KEY POINTS
• Indigo Agriculture raised another $360 million for a carbon credit system that incentivizes farmers to grow food with environmentally sustainable methods.
• With Indigo Ag’s series F funding round, Moderna CEO Stéphane Bancel is joining the board.
• Businesses responsible for 21 million acres of US farmland have already signed up for Indigo Ag’s carbon sequestration program.
• Boston-based Indigo Agriculture got its start in 2014 under the name Symbiota, and developed microbial seed treatments to help farmers grow corn, rice, soybeans and wheat without excessive use of costly fertilizers, fungicides and other chemicals.
• The company then expanded its ambitions and business lines to look more like an Amazon for agriculture, running marketplaces that connect grain growers, buyers and shippers, and an agronomy consulting arm that employs satellite imagery and analytics to help farmers increase their yields and margins.
• The company’s newest business line is its most experimental yet: A carbon sequestration program that rewards and trains farmers to use “regenerative” farming practices.
• The aim of regenerative farming is to replenish and protect land while growing food, rather than depleting soil and polluting the ecosystem in the process. The practice can include rotating crops, planting cover crops and more. One benefit of regenerative farming is that it can take carbon dioxide out of the atmosphere, long-term.
• The company on Monday announced it had raised another $260 million in preferred equity financing and $100 million in convertible equity funding to top off their latest round of funding. The round totaled $535 million, bringing the company’s total funding to date to around $1.2 billion. Its last reported valuation was $3.5 billion in 2018, according to Pitchbook.
• The deal marked the second major investment in agriculture tech startups this week.
• Farmers Business Network announced Monday that they raised $250 million for an online network that connects farmers, and allows them to anonymously trade notes about the products they use, like seed treatments, fertilizers and other ag chemicals and how much they cost. The company also uses that pricing data to help farmers purchase those products from suppliers at prices that they are willing to pay, instead of prices offered by a visiting salesperson.
• Indigo Ag also added Moderna CEO Stéphane Bancel to its board of directors, the companies announced Monday. Moderna has locked in about $1 billion in government funding to develop Covid-19 vaccine and its candidate, which was the first to begin human trials, contains genetic material called messenger RNA (mRNA) that may be able to provoke the immune system to fight the novel coronavirus.
• Both companies began at Flagship Pioneering, a sort of scientific incubator, and Indigo Ag CEO David Perry told CNBC, “Moderna is on a parallel track to the one we are on.”
• Carbon sequestration
• As plants grow, they turn carbon dioxide from the atmosphere into roots, shoots, stems and leaves. When the plants decay, they bring organic matter into the soil, including humic acids which are not only good for growing more plants, but hold onto carbon rather than releasing it back into the air.
• Indigo Ag thinks farmers will adjust their practices to capture as much carbon as possible as long as it’s profitable to do so.
• Agronomists and climate scientists don’t know exactly how much carbon capture can be achieved through regenerative farming. But Perry is betting it’s enough to help curb climate change and keep the world’s arable land healthy.
• Perry told CNBC on Monday that businesses responsible for 21 million acres of U.S. farmland have expressed interest in the Indigo Ag Carbon program, which the company launched in June 2019. “That’s very promising adoption– there are about 500 million acres of cultivated land in the US,” the CEO said.
• To get them started, Indigo Ag sends scientists to test soil samples at participating farms. Based primarily on carbon content in the soil at that starting point, farmers will later earn credits commensurate with the amount of carbon they’ve added to their soil over time (and other ways they’ve removed carbon dioxide from the atmosphere).
• For now, the company plans to help farmers sell “voluntary” credits. These are likely to be purchased by environmental nonprofits, or companies that want to market their own food and packaged goods as “carbon neutral,” or even carbon negative to eco-minded consumers and backers.
• Down the line, Indigo Ag hopes its credits can be eligible for trading in regulatory markets. As CNBC has previously reported, regulatory credits can be a boon for environment-minded companies looking to fatten up their margins. And they can help companies appeal to an ever-widening field of Environmental, Social and Governance or ESG funds.
• To that end, Indigo Ag is working with two organizations that set standards for and validate greenhouse gas emissions and removal credits — Climate Action Reserve and Verra.