Pivot Bio raises $100M as it proves out why it’s agtech’s next billion-dollar baby

May 6, 2020 |

In California, Pivot Bio announced the close of its $100 million Series C funding round.

With this new funding, Pivot Bio will accelerate its plans to scale its first-to-market microbial nitrogen technology that increases crop yields and farmer revenue. The technology will also aid in decreasing greenhouse gas emissions, water pollution, and global energy use related to the $65 billion global synthetic nitrogen fertilizer market.

We tipped this as one of our Top 10 Trends for 2020, so we’re not exactly bowled over with surprise.

The Pivot Bio backstory

You can read up on this technology which confers the ability to fix atmospheric nitrogen and take up applied nitrogen more efficiently on crops like corn and wheat that have not had the symbiotic bacterial communities to accomplish it, before. Soybeans have this ability already because of the colonies of symbionts that surround its root system. More about the Pivot backstory here.

The Yield improvement

Pivot Bio PROVEN, the company’s inaugural product for corn, consistently delivers more nitrogen into the crop than synthetic nitrogen, translating to an average of 5.8 bushels per acre advantage when compared to fields using only synthetic nitrogen in 2019.

The economic impact

Pivot Bio helping farmers shrink their use of synthetic nitrogen fertilizer by at least 100 million metric tons over the coming decade.

Nitrogen prices vary widely depending on source, urea, urea-ammonium nitrate or anhydrous nitrogen – but think in the $0.25-$0.45 per pound range, or the $550-1000 range per metric ton of nitrogen. That puts the potential nitrogen savings at something between $550 million and $1 billion, in the US, if you could replace it all. Consider that an aspirational goal — for now, Pivot Bio is focused on proving value by reducing nitrogen load, and improving yield.

About those yields. 5.8 bushels per acre is revolutionary, that’s several years of seed technology improvement in one jump, and at $3.18 per bushel (the current corn price), that’s $1.75 billion in US impact when we consider that the US has 95 million acres or so of corn.

So, we’ve found $2.3-$2.75 billion in addressable market impact, no real competition anywhere near scale, and that’s without considering the impact of international markets or the expansion into crops such as wheat.

Expansion into international markets and crops such as wheat

Glad you asked.

Pivot Bio PROVEN will soon be available to Argentinian corn farmers, and through IN10T’s FarmerTrials, Pivot Bio will launch Intent to Pivot on-farm corn trials for Canadian growers. Earlier this spring, the company launched its inaugural product for U.S. wheat crops, Pivot Bio RETURN, through a limited, early-adopter program.

The sustainability advantage

By adopting Pivot Bio’s cleaner nitrogen, agriculture will simultaneously achieve more consistent yields and eliminate one gigaton of carbon dioxide-equivalent emissions (akin to removing 216 million cars off the road). Additionally, water-borne nitrates will be reduced, avoiding an estimated $4.1 billion in U.S. water purification costs and significantly reducing the dead zones in our oceans.

Manufactured, sold, and distributed to farmers in a radically different model from traditional synthetic nitrogen fertilizer, Pivot Bio’s approach uses significantly less energy than the manufacturing of synthetic fertilizer, eliminates 99.5% of greenhouse gas emissions during its production, and is delivered through regular shipping carriers. This model eliminates the costly infrastructure of factories, pipelines, barges, and storage at brick-and-mortar retail locations. Instead, local trusted agronomic advisors can leverage a simplified mobile app to order and schedule on-demand delivery as they help farmers plan their nutrient management strategy.

The investor group

Series C is co-led by return Series B investors Breakthrough Energy Ventures and Temasek and are joined by DCVC who led Pivot Bio’s seed and Series A rounds; Prelude Ventures; Spruce Capital Partners; Codon Capital; Bunge Ventures; Continental Grain Company; Tekfen Ventures; Pavilion Capital; and individual investors Alan Cohen and Roger Underwood. To date, the company has raised $186 million in capital.

Reaction from the stakeholders

“Growers and our planet deserve a better fertilizer – one that balances on-farm economics with the farmer’s commitment to leave the land better for the next generation, and Pivot Bio’s technology helps them do just that,” said Karsten Temme, Ph.D., CEO and co-founder of Pivot Bio. “The strong backing by our Series C investors enables Pivot Bio to redefine the future of fertilizer and provide the world’s farmers with a new nitrogen source. Based on remarkable demand, we expect to ramp up from our large current footprint to millions of additional acres in the next growing season.”

Pivot Bio PROVEN – in its second year of commercialization – has again sold out and is used on hundreds of thousands of acres of U.S. corn as farmers seek cleaner nitrogen technology that can increase their profitability. Pivot Bio will deploy Series C capital to rapidly expand internationally.

“Pivot Bio’s microbial nitrogen fertilizers are revolutionizing how farmers apply nitrogen to their crops, and we’re excited to continue our investment to support this important mission,” said Carmichael Roberts of Breakthrough Energy Ventures. “The company is leading the charge on truly sustainable farming techniques, and we’re confident that they’ll continue to innovate their product offerings to solve this critical climate and societal challenge.”

“Pivot Bio is addressing one of the most difficult challenges facing agriculture in the 21st century – reducing dependence on damaging synthetic fertilizer while increasing crop yields and creating better outcomes for farmers,” said Matt Ocko, Managing Partner, DCVC. “DCVC led Pivot Bio’s early rounds and remains a major backer because we believe the company will truly transform global agricultural practices. We’re pleased the company continues to bring its microbial nitrogen technology to new crops and new locations, across America and around the world.”

“Farmer acceptance of our technology and support of our vision is far beyond our expectations,” said Temme. “They understand the economics and efficiencies our product offers – more consistent yields, 100 percent nitrogen efficiency with the crop, and a lighter environmental footprint. It’s a triple bottom line for them and our planet.”

What’s Next?

Well, there’s rice. 28 million metric tons of nitrogen there, more or less. And, there’s sugar, which uses about 2 million more. Just to mention a few, for starters.

The Bottom Line

Well, this is what a billion-dollar company looks like, just before it becomes a billion-dollar company.

Typically, you have to have a completely disruptive technology and an early-mover advantage in a $10B+ market. All that’s lining up nicely.

Strategic acquisition? Hmm, Bunge’s right there as one of the strategic investors, although the stock is getting pricey and one would think that if Bunge wanted the whole company, they might have stepped up and taken the lead in the Series C. So, we’re thinking IPO, and a monster this will be if the company can wait until it reaches break-even on a cash-basis and can do so with sales to US corn farmers — that is, one crop, one market.

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