European investment firm Demeter has made the first investment out of its €45 million Agrinnovation Fund after it held a first close last July.
After viewing over 700 investment opportunities, the fund decided to invest €700k of seed funding in French bio-inputs innovator Kapsera.
Kaspera is focused on the microbe-based biofertilizer and biopesticide markets with patented technology enabling the encapsulation of the microbes. Based on microfluidics, the capsules protect the live microbes to enhance their performance as a crop enhancer and protector, according to the company.
Using microbes to replace or enhance the use of synthetic, chemical fertilizers and pesticides is nothing new, but the industry has faced many challenges around their efficacy. The timing and format of their application is a big challenge that startups are approaching in different ways. Last week, we reported on 3Bar Biologics which is approaching the storage and application process differently.
The investment round will allow Kapsera to scale up its process and complete its product development, after convincing Demeter it was a ‘perfect fit’ to receive support.
“Our ambition is to allow farmers to bridge the gap between sustainability and productivity by providing them with affordable and efficient biostimulants and biopesticides,” said Antoine Drevelle, CEO of Kapsera, adding that the company’s new technology addresses a major bottleneck in farming caused by a lack of stability and performance of bio-inputs under commercial field conditions.
Claiming that the bottleneck is mainly due to poorly–adapted bio-inputs formulations, Kapsera says its unique and patent-protected microfluidics encapsulation process is without any equivalent on the market.
It also believes its solution, which is already approved for agricultural use, is ideal for sustainable agriculture and takes full account of environmental, economic and human health issues for consumers and farmers alike.
“We’ve reached a first key milestone for our development, after just one year of operations,” said Drevelle, adding that the investment gained from the Agrinnovation fund is a major recognition of the potential of Kapsera’s technology.
Our capsules are made of alginate: a biosourced and biodegradable polymer extracted from brown algae. This material is ideal for sustainable agriculture and already approved for agricultural use.
Kapsera’s capsules contain a liquid core, and a very thin shell. The composition of the core is optimized to protect and maintain the viability of microorganisms. The thin alginate shell is semi-porous, to allow for the exchange of gas and nutrients with the outside environment. The small and monodisperse capsules range between 100 to 500 µm in diameter, making them compatible with standard farming equipment, according to the company website.
“Kapsera is the first company to offer us encapsulation technology matching market requirements, which are adapted to living microbes formulation, are size compatible with farming equipment, based on bio-sourced and biodegradable material, and all at competitive costs,” said Majdi Najah, investment director at Demeter
“Our first investment had to be emblematic of our fund ambition,” said Najah, adding the fund’s current portfolio target is to provide investment to 20 companies across Europe.
“From this perspective, Kapsera is the perfect fit, featuring an ambitious project, an experienced team and a technological breakthrough.”
Other targeted companies, with an ambition to join Kapsera as a member of the Agrinnovation family will, therefore, need to be developing innovative technologies and services geared towards the creation of a more sustainable, efficient and safer agriculture and food environment. Likely development areas include bio-inputs, precision agriculture, ingredients, bio-based chemistry, and product safety & traceability.
“Our team has reviewed 700 investment opportunities since the Agrinnovation fund started,” said Najah, adding that Kapsera had provided a very high and differentiated value proposition. He also said the innovative company had a solid IP, a talented team, an experienced board, a large and growing market and very good positioning on the value chain.
Although the bio-inputs company looks like an extremely hard act to follow, Najah is confident that other equally backable opportunities will emerge as the year unfolds.
“We’re about to close a new deal in the next few weeks, in fact, with plans to close four more investments before the end of this year,” he said.
“Deal flow is increasing strongly all over Europe with the number of specialist agtech investors still limited, all of which confirms that our positioning of Agrinnovation is correct.”
In line with such encouragement, Demeter is continuing to expand its Agrinnovation resources, seeking to build further on the €45 million raised during the fund’s first closing in July 2018.
“We will make a second closing on €60m by the end of April this year,” said Najah. “After that, we will be targeting to reach €80m by the fund’s final closing in July 2019.”
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