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New probiotic seeds grow crops that require less water to survive

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The startup that makes them just closed a $100 million funding round

Today, agtech startup Indigo launched a probiotic-covered seed called Indigo Cotton, which promises to reduce how much water a cotton plant needs by harnessing the power of microbes. Indigo also closed a $100 million Series C funding round and announced it will launch its next microbe-enhanced seed Indigo Wheat later this year.

When we first heard about Indigo in February, it was promising to increase crop yields by replenishing the microbes that decades of industrial farming have stripped out of our most common crops. The Indigo team studied hundreds of plant species and employed machine learning to figure out which microbes found in heritage plants were missing from modern agricultural staples. Based on this, they developed a microbe seed coating and have claimed that in over four plantings, coated seeds yielded 10 percent more crop than uncoated seeds.

There's a real difference in root mass

Indigo Cotton is the startup's first commercial product and the company said it's already been planted across 50,000 acres in Texas and four surrounding states. Indigo CEO David Perry told The Verge that he's expecting around the same 10 percent yield increase seen in earlier trial plantings — assuming normal climate conditions — when the crops are harvested this fall.

"We're in these fields all the time and we're able to make comparisons," Perry says, referring to the prerelease planting. "You can see a real difference in stem diameters and root mass, which is an especially good predictor for a plant's ability to manage water stress."

The microbes covering Indigo Cotton are specifically chosen to help make the plants more resilient to that stress, Perry explained. Indigo plans to develop seed coatings that address issues like low nutrient stress, high salience stress, and threats like insect infestations. But Perry said they chose to tackle water first because agricultural water use is such a massive issue. Farmers currently consume 70 percent of the planet's fresh water. And studies show that if current trends continue, there will be a 50 percent jump in agricultural water usage by 2050. At the same time, global water consumption is already dangerously high.

A unique pricing model

Current agricultural technologies like GMOs and agrochemicals don't really address water use and water scarcity either. "There aren't any chemicals you spray on a plant to make it perform better when it doesn't have enough water," says Perry. Meanwhile, cotton is traditionally grown in drier areas of the planet, like the American South, which can have an impact come harvest time.

Tyler McClendon, president of Oxbow Agriculture, which operates 40,000 acres of farmland in Arkansas, told The Verge he believes Indigo Cotton has great potential to increase crop yields and address water scarcity. This past spring he partnered with Indigo and planted 1,000 acres of the microbe-enhanced seed.

"We ultimately feel that Indigo's ideas are good not only for the farmer, but for the bigger problem of feeding the world," says McClendon, "and as a business we would say that's our mission, to feed the world." While cotton can't feed anyone, Indigo's forthcoming product Indigo Wheat grows into a crop that can. Indigo is also developing solutions for corn and soybeans.

Beyond technology, McClendon was also attracted by the startup's unique pricing model. Perry said Indigo will charge a minimum for its seeds in exchange for a 33 percent share of any additional value that Indigo's crop creates for a farm. This means that Indigo makes a profit only when their seeds perform well, and it allows farmers to attempt to increase their yield using Indigo's product without taking on too much risk — something that McClendon said farmers are very wary to do.

Indigo Cotton will prove itself during the harvest this fall

Indigo's product and profit model have certainly attracted a lot of interest. This latest funding round was led by the $54 billion Alaska Permanent Fund, which pledged to match its investment in future financings. Perry said that the $100 million raised makes this round the largest private equity financing in the agricultural technology sector ever. That puts Indigo right in front of Climate Corp, which raised $50 million in 2012 and was subsequently bought by Monsanto for $930 million in 2013. Indigo will be using the cash to scale their operations in preparation for the launch of Indigo Wheat later this year.

Around the same time, Indigo Cotton will be proving itself during the fall harvest.

"The plants look very healthy," McClendon says, referring to his cotton crop at the moment. "But I would be the first to tell you that one of the key tenets of our business is we need facts and data. And I don't really care what the plants look like, I care whether they produce more crop at the end of the year."