December 12, 2017

by Michelle Pelletier Marshall, GAI Media

TechAccel, based in Overland Park, Kansas, is a venture and technology development organization focused on agriculture and animal health. It identifies and invests in new technologies and funds science advancement initiatives with leading research universities to drive the innovations to market. TechAccel strives to bridge the technology “valley of death” gap with capital and science expertise, and this year alone, has invested millions of dollars in six new technology platforms.

Recently TechAccel advocated for the need for more venture capital investment in animal health and nutrition, publishing a map detailing nearly 250 leading companies in the plant and animal Ag Biotech space. TechAccel’s research shows that these companies have raised approximately $3.4 billion in total funding since they were founded, of which $500 million was in animal biotech and $2.9 billion in plant biotech.

Leading the charge at TechAccel (Technology Acceleration Partners) is Co-Founder, President, and CEO Dr. Michael Helmstetter. Helmstetter has over 30 years of experience working in agriculture, defense, and biotechnology industries. GAI News caught up with Helmstetter earlier this month.

1. TechAccel focuses on ag solutions to meet the growing world population. How does targeting animal health and nutrition accomplish this goal? 

The challenge of feeding the growing population will require economic investment, consumer and cultural acceptance, and the broad application of innovation. We think there are many opportunities to contribute solutions in agriculture and animal health and nutrition – increasing crop yields, protecting plants and animals from disease, using digital technology to better manage crops, soil and water, just to name a few. Advancing novel vaccines and therapeutics, as well as deploying innovative feed additives put animal health and nutrition at the forefront of addressing the population increase and associated food demands. Our investments tend to focus on platform technologies, or those innovations that work in multiple product or market segments. The platform strategy allows for scaling innovations more quickly, with managed risk.

2. You have spoken of the three trends that will transform animal health – what are those?

We identified the three trends as alternative proteins, companion animal spending, and the internet of animals. I’ll caution there are certainly more trends – such as gene editing, which is transforming plant, animal, and human health and gut microbiome. Our reasoning on these three:

Alternative proteins will be important in animal feeds from livestock to aquaculture, bringing the potential to reduce the use of crop feedstuffs and antibiotic use. Additionally, alternative proteins show promise in sustainability and lower cost. This trend is not limited to the animal health ecosystem – it also promises affordable protein for human diets.

More people own pets than ever before and they are spending money on pets in record amounts – an estimated $69 billion this year. In the U.S., pet owners readily buy premium foods, a wide range of medicines and treatments, grooming, toys and treats, and digital devices for their dogs and cats. Pet spending shows no signs of slowing.

The Internet of Animals is coming not only for pets, which we can monitor with collars and home videocams, but also for livestock, poultry, and fish. The combination of inexpensive biometric sensors and monitors, cloud computing and increasingly smart algorithms create possibilities for predicting, diagnosing, and managing health issues before they become serious. Digital and mobile technology will keep animals connected to us like never before.

3. Earlier this year, TechAccel participated in a $25 million Series B round for crop science startup Benson Hill Biosystem, and a Series A round for epigenetics company Epicrop Technologies. Where do you see other promising investments in the agtech sector?

We are focused on a few specific areas – gene editing, including RNAi and epigenetics for improving traits; unlocking the secrets of the microbiome for biopesticides and improved nutrients; and deploying biotechnology for safer and more effective vaccines, feeds, and nutrients. We like applications in animal nutrition, such as our investment and science advancement with Agrivida. We’re also looking at innovations in food safety, as well as grain processing and by-products.

4. How is the agtech space unique and what are some of the preliminary questions marketplace participants should ask? What is the potential return for investments in this realm?

The agtech sector is a relatively small innovation ecosystem with a very diverse population. One thing that sets agtech apart is the success rate: about one in 10 agtech startups will succeed, while in pharma the number is closer to one in 1,000.

That might be part of the reason behind the wave of new money in agtech, but this is still a field that requires patience and an understanding of the complex systems in agriculture, nutrition, animal health, and food tech. We talk about having muddy boots – the result of literally walking the fields and farms, understanding issues from the ground up. We always encourage new investors to take a systems approach to learning and really understanding this marketplace. It’s not the same as investing in a new app. So ask: Why does this technology matter? Do you know your customers?

The possibilities of returns? You can find as many ROI projections as you can startups. The projections can be large, especially when you consider a global market of 9 billion people. We have seen several recent acquisitions in the agtech space in the hundreds of millions of dollars, such as Blue River Technology and Granular. Realistic market opportunities and penetration rates are critical to predicting a realistic ROI. Our model targets high risk technologies…transformative, disruptive technologies, so our target ROI tends to be quite high but equally high is our technical failure rate projection.

~ Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and an occasional contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.