Replacing Synthetic Nitrogen: Why We Invested in Pivot Bio
History
Both the process for manufacturing fertilizer and the way in which it is applied to crops largely hasn’t changed in over 100 years. In 1910, German chemist Fritz Haber developed a scaled-up version of the process first discovered by Carl Bosh a few years earlier to produce ammonia (NH3) from atmospheric nitrogen (N2), by reacting it with hydrogen (H2) derived from natural gas. The famed Haber-Bosch synthesis route for ammonia became one of the most meaningful contributions to humanity in the 20th century, leading to increased agricultural productivity for farmers around the world. However, it came at a meaningful cost to our environment and remains a top input cost for most growers.
Environmental Challenge
Today, the global synthetic fertilizer industry is ~$197B/yr, constituted mostly by a handful of cereal crops: corn, wheat, sorghum and rice. Ammonia production consumes 5% of the global natural gas supply and contributes to 7% of global greenhouse gas emissions. In the US alone, synthetic nitrogen fertilizer accounted for 330MT of CO2e in 2018, which is comparable to the emissions of ~70 million passenger vehicles annually.
Despite being one of the largest costs for farmers, second only to seeds, nearly 50% of all fertilizer applied to crops is wasted — either via water-induced runoff or to oxidation and the formation of nitrous oxides. This causes two discrete environmental challenges — first, nitrate runoff causes eutrophication poisoning to critical aqueous ecosystems, contributing to 500+ oceanic dead zones and degrading fresh drinking water sources globally. Second, N2O emissions, which persist 300x longer than CO2 in the atmosphere, contribute over 0.5GtCO2e/yr (growing to 1 gigaton CO2e/yr by mid-century) — a major contributor to climate change.
Pivot Bio has developed a biological alternative that can potentially replace all synthetic nitrogen needs for major row crops, reduce CO2 emissions from ammonia production by 98% and eliminate nitrate runoff, at a fraction of the cost and with reduced logistics complexity.
Technology Megatrend
At G2, we track technology megatrends that have the potential to disrupt traditional industries, including agriculture. Synthetic biology has emerged as one of the most important technologies in this century, leading to genetic engineering, CRISPR and gene editing, and most recently mRNA technology for COVID-19 vaccine development.
Pivot Bio is using synthetic biology to produce proprietary microbes that fix nitrogen from the air into the soil. The microbes attach to the root system (specifically the rhizosphere), feed on sugar-containing root exudate as the energy source, and excrete ammonia, which is immediately available as a source of nitrogen for the plant. Their flagship product, PROVEN, is designed for corn, but the technology can be applied similarly to sorghum, wheat, rice, and soybeans.
Rapid Farmer Adoption
We’ve seen countless startups struggle to sell technology to farmers. While farmers are incredibly savvy entrepreneurs and many are willing to try new technologies, they won’t continue to buy unless there is a rock-solid value proposition — and often companies fail to comprehend the complexity of choices farmers face. We’ve known Karsten Temme, co-founder and CEO of Pivot Bio, for over 4 years, and had deep respect for the science he and his team were developing, but we waited until we saw repeat, year over year, buying behavior from their customers before investing.
In early 2021, as US farmers were buying and applying fertilizer for the upcoming season, we saw the company tripling sales and expanding adoption across more than 1 million acres of farmland. We were also impressed by nearly all of Pivot’s customers buying again and quickly scaling usage across the majority of their acres within just 1–2 years. Growers we spoke with were highly enthusiastic about Pivot Bio’s ability to deliver increased and more predictable yields, enable a reduction in N2 usage eliminating nitrogen runoff and emissions, and offer a sustainable/regenerative option to protect soil health. On top of this, Pivot’s approach saved farmers substantial time and logistics costs re-applying fertilizer later in the season.
Global Impact Potential
We’re excited to be partnering with Karsten and the entire Pivot Bio team to leverage our experience in traditional industries and help them build the next iconic company in agriculture. We also are proud to be co-investing alongside our friends at Breakthrough Energy Ventures, Prelude Ventures, DCVC, Generation Investment Management, Temasek, Continental Grain Company, among others, who all have similar aspirations to support Pivot Bio’s next phase of growth and unlock the potential for global impact in the agricultural sector.
Press Release: https://www.prnewswire.com/news-releases/pivot-bio-raises-430-million-to-replace-synthetic-fertilizers-in-agriculture-301336101.html
