From AgFunder, October 29:
Bayer Growth Ventures: What We Don’t Know Yet
**UPDATED October 31, 13:51 ET: Adds Board Seat representation details that Bayer had not disclosed when AgFunderNews first went to press.
If you talk to new Bayer employees, the relief that the long journey to the acquisition of Monsanto is over is slightly overshadowed by the wide-eyed anticipation of the years of integration work yet to come. Details are few and subject to change across the board.Venture capital at Bayer Crop Science, which has until now focused mainly on investing in external funds, is just beginning to firm up with the creation of Bayer Growth Ventures (BGV) — a venture capital investment office under the umbrella of Leaps by Bayer, the company’s existing venture outfit. The name is a copy of Monsanto’s well-established venture arm: Monsanto Growth Ventures (MGV).BGV will invest much like MGV did, which was very similar to a traditional venue office investing smaller check sizes in relatively early rounds, and occasionally leading later-stage rounds. One notable counterexample is Monsanto’s investment in Pairwise, an independent gene-editing startup that the MGV team built internally, though it was not the sole funder.We spoke to interim head of BGV Jürgen Eckhardt, a longtime venture capitalist focused on life sciences, to find out more about the company’s new approach to venture capital. But one thing that remains unclear is the fate of MGV’s portfolio.Board Seats and Follow-OnsThe potential for BGV to invest in the future funding rounds of its existing MGV portfolio — called follow-ons — was called into question after BGV was noticeably absent from the $70 million Series B round of microbial crop inputs company Pivot Bio earlier this month. Billionaire-backed clean energy fund Breakthrough Energy Ventures led the round alongside Singapore state fund Temasek. Some commentators wondered if Bayer’s microbe-focused joint venture Joyn Bio would create a conflict. Eckhardt responded to say: “We don’t necessarily divulge every detail of our investments. Bayer Growth Ventures supports both Joyn and Pivot, as they each are pursuing important innovation for the agricultural industry.”There was uncertainty around the uptake of board directorships at MGV portfolio companies after the team of MGV — Kiersten Stead, John Hamer, and Ryan Rakestraw — recently stepped down from their board seats in the wake of the closed deal. When they left MGV a few months ago, the plan was for them to continue to manage the portfolio and retain their seats — often board members will manage out their portfolio to provide continuity for the startups — but the plan clearly changed.Bayer has now confirmed that replacements have been found for each portfolio company. They are as follows:
Company Location Board Role BGV Board Representation Arvegenix St. Louis, MO Director Jak Knowles Atomwise San Francisco, CA Director Axel Bouchon Resson Fredrickton, NB, Canada Director Axel Bouchon Understory Madison, WI Director Axel Bouchon FarmLead Ottawa, Ontario, Canada Director Juergen Eckhardt Pairwise RTP, NC Director Juergen Eckhardt Plant Response Madrid, Spain Director Juergen Eckhardt AgBiome RTP, NC Observer Lucio Iannone Pivot Bio Emeryville, CA Observer Jak Knowles NewLeaf St, Louis, MO Observer Jak Knowles A notable change is that BGV no longer has a board director role at Pivot Bio, AgBiome or NewLeaf.Karsten Temme, CEO of PivotBio told AgFunderNews: “We haven’t disclosed the participants of our Series B outside of Breakthrough and Temasek. We did disclose that our board composition changed and does not include a BGV representative.”
DOJ Stipulations
Eckhardt told AgFunderNews that no deal was off the table, which is an important detail since the Final Proposed Judgement regarding the Bayer-Monsanto deal, as released by the US Department of Justice, threw up another uncertainty for the future of MGV’s portfolio. The Judgement made several stipulations that could interfere with existing and future venture investments at the newly-merged company, essentially ordering Bayer, for the next 10 years, to notify the US Department of Justice 30 days in advance if it intends to “directly or indirectly acquire a financial interest … in any company that researches, develops, manufactures, or sells digital agriculture products or soybean, cotton, canola, or corn seeds or traits.”Eckhardt told AgFunderNews that this fact will not hinder investments in any technology category.“Obviously we will follow the guidance of the DoJ if and when we invest in such an area. On first sight, it looks like this is absolutely doable… In my 16 years of venture capital, I’ve never seen a round close faster than 30 days,” he said with a laugh.Rob Leclerc, CEO of AgFunder, is less sure about what the ruling means.“Agriculture may not be like other industries and we already saw the DoJ reject the sale of Precision Planting from Monsanto to John Deere last year. It will be interesting to see how the DoJ reacts. If the DoJ restricts Bayer and BGV from investing in and acquiring agtech startups, Bayer could quickly lose its leadership position in digital agriculture.”
What We Do Know
Bayer CropScience CEO Liam Condon said in June that the shape of venture capital in the newly integrated company was a “hotly debated topic” internally, and it wasn’t clear initially which direction the company would take....MUCH MORE
*Roundup "probably" doesn't cause cancer but Monsanto left itself open to lawsuit risk because of the corporate culture that intentionally kept information about glyphosate's potential harms from the public.
Additionally, the initial jury award was reduced by $200 million in October but there is still a lot of exposure for Bayer.
Bayer reports their numbers tomorrow and I'm sure will have some comments:
News Conference Call
Investor Conference Call
