Predicting Startup Success
As YCombinator co-founder Jessica Livingston has said, “it is really difficult for anyone to predict which startup will wind up becoming a billion-dollar company.” However, while there are certainly not foolproof methods for identifying the next unicorn, we have found that there are important factors that shape startup success, namely:
- Is the company’s mission clear and sustainable?
- Are the founders relentlessly determined
- And, is the company building something an industry desperately needs or that people love?
For three of THRIVE’s startups from previous cohorts, MagGrow, Nuritas, and Trace Genomics, the responses to these questions are very likely “yes”.
- THRIVE I Startup Cohort (2015)
- Team members: 27 and growing quickly
- Status: Hit multi-million revenue in 2017. Most recently, BASF and Nuritas jointly announced an extremely exciting two part collaboration project ,the first component of which concentrates on the royalty-based commercialization of one of our existing patented peptides. The deep collaboration also focuses on the on-demand prediction and discovery of new peptides based on a number of specific health areas strategically important to BASF and their customers.
- Stage: Series A
Peptides are found throughout every cell and tissue in the body and are an integral part of most biologic processes. Outside the body, the chains of amino acids comprising peptides are found in food like milk, eggs, and grains. For years, peptides have been cited for their curative, disease reversing properties, but discovery is time consuming, expensive, with a staggeringly low success rate.
Nuritas’ technology speeds up the discovery process to a matter of months and is 500x more than the traditional peptide discovery methods. Using AI and bioinformatics, Nuritas searches through billions of molecules in everyday foods to find and unlock those particular novel peptides that have extraordinary health benefits or that can be used to target specific diseases. In only 12 months’ time, Nuritas has discovered hundreds of patented peptides. Two of these peptides, which regulate blood glucose levels, have been developed with plans to use them to target the prevention and onset of diabetes.
As with any disruptive technology, one of the biggest obstacles is resistance to change. To forge ahead despite this, Nuritas CEO Emmet Browne shared that “we found success by working with many multinational companies that strategically understand that there is a new future possible and massive opportunity in a technology like Nuritas.”
Recently, the company announced its partnership with multinational BASF to grant an exclusive, royalty-based license to BASF to commercialize one of its existing peptides across a number of applications. The second component of the collaboration entails on-demand discovery of new peptides, based on health areas that are strategically important to BASF’s customers and, ultimately, the consumer. What this means for the company is pending regulatory approval, consumers will see Nuritas’ peptide integrated into food products and available on the market by 2020.
This year and next, Nuritas is focusing on bringing in another 30 people, growing the company to 150 by the end of 2018. The company also has its eyes on a Round A, building on its initial funding raised with investors Mark Benioff (Salesforce CEO), Bono & the Edge, and Singapore’s New Protein Capital. Browne said that what has been most valuable in these efforts is finding the right people: “those who really understand the depth and breadth of Nuritas’ reach, will continue to be the key to our growth.” He added, “in order to drive this change, don’t accept the current norm, and be driven in making real change.”
With a passionate and growing team and backing of strategic investors and partners, Nuritas is on track to become the global leader in peptide discovery
Trace Genomics: Digitizing the Soil
- THRIVE II Startup Cohort (2016)
- Team members: 12
- Status: Currently testing on thousands of acres of high value fruits, vegetables, orchards, vineyards, and corn/soy
- Stage: Series A
The microbial ecosystem in the soil is made up of millions of bacteria and fungi which create the support structure for crop roots, meaning that soil health plays an important role in plant yield and quality. While the farmers of today have access to satellite imagery, sensors, software, and fertility testing, there are few tools available to help them understand the soil health of their fields.
Traditional diagnostics for soil pathogens look for one pathogen at a time, are time consuming, and often insensitive to the pathogen as it evolves. Profiling tools on the market today simply depict the profile of the soil without helping farmers connect that to actionable insights and are more expensive. Trace Genomics is a platform that delivers quantitative measurements of microbial populations and connects these insights into actionable recommendations that increase soil health and yield potential.
When the company was just starting, its founders took off-theshelf microbiome tools and soon realized that many of the tools were insufficient as diagnostics and failed to distinguish between pathogenic and non-pathogenic organisms. In response, the team developed a set of new pathogen tests, later validating the results of these tests extensively in real production settings.
Launched in July of last year during the Forbes AgTech Summit, Trace’s first product was a pathogen panel for strawberry and lettuce. In the time since, the team has leveraged its growing database and custom machine learning algorithms to deliver several products into the market, including a soil health report that profiles the key ecological indicators of soil health to farms. By digitizing the soil, Trace Genomics is producing innovation at exponential speeds. Through data and software, the company has delivered results to customers and shortened innovation timescales by over tenfold.
Farmers are managing tens to hundreds of fields and acres and are seeing differential productivity or loss of yields between fields and across seasons. Often, making a choice amongst which amendment or management practice to employ at the next season can be difficult because customers have no idea what’s going on underneath the ground. But Trace Genomics is a company shifting agriculture from a reactive art to a proactive science. By mailing in quick soil samples, farmers can receive insights on the effects of various cropping practices and product applications within a few weeks as opposed to waiting until the end of the season.
The road to customer adoption has been inflected by farmers jaded by an inundation of products promising dramatic increases in yield. The team at Trace has successfully made inroads by working closely with key R&D groups, agronomists, and academic researchers to test, iterate and build proven technology. Regarding their success, Diane Wu, co-founder of Trace Genomics said, “I think the industry has taken notice that we are delivering the most scientifically backed technology on the market.” Partners like the Western Growers Association in Salinas, California have been strategic partners to Trace Genomics as well. Together, the two launched the Soil Microbial Health Initiative to build a comprehensive report for participants, develop new tests for new crops, and expand the offering to brand new customers.
When asked for her advice for startups beginning their own journey, Diane said “Focus for a startup is everything. The things you don’t work on are more important than the things you chose to work on. It’s important to never lose sight of your big vision but to plan out specific milestones to get there. Stay focused on what matters: making your customers happy.”
Maggrow: Bringing Drift Control to Spraying
- Team members: 100 staff over the next 12 months and 50 worldwide now including 8 in the USA and Canada with more planned
- Status: We are targeting $10M in revenue in the US this year. We are scaling the business in the US through a number of key distributor partnerships and OEMs
- Stage: Pre-Series A
A line of insight came from MagGrow’s CEO’s brother: based on his research, existing pesticide spray technologies for crops were a compromise between application coverage and drift control. What this amounted to was 70% of conventional pesticide spraying is wasted. Based on this evidence, MagGrow was established.
On a broad basis, Pesticide spray drift is a major problem facing farmers worldwide so it was clear a sustainable solution to the problem was needed. Under future environmental and food constraints, producers will need to find more sustainable methods to grow food, to maximize their scarce resources and to make their production systems more effective. MagGrow’s system uses finer droplets that deliver better coverage while managing drift. For the user, this equates to less waste and more easily meeting environmental and regulatory compliance.
With MagGrow’s tractor boom product, farmers can retrofit their current sprayer boom with the company’s system. After retrofit, customers typically have a six to ninemonth payback. For smaller production environments, MagGrow’s backpack have a a typical return on investment of 3-6 months. Trials of the MagGrow system in the Netherlands showed more than 25% chemical savings and water rate reduction, more than 20% disease reduction, and more than 10% yield improvement. In the U.S., trials have shown a 37% reduction in chemical and water waste.
After 3 years of development and working with leading customers and regulators, MagGrow was launched into the market earlier this year. Since then, the company has seen sales in excess of $1M, with another $9M projected this year.
Speaking about key partners, CEO Gary Wickham said, “our access to strong mentors in Dole UC Davis, and extended network through THRIVE was key.” The opportunity has meant that “in 12 short months we have established technical and sales teams in California, the Midwest and Canada.”