Indigo Ag, a leading agriculture tech startup, raised $250 million in a new funding round as it expands its crop protection business in Brazil, Turkey, and other countries.
But the 10-year-old Boston company took a steep reduction in valuation in the deal, well below the $3.5 billion it reached in 2020 when the market for startups was considerably more boisterous.
Chief executive Ron Hovsepian declined to give the current valuation but noted that the value of similar companies has been cut by 80 percent or more.
“You have to look at the nature of the dislocation in the market,” he said in an interview. “It’s a point in time when the board and the investors and the management team took the decision to take some discount, because the most important thing is ensuring the company has the cash and liquidity to perform for the customers.”
The company said an earlier report that its valuation had dropped to just $200 million was incorrect.
Indigo Ag was formed in 2013, originally called Symbiota, by Flagship Pioneering and Moderna cofounder Noubar Afeyan and others to take advantage of biotechnology techniques to find naturally occurring microbes that could help farmers. It’s still in that business today, developing seed and crop treatments to boost yields, resist pests, and improve drought survivability. The company has also built a service to help farmers sell carbon credits when they use carbon sequestration techniques like planting cover crops.
Net revenue increased 40 percent last year compared to 2021 and jumped another 90 percent in the first seven months of 2023, the company said without giving more specific figures. The growth comes after Indigo struggled trying to sell grain for farmers and went through a round of layoffs in March. Now the company is approaching profitability and aims to be cash-flow positive by the end of next year, Hovsepian said.
“It’s right around the corner for us,” Hovespian, who took over from prior CEO David Perry three years ago, said.
Indigo Ag recently got permission to sell its bionematicide treatment in Brazil, which protects soybeans from deadly roundworms known as nematodes. It is also expanding sales in Turkey and parts of eastern Europe.
US farmers have added 7 million acres of cropland to Indigo Ag’s carbon credit program so far. The first sale of credits last year covered 22,000 tons of carbon captured in soil and an upcoming sale will include 110,000 tons.
The $250 million of new funding came in a deal led by Flagship Pioneering in Cambridge, the original investor in Indigo. It also included new investors Lingotto Investment Management in London and the State of Michigan Retirement System.
While a few tech companies, including marketing software firm Klaviyo in Boston, are planning to go public soon, Indigo Ag will not be among the next wave of startups hitting the stock market.
“We’re a good candidate to be a public company,” Hovespian said. But for “right now” the company is focused on growing its businesses and helping improve the planet’s climate, he said. “That’s the big goal for us that we’re focused on,” he said. “The IPO and capital sources will take care of itself over time.”