Notes from the Bar None Ranch: The new Sheriff in Nitrogenville, Pivot Bio, raises another $430M

July 20, 2021 |

News arrives from Berkeley and Pivot Bio that the company has raised $430 million in its Series D venture round, led by DCVC and Temasek, bringing the total equity raised to more than $600 million. Last we saw, the company was valued at $1.6 billion — now, even more.

The nitrogen rationale

You might ask, as we do, why is the absence of nitrogen worth more than nitrogen? After all, Pivot Bio replaces nitrogen with nothing — or, to be more exact, microbes that obtain free nitrogen from the air and share it corn, wheat or rice. Applying nitrogen fertilizer for corn production is one of the most costly aspects of raising corn — says here the cost in 2021 averages $93 per acre.  And, it’s big business —  $197 billion globally, that is, synthetic fertilizers.

As Pivot Bio notes, “Synthetic nitrogen fertilizer is inefficient, expensive for farmers, contributes to seven percent of global greenhouse gas emissions, depletes soils, and harms water supplies and fisheries.” In other words, the other guy’s product is costly and unsustainable, but hitherto inevitable. Now, there’s a new sheriff in Nitrogenville.

The replacement value story

Pivot Bio PROVEN 40, the company’s fourth commercial release in three years, enables corn growers to replace up to 40 pounds per acre of synthetic nitrogen with a better source of nitrogen. How much is that worth? Well, given that ammonia fertilizer is about 82% nitrogen and cost, say here, around $691 per ton. https://farmdocdaily.illinois.edu/2021/04/fertilizer-price-increases-for-2021-production.html — if you came up with a value per acre for Pivot Bio technology as a cost replacer and came up with $13.86 per acre, we wouldn’t disagree one bit. And tat’s assuming no value for the reduction in greenhouse gas emissions. And that’s for this still-early version of the technology.

And what about those sustainability gains?

The sustainability story

Crops only use about half of the total synthetic nitrogen applied to agricultural fields. A portion of the unused synthetic nitrogen is emitted as nitrous oxide, a GHG that is 300 times more potent than carbon dioxide and other nitrogen gases. As a result, synthetic nitrogen has become the leading cause of crop-related GHGs. Unused synthetic nitrogen also ends up in our waterways in the form of nitrates, impacting water quality, and significantly contributing to the more than 500 global oceanic dead zones.

Similar to the evidence of rising atmospheric CO2 levels that first emerged in the 1950s, Pivot points to what it describes as “mounting proof that synthetic nitrogen is correlated to the degradation of farm soils.”

Does it work beyond corn?

Yes, rice and wheat too — the Big Three of Nitrogenville. The new sheriff has picked out all the major crops from which to weed out the desperados.

Journey to scale: 

Pivot Bio has replaced synthetic nitrogen on more than 1 million crop acres in 2021 alone, representing more than 300% growth year-over-year and unprecedented agricultural product adoption. The company tripled its revenue in 2021

The technology story

You can learn all about it in our review of PivotBio technology, here. https://www.biofuelsdigest.com/bdigest/2020/05/06/pivot-bio-raises-100m-as-it-proves-out-why-its-agtechs-next-billion-dollar-baby/ Or, in our Multi-Slide Guide, here: https://www.biofuelsdigest.com/bdigest/2019/10/22/next-50-companies-to-disrupt-the-world-the-digests-2019-multi-slide-guide-to-pivot-bio/

The investor group

Generation Investment Management, G2 Venture Partners, and Rockefeller Capital Management join returning investors in Pivot Bio’s Series D, including Series D co-leads DCVC and Temasek. Breakthrough Energy Ventures, Continental Grain Company, Prelude Ventures, Pavilion Capital, Bunge Ventures, Tekfen Ventures; and Roger Underwood, the co-founder of Becker Underwood. Pivot 

Next steps, with all that dough

The company’s next stage will focus on rapidly scaling its U.S. business and expanding into key international markets. 

The Bottom Line

Bar none, this is the biggest bombshell technology on the agricultural front anywhere near scale. There’s great agtech floating around, nothing like this for financial and sustainability gain. 

Think of it this way. Let’s guess that farmers would split the $13.93 cost advantage with Pivot and the company could realize $7 per acre, and let’s further assume a 40% gross margin on those sales. Why, that would be something like $10 billion in revenue potential, based on the global acreages you’d see here. https://aei.ag/2018/04/30/global-acreage-is-the-expansion-over/

Which is why this technology is not in the “raising the bar” category, but in the “bar none” category, and joins just a handful of monsters at the Bar None Ranch. It’s up there with double cross hybridization and Roundup Ready corn. Nitrogen has been a growing problem for corn lo these many years — now, the new sheriff’s in town and one big whale of a sustainability and cost mess is getting sorted. 

Next steps towards international distribution and expansion to wheat and rice should be watched carefully — and I am doubtful myself of the ongoing value of remaining in private hands, having reached this rate of expansion, proof in the field and thirst for affordable capital. So, a transition to public ownership would be beneficial to all.

Reaction from the stakeholders

Since the company introduced the industry’s first commercially available microbial nitrogen in 2019, 

“Pivot Bio exemplifies the power of DeepTech solutions to create equitable and profitable outcomes for all stakeholders in immense industries like agriculture,” said Matt Ocko, Co-Managing Partner of DCVC. “Farmers are able to grow more crops to feed more people, more cost-effectively, while being even better stewards of their land and water. Societies benefit from both more abundant food and more climate-resilient and sustainable agriculture. Pivot Bio has delivered the kind of win-win-win breakthrough DCVC is honored to back, and on which we are focused as a firm.”

“We are thrilled to be investing in Pivot Bio, given the deep trust they have built among farmers by providing solutions which are both more sustainable and profitable for their customers,” said Lila Preston, Head of Growth Equity at Generation Investment Management. “We look forward to supporting the company as it accelerates its broader climate impacts on a global basis.”

Pivot Bio is selling the first disruptive agricultural products in decades through a direct-to-grower model by creating mutual trust and economic success for both the farmer and the company. 

“Pivot Bio is driven to serve farmers by simplifying the challenges of managing nitrogen and ensuring resilient farm productivity. We have built a platform for accelerating nitrogen innovation in the market, and our products are delivering recurring positive outcomes for the growers we serve,” said Karsten Temme, Ph.D., Pivot Bio co-founder and CEO. “We are establishing relationships that will span decades, and aim to provide the sole source of nitrogen needed to power the economic and environmental sustainability of global agriculture for generations to come.”

“We have earned the trust of farmers for our direct-to-grower approach and have proven that our products provide consistent yields and profits for farmers, even in the face of a volatile climate,” said Karsten Temme. “Our track record of delivering a solution to address farmers’ needs and remediate the challenges facing our planet has also earned us the support and confidence of our investors. The Pivot Bio team looks forward to continuing our success at scale.”

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