By focusing on technological innovation at the intersection of food, health and nutrition, Flagship Ventures aims to accelerate the pace at which new products and services become available to the world’s farmers and other stakeholders. That focus explains its recent decision to partner with Bayer CropScience along with companies such as AstraZeneca and Nestle Health Science.
“You see the huge need for innovation in the agricultural sector,” explains Ignacio Martinez, partner, Flagship Ventures based in Cambridge, Mass. “Big companies are not good at developing breakthrough technologies. We believe that in the agricultural sector we are in great need of developing technologies—and we have a responsibility to develop these technologies—to grow more food with fewer resources.”
Traditionally, venture capital (VC) has been used to finance technology development at the earliest stages, often at startup companies, Martinez notes. Flagship does this type of investing, but what differentiates it from other VC firms is that it also launches businesses from scratch through its VentureLabs arm.
“If we don’t see any company in the market that has a technology or has solutions to address specific needs, we are very proactive and we start companies,” he says.
Plans For Agriculture. Flagship’s companies are spread over multiple industries including agriculture. About two-thirds of its portfolio is dedicated to biotechnology and therapeutics. The remaining third is focused on sustainability initiatives in agriculture, green energy, water purity and other sectors.
Bayer is one of three strategic corporate partners that have invested in Flagship Fund V, the firm’s $537 million oversubscribed fund, which closed in March. The other strategic partners are AstraZeneca, the multinational pharmaceutical company, and Nestle Health Science, the nutrition-based therapeutics subsidiary of the Swiss food giant.
“We anticipate launching as many as five companies per year, spread across many areas we look at,” explains Jeffrey Krasner, senior director of communications at Flagship.
Already, the company has made inroads in agriculture with Symbiota, one of Flagship’s portfolio companies. The firm is engaged in field trials to strengthen major crops against biotic and abiotic stresses. To do so, it is investigating the plants’ microbiome—the collection of bacteria and other organisms that live on them and inside of them. The microbiome research stems from research at a related company within Flagship called Seres Health, which is conducting human clinical trials of an investigational treatment for Clostridium difficile, a superbug that infects many hospital patients.
Separately, biologicals are attractive as new products that might be developed for the ag market because they are more sustainable than chemicals and the regulatory approval process is less expensive and time-consuming, Martinez notes. Whereas chemicals and GMOs require between $130 million and $250 million of research and development, and 10 to 12 years to enter the marketplace, biologicals require between $3 million and $5 million of investment and between 3 to 5 years to enter the marketplace.
“If we develop the right products, we will have a substantial impact on the way farmers can solve stresses in their farms,” Martinez says. Bayer is a great partner for Flagship because it understands the complexities of global agriculture, he adds.
In a recent interview with BioCentury, Flagship Ventures CEO Noubar Afeyan explains the firm’s philosophy, one that will inform its relationship with Bayer and agriculture in the future.
“We’re basically the opposite of build-to-buy,” Afeyan tells the publication. “We’re not advocates of that—we never have been and never will be, I hope. It’s difficult to sign up to the notion of capping your upside. You then minimize the risk — we want our entrepreneurs to maximize risk/reward.”
Helping farmers manage risk while boosting crop potential with fewer inputs is exactly what the firm hopes to do.