Crop Enhancement is an early-stage Boston-based company that develops non-toxic and sustained release technologies for agriculture. They recently secured $8.5 million in Series B funding. Kevin Chen, Crop Enhancement’s CEO, talked to us about how they found investors and what they are doing to overcome other challenges.
What does Crop Enhancement do?
We provide sustainable crop protection products to help farmers increase crop yields without using toxic chemicals.
Can you tell me more about your technology?
We have two primary platforms. The first is CropCoat, a non-toxic, biodegradable protective barrier coating that can be sprayed onto all plant surfaces including fruit, leaves, seeds and stems. CropCoat physically prevents pests from attacking crops. It is a mix of environmentally benign organic and inorganic chemical components that are formulated to be compatible, stable in suspension and film-forming.
We supply CropCoat in a concentrated form that farmers dilute with water to spray on their crops. The water then evaporates, leaving the CropCoat barrier in place. Field studies on cocoa plants have shown that our rain-resistant technology is effective for at least two months, which is four times longer than the pesticides currently in use.
Our second technology platform provides a vehicle for tunable release of the active ingredients that are commonly used by farmers, including nutrients, insecticides, fungicides, and fertilizers. Our technology works to carry and release common agrochemicals, and we are testing it with biological materials such as microbes. Both our platforms are based on sustainable chemistry, while some of today’s popular controlled-release products on the market are not completely biodegradable.
What are your target markets?
We are initially focused on developing solutions for crops grown in and near the tropics. This is a multi-billion-dollar market that includes crops like cocoa, coffee, bananas, pineapples, citrus, and cotton. Farmers in the tropics have significant challenges. The climate is very hot and humid with high rainfall so the pest pressure in these regions is extremely high. Farmers are struggling to find solutions. Rainfall is very unpredictable. Many will spray their crops and then it will rain the same day and all that pesticide will be washed away into the environment and the farmer will have to do that work all over again.
Because our CropCoat technology resists rain, this takes out some the variability in crop yield and quality that can be caused by unpredictable rainfall. Our product also helps farmers reduce costs by reducing labor requirements. The pesticides that are currently used must be sprayed every two weeks, while ours is effective for at least two months. Our slow-release technology also helps farmers to titrate the doses of many different agrochemicals like nutrients, fertilizers and pesticides, not only in the tropics but for the major commodity crops here in the US as well. This platform will also help them reduce their costs. These technologies have been very well received so far, so that there is a huge amount of interest in our products from farmers and food and beverage companies.
All the tropical crops we have worked with so far have protective outer coatings — for example cocoa pods and coffee cherries. These are the surfaces onto which our CropCoat product is sprayed and these surfaces are removed before the crops are processed into products for human consumption. So even though our product is non-toxic and biodegradable, we are taking steps to ensure that is not present in food.
We’re also interested in crops grown slightly outside of the tropics like cotton, pistachios, almond and oranges. Cotton is a very large pesticide consumer. These additional markets will expand the reach of our products not only in Asia but also in North and South America.
Are your products on the market?
Our products are currently being tested in field trials around the world by farmers, universities, non-governmental organizations, and food and beverage companies. Our preliminary results are very encouraging and we expect our products will be more widely available in 2017.
If the recent big ag deals such as Bayer’s Monsanto takeover and ChemChina’s Syngenta acquisition go through, how will that affect you?
There is quite a bit of industry consolidation going on right now. This benefits us in a couple of different ways. The first is talent. The mergers will free up a lot of talent, which is good for startups like us as we will be able to attract top talent from the industry. Also, as companies merge, there are more opportunities for outside technologies to be considered in terms of collaborations.
ChemChina is an interesting player. They have been building through acquisition. The agriculture environment in China is going through major changes. China is historically a rural economy. Now issues like the traceability of food and sustainable farming are becoming more important. We are conducting a citrus field trial in southern China.
How did you get your funding – first a Series A round and now an $8.5 million Series B round?
It was an old fashioned door-to-door approach. It was all about getting introduced to as many different investors as possible and to different types of investors – angels and VCs. Once introductions were made, we were looking for the best fit for our company, for investors who would help us get to the next stage in our development. Looking back, we are very fortunate to have partnered up with an amazing syndicate of investors, who are primarily venture capital investors in our domain.
Our Series A investor, Phoenix Venture Partners, is an advanced material venture fund. They showed their confidence in our technology by re-investing in our Series B round. Our new investors include: MLS Capital, one of the top agriculture VCs; Bandgap Ventures, an Austin-based hard-sciences venture firm, and 1955 Capital, a brand new fund targeting China, southeast Asia and the developing world - we are their first investment. All our investors bring an excellent array of relationships and a strong network. We are thrilled to have such a strong team of investors who share our enthusiasm and who bring the experience to help us succeed.
Did your investors become part of your Board of Directors?
Yes. Our board of directors includes several of our investors, along with Crop Enhancement’s founder and CTO, Dr. David Soane, and me.
Do you have any tips for startup CEOS who are pitching to investors?
Just start telling your story and sharing your passion. You’ll get feedback from everyone you talk to – some of which will be useful and some of which won’t. But welcome the feedback and use it to make your story more precise. Some of the best feedback actually helped us improve the company itself and its products.
Secondly, become comfortable approaching people that you don’t know, and explaining what you do in a way that matters to them. Often entrepreneurs focus on their technology. I’d recommend focusing on the customers instead, how our technology would help them and why that should be interesting to investors. It really helps to understand your audience and their pain points, so that you can show them how your company can make their lives better.
Also develop as big a pipeline of possible investors as you can. A typical VC firm may only invest in one of every 100 viable deals they see. So talk to as many investors as possible to increase your odds. As a by-product, you will see how they respond to your message, so that you’re more effective in telling your story to other investors. Meeting a lot of people also helps you to develop your network.
How many people work at Crop Enhancement?
We have 12 full time and part time employees. With this new funding, we are looking to hire additional people for tech development – ideally chemists with previous experience in the agriculture industry. We also need Product Managers – people who can specify and market a product - and business development people who can expand our reach into international markets. We are Boston-based and if people are interested in working for Crop Enhancement they can check out our new website or send us their resume.
As a small startup, we are also actively developing a network of expert consultants who are specialists in certain fields such as entomology and crop science. We look to these specialists to provide targeted knowledge and services.
What do you look for in employees?
Apart from the basics like competence and background experience, the intangibles are really important in a startup. .Our employees have, and our future employees need to have, a passion for what we are doing The hours will be long and the problems will be challenging, and the resources are not the same as would be in an established company. You need to be able to find solutions quickly. Startups attract a different type of person: someone who wants to build on the opportunities in front of them and work in an environment where very innovative ideas come from everywhere. We’re small, so we don’t have a lot of bureaucracy to slow things down and frustrate creative people. And the benefits of success in a startup are very rewarding.
One thing that keeps me up at night is what if there is a competitor somewhere in the world that is making a similar product? That drives us to be fast, innovative, creative and stay ahead of the competition. I’m so excited to be working with a great team that is driven. All employees have to be on board to make the venture successful.
What have been your biggest challenges?
I’ve been CEO at Crop Enhancement for almost a year. My biggest challenge until now has been to complete the fundraising. Now we are tackling access to and penetration of new markets and international markets, even though we’re a small company with limited resources. We need to find the right trusted partners in Indonesia, China and other countries to expand our networks. That’s our next challenge. We welcome people to contact us if they would like to be involved in helping us build our global business.
What do you think are the biggest challenges facing the AgTech industry and the life science industry as a whole?
The biggest challenge in AgTech from a large company point of view is the uncertainty stemming from consolidation. There is a lot of uncertainty among the established players.
Also our customers are farmers, who’ve heard it all before. Breaking through that noise is an art and a science and we need to work to make a case for why they should use our product.
There’s plenty of amazing R&D happening in AgTech right now, and many very exciting startups including ourselves working on new solutions to big problems. We are all working to solve the problem of ‘How do we feed the world on the limited land that we have?’.
What makes someone a good CEO?
Adaptability is very important – you are constantly learning and as new information comes in, a good CEO should adapt. Also fearlessness. A startup is a small team tackling a big problem. You have to jump in and try things out, reach out to other companies and people even if you think they might not have the time of day for you.
Do you have any other advice for biotech startup CEOs?
Learn how to creatively leverage your limited resources. This includes working with the media to your advantage in a measured and productive way.
If you would like to tell your Biotech Startup Story, please contact Leah at firstname.lastname@example.org.