Q&A with Marja Wallach, Element 8 Investor and Board Observer, Adaptive Symbiotic Technologies
What drove your initial interest in AST?
My husband, Bob and I had just started to act as angel investors. Our goal, as would be expected, was to create a positive return on our investment. We also hoped that our investment might be a catalyst for positive change. We were also looking for a way to use angel investing as a vehicle to find common ground for the different interests within our family. We attended a Slow Money Northwest conference to support and learn more about our daughter’s passion for sustainable agriculture and social justice.
A presentation by Zachary Gray (the VP of business development for Adaptive Symbiotic Technologies) caught our attention. AST uses the symbiotic interactions between plants and microorganisms to increase the tolerance of a wide variety of crops to abiotic stressors. The goal is to improve crop yields to mitigate some of the impact of climate change on food production, while doing so in a sustainable manner.
AST’s technology can potentially reduce the use of chemical and agricultural practices that degrade the environment and in the longer term use of AST’s products may also lead to improved soil health further, decreasing the need for fertilizers, herbicides and pesticides. The technology can be used by large scale conglomerates as easily as small rural farmers in developing countries, where the need for increased agricultural yields is most significant. Our conversation with the CEO Rusty Rodriquez afterwards gave us confidence in the science supporting their mission and their ability to carry it to fruition.
The passion that Rusty and Zach had for what they were setting out to do got our attention. It was the curiosity that Rusty and Regina Redmond, AST’s CSO, had in understanding how Bioensure worked, and their wish to grow the library of microbial strains, that cemented my interest.
What specifically about the business model made you decide to become involved in a Board observer role?
When we started angel investing I came across a description of a business model that works well for me in looking at a company’s model and thinking of its possibility for success. AST was able clearly and concisely explain the business model to me, it had the scientific expertise and creativity to realize its vision, and it had many possible paths to success and many ways to grow on that success. The operating and research costs were relatively small and the potential market was huge. This was compelling enough to counter the risk of the limited experience management initially had in the agricultural world.
My wish to act as a Board Observer was based on my interest in the science behind AST, the respect I had for the founders of the company, and the positive potential impact the company could have. I recognized that it would be a positive learning experience for me in representing the other Series A investors as well as understanding the dynamics of a startup.
In what ways does AST’s business align with Element 8’s mission and investment goals?
Eric Berman, co-chair of Element 8 Angels, recently wrote COP21 – The Road Ahead for Sustainability and I’m going to borrow some of his well -written words.
“At Element 8 we believe that clean tech investments should transcend energy technology…we peek around corners at solutions that do far more than simply mitigate temperature increases. They hold the promise to increase the health of the planet, and all of us who live on it.”
The success of AST certainly will mitigate some of the negative consequences of climate change, both in the short term by improving plants resistance to drought, increased salinity, and temperature changes but also in the long term by improving soil health, maintaining seed diversity and aiding the survival of small farmers.
Food security is vital to social stability and, in this way, AST can also help promote social justice and peace. AST is currently working with a group of rural farmers in India. The poor crop yields of the past few years had left the farmers facing the real possibility of having insufficient food to feed the villagers. We are currently awaiting final field test trials – andall indications are that crop yields and crop health are dramatically improved with the AST symbiotic endophytic treatment.
Pictured: Farmers with their harvest of mung beans. The beans on the left of the photo were grown from seeds treated with Bioensure. The smaller pile to the right are beans from untreated seeds. A good harvest means seeds can also be preserved for the following year’s crop, increasing the likelihood of successful harvest.
What has AST done to build a company well positioned for growth?
As with most startups, AST has hit several road blocks and unanticipated problems have shifted the timeline to profitability. What AST has done well is to pivot and adjust their business model accordingly and to do so with relatively limited funding.
AST successfully addresses a problem by creating additional opportunities for growth both in product offerings and market geographies. This is due in part to the communication and coordination between the management team and to the fact that a problem is viewed as an interesting challenge to be solved. When we first invested in AST the company had developed a dry product that was being market to large US Seed companies. However, seed coating processes required a liquid formulation and the field testing timelines and negotiations were, and still are, onerous and lengthy. Today, AST has many liquid formulations that are compatible with various crops and numerous fungicides applied by companies.
AST is targeting small, midsize and large companies in the US and globally as well as working with organic and traditional growers. AST has also recently have branched out to work with groups that germinate plants by vegetative propagation (rather than seed) and by applying Bioensure on seeds as they are planted in furrows. Modifications of the original dry formulation have proved to more appropriate for locations, such as India, that do not have optimal storage facilities and application of the product occurs by hand.
The increasing need for food security, sustainable agriculture and our recent success in places such as India opens up the possibility that grants will provide non dilution funds that may be able to precipitate even more dramatic growth. The ability to network successfully within the scientific, agricultural, government and nonprofit communities is a skill that AST, hopefully, will continue to use to their advantage. Very importantly, AST is also aware that continued success will depend upon staying one step ahead of the market and they continue to grow their intellectual property and microbial library. This requires the scientific creativity that Regina excels as well as the ability to network and interact with others. Joint collaborations with other microbial companies may open up another vast market in agriculture.
How do you see the market for clean tech investment evolving in the next 3 years?
There is an interesting change in the environmental science world; increasingly, there is a new interconnection between environmental science, technology, public health and public policy. I think we will see three main areas that this will impact.
First, around the world we see increasing examples of how environmental concerns are driving forces behind public policies. Universities such as the Technical University of Munich are opening new programs in schools such as the Bavarian School of Public Policy designing degree programs that integrate technology and public policy and governments are increasingly asking what the impact of a policy is on public health and social justice. Clean energy companies that have an understanding of these policies will better be able to create technologies that will be accepted into the market place.
Second, aging infrastructure will increasingly lead to situations that we have seen such as in Flint, Michigan that disproportionately affect the disadvantaged and solutions will be demanded prior to failure of the infrastructure. Stress on infrastructure from rising sea levels, increased salinity, and higher temperatures unfortunately will also create huge opportunities. Companies that can anticipate the need will have an early entry into the marketplace.
Lastly, companies that may in the past not have been considered traditional clean energy companies will begin to play a larger role in clean tech investing. For example, a company producing an acceptable meat alternative, whether it is a lab grown protein, stem cell based or vegetable, will have a significant impact by decreasing the cattle population and thereby decreasing methane production. AST is also a company that, in the past, may not have fit the traditional parameters of a clean energy company, but one that will help reduce energy consumption and increase sustainability.
What was the most valuable piece of advice you’ve ever received as an investor or adviser?
Start small! Wish I had taken that advice more seriously! As an angel investor you quickly realize that there are far more unknowns than knowns and that you know far less than you think!
There are lessons to be learned and most are learned the hard way. You need to find where your strengths are as an angel investor and then capitalize on those strengths. Be cognizant of your limitations and seek advice from others who have strengths different than your own. Attending angel group meetings, participating in due diligence process and making an “imaginary” or small investment and then following your investments is a great learning experience. Following a company’s ups and downs as a Board Observer has given me invaluable insight into the workings of a startup.
What are you currently reading?
This explains everything: Deep, Beautiful and the Elegant Theories of How the World Works by John Brockman. It’s a great book for me since there are 148 short essays that I can skip around. It presents a wide range of answers to all sorts of questions. Some of the answers are fun, some are elegant, some are simple and some are not. It is interesting to read and ponder the writings of such a diverse group of thinkers.
Anything else you want to add?
One of the most important things I’ve learned as Board Observer is the positive role involved investors can have. One never knows when you can offer helpful advice, when a connection you have may be of help, when your outlook will provide a new perspective or when a question you ask will trigger a new line of thinking.