Bayer, Ginkgo Bioworks Partner to Revolutionize Nitrogen Fixation; Announce $100M Series A
Bayer and Boston-based bioagtech company, Ginkgo Bioworks announced their partnership to create a new agtech company that will focus on the potential within beneficial biological-based microbes to make nitrogen more available for plants.
"Accessing the microbiome is part of Bayer's innovation strategy,” said Kemal Malik, member of the Board of Management of Bayer AG and responsible for Innovation. “We are launching this enterprise to develop transformative agricultural products based on the latest synthetic biology technology. We have exclusively partnered with Ginkgo to build a leading player in this field."
The deal also includes a $100 million Series A investment round backed by the two parent companies and hedge fund Viking Global Investors LP, to finance the as-yet-unnamed company. The investment round is expected to close this fall, and the process of hiring a team of 50 is currently underway.
The massive Series A is reflective of how agtech funding rounds have recently begun to grow in size and impact - as was seen this July when San Francisco-based indoor vertical farming startup Plenty raised a $200 million Series B led by SoftBank Vision Fund - the largest agtech round on record.
Axel Bouchon told Bloomberg that the Series A was intentionally large as to give Bayer and Ginkgo Bioworks the freedom to focus “entirely” on their goals in the coming years, stating, “Big challenges need big tools”.
Operating from both Ginkgo Bioworks’ Boston headquarters and West Sacramento, where Bayer conducts its R&D activities testing plant biologics, the startup will target the identity and development of plant-based microbes that can help plants and soil fix nitrogen from the air or other alternative sources as a means to reduce the need to apply traditional nitrogen fertilizers in agricultural production. Aside from being a significant financial cost to farmers, nitrogen fertilizers are also costly to the environment, causing ever-more concerning water pollution through run-off, and accounting for 3 percent of the world’s carbon emissions, according to Forbes.
Founded in 2008 and launched through the Y Combinator, Ginkgo Bioworks has employed automation to custom create microbes at a fraction of the cost to traditional methods. In July 2016 the company successfully raised a $100 million Series C backed by Y Combinator’s Continuity Fund, Senator Investment Group, Cascade Investment, Baillie Gifford, Viking Global Investors, and Allen & Company LLC, and in July 2015 raised a $45 million Series B led by Viking Global Partners, and including OS Fund, Y Combinator, and Felicis Ventures.
"Biology is changing industries as diverse as flavor and fragrance to consumer electronics. Agriculture is the original biological technology, and the more we can learn to work with the soil microbiome, the more we can discover new ways to add value to farmers and return to its biological, and more sustainable, roots," said Jason Kelly, co-founder and CEO of Ginkgo Bioworks in a joint statement with Bayer. "We're thrilled to be working with Bayer to bring this transformational aspiration to life."
Dr. Mike Miille - a biotech veteran with extensive experience in applying microbiomes to improve agricultural production, and the former CEO of AgraQuest, and current vice president, strategy and business management biologics at Crop Science, a division of Bayer - will assume the interim role of CEO of the new company that will combine Bayer’s extensive presence in the agricultural sciences with Ginkgo Bioworks’ ability in creating custom microbes. The new Board of Directors will consist of four seats - two representatives from Ginkgo Bioworks to be filled by Dr. Jason Kelly and Dr. Reshma Shetty, and two from Bayer to be filled by Dr. Axel Bouchon and Dr. Juergen Eckhardt.