“Technology incubation in Agriculture”: new white paper from Kapyon Ventures

May 1, 2013 | Jim Lane

In recent weeks, Kapyon Ventures led two Series A capital raises: Algenetix, a company developing biofuels and other products from microbes, raised $2 million while ZeaKal, a developer of technologies to increase yields from soybeans and rice, has raised $3.8 million.

Today, we excerpt from a white paper detailing Kapyon’s incubation model:

“New ventures will be less capital intensive and innovation will be driven more by inventiveness rather than infrastructure.”

Early stage technology commercialization has always faced a unique set of challenges unlike that seen in other businesses. The transition from science to products has been one of the most difficult and has often been termed the “Valley of Death”.

These challenges are further compounded in agricultural biotechnology where the industry has not benefited from the same level of early stage investment and entrepreneurial success seen across other segments of life sciences and high tech (software, social media).

The creation of technology eco-systems whether in Silicon Valley, Boston or San Diego, all have their origins grounded in strong research and entrepreneurial talent — successes of entrepreneurs subsequently resulted in the genesis of new spinouts and venture groups often comprised of previous company founders.

The development of the agriculture industry in contrast has been conservative and the eco-system of entrepreneurs and financiers has never truly emerged.

[Today], the importance of biomass productivity is now not only a target of agriculture but of energy, consumer products and society in general-as we look for a sustainable way to reduce our reliance on petroleum. Agriculture now at the epicenter of so many industries is drawing in new entrants, seeking to secure the biomass volume necessary to sustain their core businesses.

Innovation will also be driven by the advances in biotechnology. The improvements in synthetic biology, gene synthesis, and computational biology have removed many of the barriers to discovery as they becoming increasingly leveraged into agriculture. What this shift means practically is that biology is becoming more predictable, the risks better quantified and the costs dramatically decreased. Technology that is valuable for soybeans can readily be customized for new oilseeds such as jatropha and even into unrelated species such as algae.

As development in agbiotech migrates to more capital efficient or venture lite models, technology incubation, a business model that has gained traction in other technology sectors can greatly benefit agriculture as well in nurturing new startups. Technology incubators have ranged in their activity and value propositions often include (i) low cost infrastructure (ii) mentorship (iii) access to networks (iv) and brand clout (for established incubators).