to invest in, giving them full discretion over which they want to back.
“What we learned with AgTech Accelerator was that our partners really want to have optionality and a choice of whether to invest or not; previously they were mandated to invest at the Series A stage, with optionality at Series B. Now, after taking feedback, our members can continue to be active, but instead of forcing a crop protection company to invest in an animal health startup, they have total optimality over the deals we present them that we’ll lead,” Joel Marcus, founder of Alexandria told AgFunderNews.
AgFunder Co-Investment Fund III is now open for investment. Closing June 15, Spots are limited.
“What’s nice about this model is that our members will be making investments from their balance sheets — which go into the multi-billion dollars — so we don’t need to raise a dedicated fund which saves all the craziness running a complex fund. For a seed stage environment [where the amounts are small in each deal], it’s the perfect situation.”
“A lot of venture firms and strategics have highly complicated internal processes,” he added.
LaunchLabs will continue the work AgTech Accelerator started in ideating agtech businesses from scratch under the venture development model, although this will form just part of its work, according to Dombrosky.
“Venture development can be very intense and takes a lot of time and attention, and a few years. We will continue that and it will benefit from the ecosystem and infrastructure that LaunchLabs provides,” he said.
LaunchLabs will also help accelerate and incubate more established startups through seed, Series A and B stage, providing them with workspace, including greenhouse access, and even executive leadership such as interim CEOs, until they progress enough to operate independently.
Alexandria operates the Seed Capital Platform and LaunchLabs initiative in other locations in New York and Cambridge, MA for healthcare and other life sciences startups.
The Alexandria Center for AgTech
Alexandria, which Marcus says “pioneered the life sciences industry in 1994” is no stranger to building facilities suitable for the industry; it has 22.4 million square feet of properties in its North American portfolio dedicated to innovation clusters, and a further 3.9 million under development, giving it a market capitalization of over $18 billion.
A key feature of the Alexandria Center of AgTech is the “highly sophisticated greenhouse” on-site, that’ll reach about 300-400 square foot, which is very rare, according to Marcus.
“Often you have to go and find these things and most are owned by companies so it’s hard to find those you can lease out. Our greenhouses have the most sophisticated engineering with the aim of enabling an agtech startup to have an immediate start in a greenhouse.”
The center will also have combined laboratory and office space– essential for research groups — a healthy cafe, a fitness center, and meeting rooms, all with the aim of encouraging lots of interaction between organizations located there and across RTP. LaunchLabs will also be located in the center where it will host a variety of events and mentor-based programming.
The Center has five agtech companies already signed up to lease space when the center opens in June this year including AgTech Accelerator portfolio company Boragen. The others are crop protection group Arysta LifeScience, Precision Biosciences‘ food-focused subsidiary Elo Life Systems, biopesticide startup GreenLight Biosciences, microbial and supply chain tech group Indigo Ag, and Syngenta Crop Protection.
Dombrosky will continue to work with AgTech Accelerator’s other portfolio companies through LaunchLabs, including Skyline Vet Pharma, Resilient Biotics, and the two businesses it created that are still in quasi-stealth mode: Vindara, an indoor ag genetics company, and Ground Truth, a company integrating data around soil health into farmers’ agronomic decisions.
Moving Down the Value Chain
With the transition from AgTech Accelerator to LaunchLabs and the Seed Capital Platform, Alexandria and Dombrosky are also expanding their scope to have a more expansive definition of agtech. This moves in line with many venture capital investors in the space who are increasingly adopting the “agrifood tech” terminology coined by AgFunder in 2017 to encompass technologies innovating across the whole supply chain, from farm to fork.
Alexandria is particularly interested in the intersection of food and health, to “address the challenge of advancing human health by improving nutrition” reads a press release today.
Dombrosky also pointed to the increasing awareness and need to engage the consumer earlier on in the development of technology, as a lesson learned from the development of GMO crops.
As we expand the use of biological crop inputs and gene-editing, it’s important we make sure those are integrated with consumer preference and not developed in silos,” he told AgFunderNews. Another technology area of interest is food animal agtech, either digital tools or antibiotic alternatives, to address a “gap” in technology development for the industry.
At a higher level, Marcus pointed to the tremendous opportunity resulting from the mass consolidation that’s occurred in agribusiness over the past few years with the mergers of Bayer and Monsanto, ChemChina and Syngenta, and Dow and DuPont.
“These groups will be spending a lot of time on integrating their businesses and not doing novel stuff at the leading edge. Also, lots of people have spun out of these groups [and are joining startups]. They can’t do everything themselves; they’re great at production distribution and development but not necessarily great at the very early stages of innovation, so that really benefits us,” he said.
He added that with innovation taking place at a frenetic pace, and with global issues including food waste, climate change combined with consumer demands for health safety, traceability and transparency, against a changing political landscape, such as increasing tariffs in the US, the industry is ripe for transformation.