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CoverCress Raises $2m to Develop Gene-Edited Cover Cash Crop

November 13, 2018

CoverCress (formerly Arvegenix) has closed a $2 million bridge investment round co-led by Bayer Growth Ventures and BioSTL’s investment arm BioGenerator.

CoverCress is a plant breeding company using CRISPR gene editing tools to develop and grow a new cover crop based on the native plant pennycress. Dubbed Covercress, this new type of pennycress can provide corn and soy farmers with an off-season cash crop with biofuel applications.

Other investors in the round include St. Louis Arch Angels, Cultivation Capital, Missouri Technology Corporation, Prolog Ventures, Prelude Ventures, and some founders and employees. Fulcrum Global Capital located in Kansas City also has joined the investment round and the company’s board of directors.

Dr. Jak Knowles, vice president of venture investments at Bayer will join CoverCress’s Board of Directors to represent Bayer Growth Ventures. “CoverCress is both a cash crop and is also a soil-nourishing cover crop, a novel and compelling idea this team has turned into a reality,” added Knowles.

Commodity crop farming presents a serious opportunity — and arguably a need — for cover crops as they can help protect the soil, improve its overall quality, and potentially provide farmers with another cash crop. Finding the right cover crop and a way to turn a profit from the work that goes into planting it, however, has not always been easy.

CoverCress is hoping to ease this pain point with its novel cover crop based on the native plant pennycress. Its new winter oilseed cash cover crop that it’s calling Covercress is designed to provide winter and early spring soil cover between corn harvest and soybean planting while producing an oilseed crop. The startup’s oil and protein meal are similar to that of canola, but offer greater value due to the improved quality of oil and high protein for animal feed according to the company.

“We are very fortunate to have committed investors to help us achieve this next business milestone so we can stay on track for a 2021 commercial launch of CoverCress,” company CEO Jerry Steiner told AgFunderNews. “We just planted our fifth season of field trials. We are the kind of business where things are more time intensive than capital intensive, so we have raised relatively small amounts of money. Time is one of the biggest enemies of venture capital, so that has been a natural challenge. But we are at a critical point because we have been able to find winning lines that meet our initial yield goals.”

The new funding will be used to expand the company’s R&D team, particularly for its lab-based explorations. It will also hire someone to boost its ability to work with farmers in the field. The raise provides the company at least one year of runway to complete what Steiner describes as the last confirmation of its product during the fifth field trial. CoverCress performs its research at three facilities in the 39 North district of St. Louis, including the Helix Center, The Donald Danforth Plant Science Center, and BRDG Park.

Breeding and Gene-Editing Pennycress to Create Covercress

The USDA researched pennycress’ potential applications in the mid-2000s and several universities have worked on it as part of grant-funded projects exploring new plants that could become feedstocks for renewable diesel and jet fuel without competing for food production.

“The first thing the company founders did was collect a diverse set of these native plants ranging from Midwest mountain states to some outside of the US and put together a breeding program,” explains Steiner.

Through that program, the company worked on boosting the plant’s natural assets, which naturally has about 30% of its total grain in oil, using plant breeding and genetic engineering. This makes it a viable feedstock for biodiesel and renewable fuel, while also being a strong cover crop component for a conventional corn and soybean operation. It partnered with three universities that had been researching the plant’s profile to reduce the fiber and the anti-nutrients.

CoverCress has also developed a meal product from the mash that is leftover after pressing the seed to expel the oil that will fit well in the dairy and swine markets as livestock feed, according to Steiner.

Optimizing crops through plant breeding techniques is not necessarily a novel technology. And when it came to optimizing pennycress, all of the pieces of the puzzle already existed. For Steiner, the company’s edge has more to do with connecting those dots.

“We use every possible tool to get to where we are. The gains we have made in yield and early maturity we have done through breeding. We have also utilized in our collaborations with the University of Minnesota and Illinois State exploring large mutant populations so that we can figure out which genes would improve the plant’s composition. We have also worked with them using CRISPR to accomplish the goal of creating a plant that looks like pennycress but harvests like canola,” says Steiner.

“So, the secret sauce is that we have been able to put together a team internally with a lot of experience and to forge partnerships with universities who have worked on the same plant for two-to-three years before we got there.”

The Secret Sauce

Steiner, who previously held various positions at Monsanto, lists basic management skills and decision-making capability as two benefits that he’s carried over from his corporate years. He’s also found that working in a small startup environment offers a different set of advantages and disadvantages than being part of a large-scale, international outfit.

As the company has advanced from its 2013 beginnings, the company felt it was time to update its name to reflect this change, Steiner said.

For its commercialization plan, Steiner envisions Midwestern crop farmers adding Covercress to their crop rotations to improve sustainability and add an additional revenue stream. With the first commercial crush planned for 2021, the company has some time to hone its plan for putting the crop in farmers’ hands.

This is the second bridge funding round after the company’s $2.5 million Series A in 2015; it raised $2.4 million in March of last year.

There are a few startups working on optimizing different plants for cover cropping. In April 2017, Quebec-based Agrisoma announced a $15.4 million Series B for its sustainable bio-based jet fuel and animal feed derived from carinata oilseed. A few months ago, the company partnered with United Airlines to accomplish the first transatlantic flight using its biojet fuel.

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