KALAMAZOO — Southwest Michigan biosciences company Native Traits Corp. plans to use a recent investment to move its high-yield and weather-resistant seed technology into field testing and production.
Native Traits raised nearly $1.5 million in equity earlier this month, according to filings with federal securities regulators.
The Kalamazoo-based company embeds cold- and drought-tolerant characteristics found in historic types of corn into modern varieties. Native Traits President and CEO Jim Friedrich in 2010 began screening seed bank strains for traits that might be used to address growing populations, shifting weather patterns and climate change. Now, the company is preparing for a move into developing markets.
“We are well past a proof of concept stage. That part is completely done,” Friedrich told MiBiz. “We have defined genetic products, the most important of which is what we call the EaSY — which stands for enhanced seed yield — and this has become a major claim to fame for our company.”
Native Traits transfers the favorable genetic traits of certain varieties of corn into commercial lines “by natural means” that do not involve genetic engineering technology. EaSY traits increase seed yield through naturally-occurring genetics recovered from Latin American corn varieties and reduce the cost of hybrid seed production. EaSY hybrid seeds are also more tolerant of extremes in moisture and temperature, according to the company.
The new round of funding will be used for seed production and the commercialization of genetic traits like EaSY, according to Friedrich.
“In addition to starting actual production of seed, we are in the midst of widespread pre-commercial trials in at least three dozen locations throughout the Midwest, from Ohio to Nebraska, as well as Wisconsin, southwest Florida and southeast Missouri,” Friedrich said. “These are wide-scale pre-commercial tests that are essential for the actual launching of the product.”
Yield and stress tolerance are complex traits governed by multiple genes. The company’s pre-commercial trials will measure “many hundreds of individual plants” growing in practical field environments, as opposed to the laboratory.
The company plans to license its technology to seed companies, a few of which are also investors in the firm, Friedrich said.
Individual angel investors in the latest round of funding include members of Northern Michigan Angels. In addition, the Western Michigan University the Biosciences Research and Commercialization Center (BRCC) is a major investor — “if not the biggest investor” — in the company’s latest raise and historically, according to Friedrich.
The company is planning a subsequent $1.5 million Series B round of financing later this year or in early 2021.
Ag biotechnology deals were down in 2019, according to an annual industry report from venture capital firm AgFunder. Deal volume dipped 22 percent for the year, while the amount invested, $1.1 billion was lower by a third compared to the 2018. The median deal size was $3 million in the sector.
Overall upstream investments in the agricultural sector — which AgFunder defines as investments “closer to the farmer and before the retailer” — held steady in 2019 at $7.6 billion in 1,039 deals. That’s a year-over-year increase of 1.3 percent or about $100 million, according to the report.
This year’s U.S. corn average yields are pegged to be 178.5 bushels per acre, which would bring the overall crop size to a record high of nearly 16 billion bushels, according to a supply and demand report released this week from the USDA. However, the demand for corn for feed and residual use is still volatile given the uncertainty surrounding disruptions to the market from the COVID-19 pandemic.
The bulk of the initial $1.5 million raised by Native Traits this year was collected before the spread of the deadly virus throughout the Midwest, according to Friedrich, who added that “it’s probably too soon to say” if the virus will disrupt the company’s future plans.
“We’re in uncharted territory,” he said. “Agriculture still goes on and farmers still plant seed. A farmer has to plant seed corn in order to have a crop, so that doesn’t change.”
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