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Insect olfactory receptors
Image credit: iStock/EcaterinaLeonte

Sprout Agritech’s first-ever venture investment was 400 million years (plus 19) in the making

April 9, 2021

Andrew Králíček spent 19 years at New Zealand R&D institute Plant & Food Research (PFR), on an idea to use the olfactory receptors of insects to make a biosensor that can smell and taste, before he and his team took the plunge and launched a business.

While carrying out postdoctoral research in Europe in 2000, Králíček had been tempted to return to his native New Zealand and join a PFR project on insect olfaction in the context of crop pest control. The project was headed by Richard Newcombe, who is now PFR’s chief scientist.

“We came up with the crazy idea of trying to make these receptors in the lab, and maybe even stick them on a sensor. When we started in 2001, I thought it would take three years,” he says.

“But it didn’t! It took pretty much 16 more years to make them in the lab and purify them. We eventually got some intellectual property, and that’s when we thought, ‘Let’s commercialize this.’”

Scentian minds

While 19 years may sound like a long gestation period, the vintage of Scentian Bio – the startup that Králíček founded to commercialize his research – goes back even further.

Way, way further, in fact.

“It’s taken more than 400 million years of evolution [for insects] to develop this unique class of proteins. We can now make these proteins in the lab, put them on a state-of-the-art device and detect volatile compounds – very sensitively and specifically.”

Israel’s most active venture investor is partnering New Zealand accelerator Sprout on agrifoodtech – read more here

Combining arthropod with automaton, Králíček and his team are leveraging insects’ sense of smell – honed through aeons of natural selection – to detect the presence of volatile compounds in flavorings, foods, beverages, and other products.

“Once you get your head around the fact that everything organic gives off a unique chemical response, you can start to understand the value of being able to read that response,” he explains. “Has the response changed? And what does that mean?”

In this context, volatile compounds could be scents or tastes – undetectable to humans and most other animals – that could be the signature of something amiss in the product that’s the subject of testing.

The tech could even potentially be used as a first step in disease diagnosis.

“If someone’s got biomarkers on their breath for lung cancer, for example, our goal is to create a sensor that is capable of identifying those biomarkers early in the disease state. What we know about insect receptors is that they are able to detect compounds very sensitively and specifically, and this may provide us with the early insight we need to help people,” says Craig Squire, a former investment banker who has been brought in as Scentian’s commercial lead.

Flavor first

According to Squire, Auckland-based Scentian is exploring markets covering air and water quality, the wine industry, defense, and point-of-care medical diagnostics, among others, in order to get its platform solution off the ground.

“But first out the blocks are applications in the flavor industry. We knew that the flavor industry was already investing in this kind of sensor tech – and they were quick to return our calls,” he says.

“The other side of it is just practicality. We’re able to test in liquid at the moment with gas detection to follow, and so flavor is something we could engage with straight away.

Quality assurance is one part of the flavor industry where actionable insights are always being sought, while research and new product development around flavorings – and food and beverages more generally – is going through a boom phase.

“[They’re] in need of a way to replicate existing flavor profiles with new materials and mixes, without swamping their sensory panels. We are pretty excited about our ability to enable this huge growth in demand for new foods and formulations,” Squire adds.

The new platform will allow Scentian Bio’s customers to answer a range of questions. Has the raw ingredient I’ve purchased been tampered with, or adulterated? Is this vanilla from the where the supplier claims it is? Can I be sure my product meets the quality standards that I and my company expect to meet? Does this alt-protein product match the desired flavour profile – or are there off-notes that are preventing us from creating new, satisfying products?

“This is a platform technology, with multiple applications across different sectors,” says Warren Bebb, investment manager at New Zealand’s Sprout Agritech, which made its maiden investment by joining Scentian’s recent seed round.

“It starts with the premise that insect receptors are exceptionally high specificity and sensitivity, and it has taken insects 400 million-odd years for them to get to that point. As a result, those receptors, if you use the right ones, can apply to liquids, gases – anything that has volatile organic compounds in it.”

He adds, “The first use cases we’re targeting are for flavor houses. From there we can talk about tests for quality issues and bacteria in milk products as a potential way forward. Then looking at disease in livestock, and predicting when animals are coming into heat. They key to this is you’re getting lab quality results in a portable device – you’re able to move out of the lab, but maintain that level of specificity.”

Sprout has joined forces with its investment partners – Kiwi dairy giant Fonterra, US-based VC firm Finistere Ventures, and Israeli venture builder OurCrowd – as well as PFR and government agency Callaghan Innovation to provide NZ$1 million in funding to Scentian.

Further fundings on the horizon

Sprout has previously accelerated Scentian through its bi-annual program, but the funding marks its first venture investment to date.

“Past accelerators have seen investment go into companies from some of those partners, but not from Sprout,” says Bebb.

“We set up our own investment fund about a year ago. We saw [that] New Zealand is a really active country in terms of having a reasonably large number, for our size, of agtech and foodtech startups with a large amount of government investment, a lot of intellectual property, [but] an investment ecosystem looking for good technologies to invest in further down the road.”

“We’re filling that gap at seed stage – helping these companies get formed and become a reality.“

Bebb says that Sprout plans to make around five or six seed round investments each year alongside Finistere Ventures, Fonterra, and OurCrowd, with NZ$1 million as the standard ticket size.

“If they require more and our investment partners are interested – and other syndicate partners want to come along – we’re more than capable of putting in more money,” he adds.

The funding will help Scentian to further develop its testing device with its manufacturing partner, and carry out more trials with prospective clients in the flavor and fragrance industries.

But Králíček says that the Sprout accelerator program was at least as valuable for Scentian, helping it make the leap from that idea 19 years ago into the living, breathing company it is today.

“For me, [the main takeaway from the program] was being able to articulate the value proposition in a better manner for investors to understand – and learning to look at things from the customers’ point of view,” he says.

“That’s what we constantly got questioned about, and how we really streamlined our thinking about how to get this technology out into the market. And then there was the exposure to other entrepreneurs – not necessarily in ‘deep tech’ like us, but other people trying to get their companies up and running, and getting a flavor of the passion, vision, and dedication they had.”

“I’ve been a scientist until now, so that gave me my first taste of the business world. It’s always good to meet people in the same boat and learn from them.”

Sprout is now accepting applications for its July 2021 accelerator program. Head here to find more details and register.

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