Ostara, a nutrient management solutions company, has closed a new round of equity financing co-led by existing investors VantagePoint Capital Partners and the food-focused European family office Wheatsheaf Group. The financing follows a November 2018 strategic investment from Taurus, one of Ostara’s distribution partners.
At the same time, Ostara has announced its acquisition of Multiform Harvest, which has developed technology to support a sustainable manure and litter resource cycle in livestock operations for phosphorous to prevent phosphorous runoff and wastewater discharge.
What is Ostara?
Launched in 2005, Ostara’s Pearl technology recovers phosphorus and nitrogen from industrial, agricultural, and municipal water treatment facilities and transforms them into Crystal Green, which the company describes as a premium, sustainable fertilizer. Ostara claims that Crystal Green is the first fertilizer that releases nutrients in response to plant demand thanks to its patented Root-Activated granule. Company trials indicate that the product can improve crop yields, enhance soil health and significantly reduce phosphorus tie-up, leaching, and runoff, improving food security while protecting local waterways from nutrient pollution.
“The $11 million is really expansion capital,” Dan Parmar, company president and CEO, told AgFunderNews. “We are looking to use that money to expand and scale the production of our environmentally-friendly fertilizer called Crystal Green. We will also expand our sales network as we start increasing our sales globally and to upgrade our existing systems. When you sell globally you need the back-end infrastructure to manage and track that growth.”
Completing another round of financing within just a few months of Taurus’ investment was in response to what the company describes as a major uptick in its customer base and demand. As long-term existing investors, Vantage capital Partners and Wheatsheaf Group have been involved with Ostara’s growth plan.
“Wheatsheaf Group is focused on investing in companies that pertain to or help with sustainability and efficiency in water, energy, or food security. Their objectives are about sustaining important industries and finding ways to recover and reuse what the Earth has to offer. We fit squarely into that mandate because Crystal Green is derived from recovered and reused nutrients in water streams and waste streams,” Parmar says. “VantageCapital Partners is similar. They are fairly hands-on and we have shared this mission and developed this strategy with them. They both were willing to dig deep and to stay with us for a long period of time.”
Acquiring Multiform Harvest
Multiform’s P-recovery systems provide smallscale solutions with low-capital costs allowing small wastewater treatment plants to access recovery technology, including small dairy, swine and poultry farms.
“Multiform Harvest has been around for quite a while. It made sense for this company to join us as an industry leader to widen the scope of opportunity and our production footprint. The acquisition deepens our IP and allows us to enter the dairy, swine, and poultry markets where you can reuse and clean up nutrients from manure and litter. This is really important because a lot of excess nutrients in manure leech into waterways. If we can find a way to recover that and use it in our fertilizer to enhance crop yields it’s a win for the farmer and for the environment,” Parmar explains.
Addressing Nutrient Runoff in Agriculture
Nutrient runoff pollution is one of the most challenging environmental problems facing agriculture and other industries in the US according to the US Environmental Protection Agency. Nitrogen and phosphorous are used pervasively as fertilizer in crop production. When surface water runoff like natural rain events or irrigation carries these nutrients away from the farm and into natural waterways, the nutrients support the excessive and rapid growth of algae and aquatic plants.
The increase in algae harms water quality, affects food resource and habitat for aquatic life, and decreases the amount of oxygen available in the water that aquatic life needs to survive. Large growths of algae are called algal blooms and they can severely reduce or eliminate oxygen in the water, leading to illnesses in fish and the death of large numbers of fish.
Nutrient pollution of groundwater poses a threat to human health. Infant health can be affected by nitrogen-based compounds called nitrates in drinking water and excess nitrogen in the atmosphere can create pollutants like ammonia and ozone that impair our ability to breathe.
“There’s a lot of media coverage of the algae blooms in waterways due to excess runoff. A lot of this comes from industrial sources as well as farmland because of commodity fertilizers that dissolve in water,” Parmar explains. “Crystal Green does not dissolve in water. It only dissolves when the plant secretes citric acid, which indicates that it needs nutrients.”
As Ostara continues to expand its customer base in its existing markets in North America and Western Europe, the company is also hoping to tap into South America where Brazil’s market for commodity phosphates is growing rapidly by Parmar’s account.
“Asia is also a target, but we have to understand it better. It’s a large and growing market with a need for fertilizers. In the next five years, I wouldn’t be surprised if you see us consolidating and acquiring other companies as well. This space is very fragmented and the players range from small-scale to divisions within larger companies. What differentiates us is that we have already achieved a lot of scale and we have a way to take our product to market through a variety of retailers and distributors,” says Parmar. “We want to be the consolidator in this industry because we can create a better, more efficient way to distribute this fertilizer into the marketplace.”