Ag-bio startups harvest more funding | Crain's Indianapolis

Ag-bio startups harvest more funding

Hydro Grow LLC hopes to hit the market within the next few years with its vegetable-growing appliance. Founder Scott Massey, left, and associates Jimmy Carlson, center, and Ivan Ball, recently landed $25,000 from Purdue Ag-celerator. |  Photo courtesy Purdue News Service

Imagine growing vegetables as if making a cup of coffee.

But instead of popping a K-cup into a Keurig machine, you insert a pod containing seeds of an heirloom tomato into a tube that’s bathed in grow lights.

Purdue University startup Hydro Grow LLC envisions its refrigerator-sized automated growing device could someday become commonplace in kitchens. The West Lafayette company, which last month received $25,000 in an inaugural round of funding by the Purdue Ag-celerator fund, is among Indiana’s latest ag-bioscience startups.

Perhaps more significantly, Hydro Grow may be the first in this entrepreneurial eco-system lately to target the mass-market consumer realm, as opposed to a product marketed to farmers or food manufacturers.

“That does make it unique in the ag space,” said John Hanak, managing director of Purdue Ventures, which operates the $2 million Purdue Ag-celerator fund. It is supported by Purdue Moves, a broader initiative at the university to focus funding resources “on areas that we felt to be generally underserved, you might say,”

Long a bastion for big companies such as Westfield-based AgReliant Genetics or Indianapolis-based Dow AgroSciences, Indiana’s $16 billion ag-bio sector is seeing a blossoming of startups. Many of these firms originated at Purdue.

 “We’re tracking over 30 early stage companies in the ag-biosciences sector,” with about 20 of them having a Purdue connection, said Beth Bechdol, president and CEO of AgriNovus Indiana, an Indianapolis-based ag-biosciences initiative.

Just a few years ago, “I was really hard pressed to be able to count them (ag-bio startups) on five fingers,” Bechdol said.

Tapping into trends

Many of these startups coincide with societal trends – Hydro Grow, in particular.

In a survey of chefs last year, the National Restaurant Association identified several hot trends including greater demand for locally grown produce and an affinity for environmentally sustainable food.

Hydro Grow founder Scott Massey, of Evansville, a senior in Purdue’s Polytechnic Institute, figures his device addresses all of those trends and then some.

To the extent consumers grow their own vegetables there’s less environmental impact than if they were harvested and shipped from far-flung places.

Freshness is another, with virtually all produce rotting to some extent during transportation and while sitting on store shelves. “We throw 40 percent of our product away because it spoils,” Massey said.

Hydro Grow’s device also will appeal to those who seek organic food – or grown without pesticides and herbicides. Because vegetables are grown in a closed environment there’s no need for such chemicals.

Moreover, Massey said the device will allow consumers to obtain certain vegetables not now abundant in the Midwest, such as Heirloom Tomatoes. 

Such a device could be a godsend for impoverished people, particularly those living in areas without grocery stores – so-called food deserts.

Initially, however, “if anything, this is going to be a luxury product,” Massey added.

Ideally, the units could hit the market in the next one or two years, he said. Currently he’s working with a manufacturing firm in the surgical equipment space about making the units.

The upstart currently has a handful of investors, and that could expand with the recent Ag-celerator investment. “There is uplift in the market when investors see Purdue has skin in the game,” Hanak said.

No lack of innovations

Last month, the Ag-celerator also invested $75,000 in West Lafayette-based Phicrobe LLC, which is headed by Bruce Applegate, an associate professor of food sciences at Purdue.

Phicrobe is in the midst of commercializing a quick and inexpensive way to detect E.coli in food. That could give Phicrobe a huge foothold in the food industry. But Hanak said such a company is also good for Purdue to the extent it helps commercialize intellectual property developed on campus.

Because Ag-celerator gives Purdue an ownership stake in the companies it also stands to gain as they begin to produce revenue and possibly from any sale or initial public stock offering.

“The object here is to make well-thought-out investments for the purpose of ultimately getting a return,” Hanak said.

There are plenty more promising ag-bio sciences companies besides Phicrobe and Hydro Grow.

Fourteen other companies applied for the initial round of Ag-celerator funds, “which absolutely thrilled us,” Hanak said. The others also show great potential and possibly could secure funding in future rounds, he said.

“I don’t think there’s going to be any lack of qualified applications.”

AgriNovus’ Bechdol was a judge in the Ag-celerator inaugural funding round and said she was struck by the depth of ingenuity among candidates. She said it also underscored the practical value of research at Purdue.

Not only that, she said it opened her eyes to the potential for even more ag-bio startups to the extent other academic disciplines can partner with innovators in the agriculture field.

“We kind of went from nowhere to somewhere in a very short period of time,” she said. “I think it’s going to continue to be a very positive, very supportive environment.”

Stirring the pot

AgriNovus is looking at the successful model Purdue has created to see if it could be replicated at other universities around the state.

Bechdol also would like to see more interest from venture capital firms in the sector as these upstarts begin to take root. In recent years such firms have raised more than $9 million in venture capital, according to AgriNovus.

There’s also the potential to stir the pot even more if “serial entrepreneurs” in the state take a fancy for the sector.

Bechdol points to innovation in the ag-bio space underway by local tech entrepreneur Chris Baggott, of Exact Target and Compendium fame. Baggott started Tyner Pond Farm, in Hancock County, which produces pasture-raised, drug-free beef, pork and chicken. Baggott also has married communications technology with food delivery with his Indianapolis-based ClusterTruck business.

Other ag-bio startups of note include Greenfield-based Rubicon Agriculture, which converts shipping containers into hi-tech farms, and Indianapolis-based Choco Finesse, which has developed a fat substitute for food.

February 23, 2017 - 11:00am