Inocucor Makes ‘First of Many’ Acquisitions, Closes Series B on $55.9m
Biologicals startup Inocucor has acquired ATP Nutrition in the opening salvo of a plan to become a “selective consolidator” in the premium crop inputs space.
The company acquired ATP, a Manitoba-based chemical crop nutrition company for an undisclosed sum. ATP focuses on filling deficits in soil health for row-crop farms.
Inocucor manufactures biological stimulants for agriculture using a patented fermentation process that combines multi-strains of bacteria and yeasts into soil and plant optimizers. It has two products on the market that aim to enhance the growth of crops: Synergro, a live-cell formulation for high-value produce, such as strawberries, tomatoes, lettuce and broccoli, and Synergro Free, a cell-free bio-fertilizer for commodity row crops, such as soybean, corn and wheat.
The two companies will combine the two R&D teams going forward to create combinations of biologicals and crop nutrition products formulated based on plant type, geography, and soil conditions to increase the efficacy of both products.
“We’re developing a whole suite of new products between the companies that bring crop treatments to let farmers reach the full genetic potential of every seed,” Inocucor CEO Don Marvin told AgFunderNews.
He also explained that the two companies complement each other in terms of distribution, with Inocucor benefitting from ATP’s wide distribution across Canada and ATP growing through Inocucor’s US reach — the company’s new Denver office will open in May.
“At the end of the day what brought Inocucor and ATP together was that they wanted to grow their product offering in biologicals and we wanted to develop our own marketing channel for second-generation biologicals,” said Marvin.
Marvin calls his product “second generation biologicals” because Inocucor’s don’t contain actual microbes, but the metabolites that send metabolic signals to stimulate plant growth.
Along with closing the acquisition this week, the Montreal-headquartered company has reached a final close of it’s Series B round on $55.9 million. The additional $15.9 million brought in since the second close in January came from existing investors TPG Alternative and Renewable Technologies (TPG ART), an arm of the $70 billion global private investment house TPG, and three existing investors: Cycle Capital Management, the Montreal-based clean tech venture capital firm; Desjardin Innovatech, the venture capital group of the Canadian cooperative financial group, and California-based agtech VC Pontifax AgTech.
In January, Marvin told AgFunderNews that acquisition news from the company was imminent and this transaction, he says, is the first in a series of actions that will move Inocucor into the role of “selective consolidator” in the premium inputs space.
Pontifax AgTech managing partner and co-founder Ben Belldegrun, who has joined Inocucor’s board of directors, said that it was this strategy that drew the agtech investor to Inocucor.
“Inocucor’s acquisition platform strategy is incredibly unique and provides immediate value through the first successful acquisition of ATP. Inocucor will continue to make strategic acquisitions in adjacent areas of the plant-health industry that help the company deliver a portfolio of differentiated products that act in collaboration with existing and future biological-based products,” he said.
Both Belldegrun and Marvin agree that the biologicals space is crowded and needs consolidation.
“Agricultural input providers are fragmented and provide individual solutions. Growers need to maximize ROI for integrated farming programs by utilizing a portfolio of differentiated products that act in collaboration between biologicals and nutrients. That is exactly what Inocucor is building through its acquisition strategy,” said Belldegrun.
Assuming the role of acquirer as a startup itself begs the question of what kind of exit Inocucor, and its investors have in mind.
“We’ve always said that we are building a rather significant company that is a standalone company that offers great products that make the farmer money,” said Marvin.
Belldegrun, who joined Inocucor’s investors for the second close of its Series B in January, is on board with the notion, noting that especially for a biologicals startup, Inocucor’s existing revenue stands out and offers promise for multiple exit options down the line.
“We were attracted to the fact that Inocucor has commercialized products today with proven technology and grower sales, a real differentiator in the biologicals space, and a greater value proposition to acquirers… Profitable, stand-alone entities with commercialized products generate real interest from strategic acquirers who are not looking to increase additional cash burn. More importantly, they are presented with many more liquidity options including traditional private equity buyers and IPOs,” said Belldegrun.
Inocucor is not the only biologicals-focused startups seeking to stand on its own. Indigo Agriculture, the Boston-based microbial crop technology startup told AgFunderNews in December that it would likely list on a public exchange eventually.
Inocucor continues to work toward geographic expansion in Brazil, Argentina, and Uruguay. Also on the docket for 2018 is distribution expansion into Western Europe, particularly Spain, and of course, more acquisitions.
“It’s a growth strategy play. Now the market is beginning to understand that we did what we said we would do and there will be a next and a next and a next…”