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Biological crop input company Inocucor has closed its Series B round at $38.5 million, bringing in Pontifax Food and Agriculture Technology Fund (Pontifax AgTech) as investors.
Inocucor manufactures biological stimulants for agriculture using a patented fermentation process that combines multi-strains of bacteria and yeasts into soil and plant optimizers. It has two products on the market that aim to enhance the growth of crops: Synergro, a live-cell formulation for high-value produce, such as strawberries, tomatoes, lettuce and broccoli, and Synergro Free, a cell-free bio-fertilizer for commodity row crops, such as soybean, corn and wheat.
The company held a first close of the Series B round in March after raising $29 million from TPG Alternative and Renewable Technologies (TPG ART), an arm of the $70 billion global private investment house TPG, and three existing investors: Cycle Capital Management, the Montreal-based clean tech venture capital firm; Desjardin Innovatech, the venture capital group of the Canadian cooperative financial group; and food and ag-focused impact investment firm Closed Loop Capital. Cycle and Desjardin also joined the second close of the Series B along with Denver-based Cairn Capital.
Since the round’s first close, the Canadian company announced the opening of a Denver, CO office and a forthcoming move into a 30,000 sq. ft. facility in Centennial, CO supported, which was backed by a performance-based Job Growth Incentive Tax Credit of $1,322,918, this spring.
Research and development will remain in the company’s Montreal office, which will double in size this year. Inocucor has 40 employees and will likely add 25-30 to its team in scientific and managerial positions.
Inocucor has been clear that strategic acquisitions will be a significant part of its growth strategy, and CEO Donald Marvin confirmed to AgFunderNews that he will have news on that front in the next few months.
“I think we will surprise a few people, because we don’t just look at the microbial space, we look at the adjacent spaces and connect the dots, if you will,” said Marvin.
“We think M&A will play an important role for Inocucor’s growth strategy in the sector,” said Ben Belldegrun, managing partner at Pontifax Agtech. “The agtech market is still fragmented in many investment areas, including biologicals, which lends itself to consolidation and roll-up.”
Inocucor’s initial focus was on high-value organic crops, like tomatoes, strawberries and lettuce, since organic growers have fewer choices in terms of crop inputs.
“We went into the high-value produce sector first, and we went to the organic growers because they don’t have as many tools in the toolbox,” said Marvin. “They opened their arms and adopted us quite well.”
Synergro is certified organic in both Canada and the United States.
This year, Inocucor hopes to expand distribution across Canada. It is also eyeing Argentina and Uruguay in the Latin American market for its broad acre crop product. Western Europe, particularly Spain, is also on the docket for 2018.
Inocucor is also looking towards its next product, a biological pesticide. Products with pesticidal claims require EPA approval, and Marvin said initial meetings with the EPA have already begun. He expects the product to go to market in the next 18-24 months. The company is undecided as to whether its pesticide will be certified organic.
Belldegrun, whose VC firm has also invested in biologicals startups AgBiome, told AgFunderNews that Inocucor’s ability to get products to market is one of its strengths.
“We were very impressed with the progress Inocucor has made in bringing products to market, its sales traction and grower adoption,” Belldegrun said. “We spent a lot of time with Inocucor customers in order to really understand the significant value proposition and strong in-field results.”
