Church & Dwight, the parent company of Arm & Hammer, has acquired Milwaukee-based Agro BioSciences, a microbial biotechnology startup, for $75 million, with a potential additional $25 million earnout dependent on future business performance.

Only four years old, Agro BioSciences was launched out of the Milwaukee County Research Park incubator program, and represents one of the biggest exits for a Milwaukee startup in the past 10 years.

Church & Dwight referred to Agro BioSciences in its quarterly earnings report as “an innovator and leader in developing custom probiotic products for poultry, cattle and swine,” adding that “the business is expected to grow rapidly to meet the growing demand for probiotic products to maintain the health and productivity of animals in an antibiotic free environment.”

Employing functional genomics and proprietary technologies, Agro BioSciences identifies beneficial bacteria within a ‘microbial terroir’, which can then be used to improve animal health and agricultural production. The company intentionally borrows the terminology ‘terroir’ from the wine industry, meaning the collective environmental factors of a specific location including soil, weather, water etc.

Through this process, the company has created proprietary microbial strains that can be added to feed to prevent illness and support livestock producers in meeting the ‘no antibiotics ever’ claim. The company also offers customized analysis services for specific herds or flocks, to determine which microbial strain or strains would be benefit a certain operation.

“Say you’re a poultry producer and you have a set of broilers,” Scott Druker, general manager of Arm & Hammer Animal Nutrition, told Milwaukee Business News. “These are the chickens that you’re going to grow up and in six weeks, they’re going to be chicken nuggets,” he said. “There’s a bunch of different things that can impact how well a bird is converting its feed to body weight,” from health to feed quality to weather. “What we’re able to do is come in and sample the environment, from the food to the litter to the feed ingredients going in, and basically do microbial work and get a complete picture of the microbial challenges that are in that environment.”

Category of Focus

Exits and capital deployments into agtech companies specializing in biologicals are growing as the space becomes a focus for investment this year. Just as so many global CPG food companies have created venture units designed to invest in startups that tap into rapidly shifting consumer tastes and demands, investors are realizing that consumer sentiment is trickling down the supply chain to affect how crops are produced, and how livestock is raised, fed, and how illness is treated.

Expectations are that the biofertilizer market will grow at a compounded annual growth rate (CAGR) of 14.08 percent reaching an estimated market value of $2.3 billion by 2020, while the agricultural biologicals testing market is expected to grow at a rate of 10.4 percent, reaching a value of $1.1 billion by 2021, according to Markets and Markets. In addition, the biostiumlants market is projected to grow at a CAGR of 10.4 percent, reaching a value of $2.9 billion by 2021, with the area of application expected to grow at a CAGR of 11.7 percent, reaching 24.9 million hectares by 2021.

Only days ago agricultural bioligicals company NewLeaf Symbiotics announced it has successfully closed a $24 million Series C co-led by Monsanto Growth Ventures (MGV) and Otter Capital, and also including Lewis & Clark Ventures, Rockport Capital, Pangaea Ventures, and Open Prairie Ventures among others.

Since its launch in 2013 through the Bio Research & Development Growth Park at the Danforth Plant Science Center, NewLeaf has conducted cutting-edge research and product development centered around pink pigmented facultative methylotrophs (PPFMs) – a naturally occurring family of beneficial bacteria that consumes the methanol produced as a waste product of plant metabolism, and secretes critical plant nutrients that provide critical energy to support plant growth, vigor, and extend the window of crop protection, according to the company website.

Agro BioSciences

Founded with a team of only four in 800 square feet, Agro BioSciences has grown to a team of 38 in a 10,000 square foot facility, and plans to move again into a space twice that size. The company’s meteoric growth resulted in between 10 and 15 percent of broiler producers, and between 50 and 55 percent of turkey producers using the company’s microbial technology in 2016.

“We are very excited about this integration because it further supports our long-term plan to grow, evolve and diversify our business through unique advancements in animal and agricultural productivity,” said Druker. “We are now a worldwide leader in providing the broadest portfolio of both microbial and nutrition solutions and services backed by an extensive R&D pipeline.”

Additionally, Third Wave Bioactives, LLC has been spun off from Agro BioSciences as an independent company to produce BioVontange, a commercial line of cultured dextrose and whey-based products that create flavors for natural foods while still maintaining shelf-life.

“Together, we will work to increase agricultural productivity through natural solutions that improve the quality and safety of the food that reaches consumers’ tables,” said Tom Rehberger, president of Agro BioSciences.

 

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.