University-based biotech startup NexGen Plants has raised $3 million in funding, including a $1.5 million grant from the Queensland Business Development Fund, to ramp up international expansion of its crop genomics solution.
The rest of the funding has come from existing investors Yuuwa Capital and Uniseed, which have contributed $1 million and $500,000, respectively.
NexGen’s technology was developed in the lab at the University of Queensland by Professor Peer Schenk.
Schenk tells StartupSmart the technology poses an alternative to genetically modified produce, allowing for cross-breeding of plants to introduce desirable traits by adding only the genome that’s required for that trait.
There are big parts of certain plants’ genomes that are “hidden treasures”, Schenk says, and by extracting those genomes and placing them into other plants, the team can mimic the natural breeding process in a “faster and more targeted” way.
It’s not about adding anything new to the plant, it’s “just enhancing a trait that’s already there,” he says.
Through this technology, the startup can create vegetables that are more nutritious for the consumer, rice that can grow in previously inhospitable salty ground, or crops varieties that are resilient to viruses.
Since it was founded as a business in 2013, NexGen Plants has grown out of the lab and into a commercially viable product, with the help of chief executive Brian Ruddle, who was brought on board to develop a strategy around the technology, and helped secure an early $2 million in funding to develop a proof-of-concept.
While both Yuuwa Capital and Uniseed are repeat investors, Ruddle also sees the government grant as something of an endorsement.
“They really put the ruler over you, make sure the investment is going to make sense”, he tells StartupSmart.
Raising funds for a university-based startup is “not a hard process when you know how to do it”, Ruddle says, but it does pose different challenges, compared to other early-stage businesses.
“Most of the companies formed out of universities need longer proof-of-concept timeframes,” he says.
“The technologies are generally very early stage … they need initial funding to complete proof-of-concept activities,” he adds.
And this particularly true when it comes to biotechs; it can take time to validate the product and ensure early-stage customers are comfortable, says Ruddle.
“That’s probably the biggest issue — how mature the idea of the technology is.”
This latest funding is pegged for “ramping up business development activities in the US and Europe”, Ruddle says, as well as more collaborative breeding projects in Australia.
It has also allowed NexGen Plants to take on a new chief executive, Dr Philippe Herve, who Ruddle says brings experience in working with research teams, venture capital firms, and large seed companies.
The appointment means Ruddle is taking a step back from the business, although he will remain on the board.
“That was in the plan from the initial term,” he says.
“My role was to drive the initial proof-of-concept model, get regulatory [aspects] out of the way, and set the company up in good stead,” he adds.
“They needed a different skill set to come on board. That was always going to occur.”
How to get out of the lab
For other university researchers thinking of turning their findings into a startup, Ruddle recommends figuring out a plan first.
“Work out the assumptions that you’ve got and the plan as to how you’re going to validate those assumptions,” he says.
And, once they’re on their way to having a business, early-stage startups need to “stop pitching”, he adds.
“All they will do is pitch to early customers and investors,” he says, but “pitching is a one-way conversation”.
Founders would be better off starting conversations and opening up a dialogue with investors, asking questions, and finding out what they’re interested in.
Pitch them later, Ruddle advises, after “picking up on the key things [you] should be looking at”.
From Schenk’s point of view, having seen his research grow out of the university lab and into commercial viability, being an academic-turned-entrepreneur is “very exciting”.
“Sometimes it’s a bit of a mixed bag, but if you get the tech out there and make a difference it can really be very rewarding,” he says.
Schenk is now running an entrepreneurship and agriculture course at the University of Queensland to try to help students look beyond the science to become “a little bit more aware of the possibilities”.
“Have a look beyond your papers,” he advises. “It can be a very rewarding thing.”
|Passionate about the state of Australian startups? Join the Smarts Collective and be a part of the conversation.|