Indigo Agriculture is Boston’s newest ‘unicorn’ startup
On a half-million acres across the United States, seeds from the Charlestown startup Indigo Agriculture have been battle-hardened against the elements, producing particularly bountiful yields of some of the nation’s most important cash crops.
Investor enthusiasm about the company has been growing just as fast, as venture capitalists have poured in hundreds of millions of dollars into Indigo Agriculture’s promising method of treating seeds with naturally occurring microbes to make crops more tolerant of stressful conditions, such as drought. On Tuesday, Indigo said it had raised $156 million — one of the largest funding rounds for a Boston company this year.
Indigo said the investment round now gives the private company a valuation of $1.4 billion, making it Boston’s newest “unicorn,” an industry term for startups worth more than $1 billion.
Chief executive David Perry attributed the broad interest to Indigo’s ability “to grow things in a way that consumers value and are willing to pay for.”
Indigo is treating seeds with combinations of naturally occurring bacteria and fungi that are already found among plants today. The company believes that by carefully calibrating them, it can help farmers produce better yields and ward off the ill effects of drought, pestilence, and poor soil.
Microbes have symbiotic relationships with plants, helping them survive and grow just like the bacteria that help humans digest food and release nutrients. Those relationships have been disrupted by years of industrial agriculture, he said.
“It’s in the microbe’s best interest for the plant to grow and reproduce, so the microbe’s habitat expands,” said Perry. “Really, all we’re doing is adding back what nature intended to be there all along.”
Scientists have long known that microbes are key to plants, but they have puzzled over how to ensure that treated seeds and soil result in improved crop production.
Often, microbes are simply outcompeted by other organisms in the soil, according to Kristen DeAngelis, a University of Massachusetts Amherst microbiologist.
“If the bacteria stay on the outside of the plant, they’re competing with all the other organisms, and usually they don’t win,” she said.
She said the publicly reported results by Indigo indicate its approach is promising.
In August, Indigo said a 20,000-acre planting of its second commercial product, Indigo Wheat, had shown an 8.3 percent average increase in yield compared to seeds treated with standard chemicals. In January, the company said it recorded an 11 percent increase in yield on a 50,000-acre planting of cotton to determine tolerance for dry conditions.
Perry said the company has seeds planted on hundreds of thousands of additional acres for corn, soy, and rice.
Indigo initially focused on helping plants survive low-water conditions, but Perry said the company’s other treatments will fight pests and disease. It is also researching ways to reduce the use of nitrogen, which is used in fertilizer but is energy intensive to produce and can be a pollutant when it enters waterways.
So far Indigo has commercial seeds on the market for cotton, wheat, soy, corn, and rice. The company is trying to persuade wheat farmers to use its seeds by offering to buy their crops back at a 30-cent premium per bushel, with the aim of reselling the wheat at a premium to customers hungry for natural foods. Indigo last month said it hoped to produce 10.5 million bushels of wheat.
Investors in its latest round included Flagship Pioneering, the big Cambridge biotech venture capital firm that founded Indigo, and the Alaska Permanent Fund, a previous investor. New backers included Baillie Gifford and Activant Capital.
The company may continue to raise money.
It said that though it has closed on the latest investments, a current funding round remains open.