Equinom, an Israeli seed breeding startup designing enhanced crops like “shatter-free sesame” or peas bulked with a higher protein content without genetic engineering, has closed its Series B funding round at $10 million.
Leading the round is BASF Venture Capital, which marks the first early-stage investment from the German chemicals giant into an Israeli company — a rather more positive batch of news for BASF than its recent court imbroglio with a peach farmer in Missouri; a court there has awarded that farmer a peachy $265 million in damages; both BASF and its fellow German agrichemicals powerhouse Bayer have appealed that decision, expressing “surprise” at the verdict. Could a new approach to seed breeding help avoid these sorts of trials in future?
Possibly, but back to the round: follow-on investments came from Tel Aviv-based Fortissimo Capital and the French plant-based ingredients company, Roquette, which recently inked a three-year deal with plant-based burger group Beyond Meat to significantly crank up its supply of pea protein as it nears completion of its $400 million pea processing plant in Manitoba, Canada. Roquette and Fortissimo both invested in a bridge round ahead of the B in 2018.
Also present in the round is Israel’s Trendlines Group, investing for the first time out of its newly-formed Singapore-based Agrifood Fund, which is putting $1.6 million into the round.
Equinom’s CEO Gil Shalev told AFN that the company would be releasing a high-protein pea variety in 2021, likely to answer the growing demand for the key ingredient in a growing amount of meat and dairy replacement food products, to add to its growing portfolio.
A quick canter through the company’s history: Equinom was founded back in 2012 by Shalev after his four years working at Hazera Seeds, where he was in charge of bringing new technologies to tomato breeding. As the cost of genetic sequencing technologies came down, Shalev realized the potential new breeding technologies could have on the business, but their implementation would require a change in breeding methodology; an impossible task at a large corporation that is used to its tried and tested way of working. “I realized it would be better to leave and try to do it by myself, especially as the reduction in costs meant I didn’t need a big company to use these technologies,” he told AFN in 2018.
Cut to Equinom’s computerized breeding technology as it stands: “Equinom’s technology is groundbreaking in the plant protein value chain and supports the rising trend towards meat alternatives,” said Markus Solibieda, managing director of BASF Venture Capital, in a statement released in December.
The Equinom algorithm, the BASF statement elaborates, “harnesses natural genetic variation in plants, analyzing the genomic characteristics from its database of thousands of plants to determine better breeding combinations to achieve desired properties. The system evaluates millions of possible combinations to design optimized seeds that focus on protein, oil or nutrient content, seeds’ functionality, plant yield, disease resistance, and other qualities. Equinom then uses the conventional method to crossbreed the plants whose genetic codes complement each other best. Using this exclusive technology and approach, the startup selectively optimizes varieties targeted to food producers’ needs, by creating an application-based solution.”
“Equinom,” the statement continues, “also offers high-oil-content sesame that enables flexible cultivation options. Shatter-resistant sesame, one of Equinom’s flagship crops, can be harvested mechanically and grown around the world. This allows farmers to grow locally to meet the rising demand for this customized oilseed, which produces some of the highest oil content in the industry and is rich in fiber, vitamins and minerals. Equinom’s sesame sets the ground for the advancement of a more responsible supply chain, greater price stability and cost-effective growth.”
As AgFunder’s recent White Paper on alternative proteins highlights, the rise in plant-based startups like Beyond Meat, Moving Mountains and Ripple Foods all owe a debt to legumes in general and peas in particular, though their market success has elicited supply-side concerns. A report by McKinsey identifies a need to find applications for the high volumes of pea starch that gets extracted during the pea protein isolation process — “if the protein is sold but not the starch, or if the starch is sold at a low price point, then it becomes difficult for the process to be economically feasible. Thus, producers could make a profit by selling this protein if they don’t lose money on the starch. Producers of mainstream products such as veggie burgers who rely on soybean protein are likely to enjoy lower input costs and more stable feedstock supply. However, high-end products will likely use pea protein to cater to consumer expectations of a niche ingredient, which is a product that touts health claims and is on sale at a premium price.”
But, at least with Equinom’s approach, a producer would ideally get more of the protein from peas and less of the starch, all with a process that is non-GMO. And if peas stop trending in favor of its fellow legumes, the company is also working on breeding solutions for soybeans, peas, chickpeas, cowpeas, mung beans, fava beans and quinoa. Equinom’s high-protein varieties, the team says, deliver taste, texture and other differentiating benefits. Their higher protein content can also make production of meat substitutes, such as veggie burgers or sausages, more cost-effective than other alternatives.
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