When it comes to crops, biologicals are all the rage. Could livestock be next?
Brazil’s Decoy Smart Control certainly thinks so. The Ribeirão Preto, São Paulo-based startup claims it is the first team in the world to develop biological controls to kill pests that affect farm animals – and it has just raised $2 million in funding to commercialize its solution.
“We are living in this moment of transition from chemical-based to bio-based technologies,” says Decoy co-founder and CEO Lucas von Zuben.
“We see this transition from chemical to biological having as big an impact as the one from analog to digital,” he tells AFN. “We are still living through that transition, and digital has opened up endless opportunities to be explored. It’s the same with this transition.”
$19 billion biologicals bonanza
The emerging class of biological crop inputs is designed to do many of the jobs that growers have historically relied on chemicals to do, but more sustainably.
One estimate expects the global market for biological crop inputs to hit $19 billion in value by 2026, up from $11 billion last year. It’s being driven by consumers demanding more sustainably-produced food, as well as farmers and agribusinesses looking to reduce their reliance on increasingly unpredictable supply chains for agrochemicals, which have been severely disrupted by Covid-19 and the Russian invasion of Ukraine.
Startups developing these crop inputs — which include biofertilizers, biopesticides, and biostimulants, among others — collectively raised about $892 million worldwide from investors last year; well over twice the total these solutions secured in 2020.
The biggest biologicals funding deals to date have involved such names as Pivot Bio, which is working on microbial nitrogen fixation technology and scored $430 million for its July 2021 Series D round; while biofertilizer firm Kula Bio bagged $10 million for its seed round in May, following that up with a $50 million Series A haul earlier this year [disclosure: AFN‘s parent company, AgFunder, is an investor in Kula Bio.]
And just this week, Anuvia — another company developing biofertilizers for crop growers and gardeners — announced the close of its $65.5 million Series D round.
“Biocontrols started with crops; people have [recognized] that opportunity. As we have a lot of problems not only in crops but also in animal agriculture, we saw [another] opportunity – and we have found a way to bring this technology to animal health in a way that no-one had before,” von Zuben says.
Tricks for ticks
Von Zuben and co-founder Túlio Nunes both have postdoctoral academic backgrounds in chemical biology. While still working at university in 2015, the duo decided to turn their specialist knowledge of pheromones to practical use by solving some of the animal health problems plaguing Brazilian ag.
First, they sought to tackle the issue of ticks, which can cause blood loss, weight loss, infection, and depression in cattle – as well as reduced milk yield and leather quality. Ticks and their associated effects have been estimated to cost the Brazilian cattle industry as much as $3.24 billion every year.
“Our first idea was to use pheromones to try to control the ticks. We wanted to make a trap to attract the ticks with pheromones, then control them somehow,” Nunes — who is now the company’s chief operating officer — tells AFN.
Ticks are known to emit pheromones to attract mates, broadcast their location to other individuals, and regulate their attachment to the animals they parasitize. Nunes and von Zuben realized the same pheromones could be used as a decoy, ‘tricking’ the ticks into gathering somewhere where they could be more easily and efficiently dispatched.
“We were able to develop technology so we could attract them, but then we had a different problem: how to kill them,” Nunes says. “And that’s when we decided to use a biocontrol.”
While it’s where the ‘Decoy’ in the company’s name comes from, von Zuben and Nunes eventually decided to drop the pheromone component altogether; the cows had no problem in attracting ticks, after all. What was really needed was the pest control solution by itself.
The biocontrol they’ve developed uses two species of fungi that are lethal to ticks but harmless to cattle, humans, and the environment. It is supplied in the form of a liquid solution that is sprayed onto cattle, as well as the fields they live in.
“This way we can control the population of ticks in the environment, as only 5% of ticks [in a given area] are actually on the cattle; 95% are on the field,” Nunes explains.
“Each bottle of our product has billions of spores,” von Zuben adds. “You dilute the content of this bottle in water, and spray it over animals and fields; the spores attach to the ticks, develop, kill the ticks, and make more spores, which find other ticks. So it has a chain effect.”
This dual-mode of application underlines one of the key advantages that biological inputs can have over their chemical counterparts. The types of chemicals used to control pests are toxic — that’s how they work — but not only to the bugs or parasites they’re targeted at, meaning that runoff can cause environmental problems and put livestock, wildlife, and humans in harm’s way. Residues from these chemicals can also make their way into meat and milk products.
Another increasingly common problem with chemical-based solutions is that pests are acquiring resistance to them, rendering them less effective and pushing farmers to use them in greater — and potentially more harmful — quantities, von Zuben adds.
The co-founders say that the product has been tested on over 100,000 animals across 800 properties in their region of Brazil.
“This was very important to us because the farmers helped us to develop our product. They gave us a lot of feedback to incorporate, so they are really partners in the development of this product,” Nunes says.
These partnerships with farmers have also enabled Decoy to monetize the product while it awaits regulatory approval for a full commercial launch.
“We offer for them to be a part of our research, and make an agreement [to the effect that] ‘you use the tech, give us the data, and if you like it, you can give us some money to keep running the research,’” von Zuben explains.
This traction, plus the positive response from cattle farmers, has attracted the attention of investors. Decoy’s seed round was led by São Paulo City-based agrifood VC firm SP Ventures, with participation from the venture arm of Brazilian animal health company Farmabase.
Decoy Smart Control aims to launch the cattle tick treatment next year, pending regulatory clearance from the Brazilian authorities.
Other tropical cattle markets, such as Australia and India, could be expansion targets for the future. In the meantime, Decoy is starting work on new product lines.
“We’re working on our portfolio. We’re looking at other problems in animal health: dog ticks, fleas — so pet products — and we are developing products for poultry,” Nunes says.
“We see other opportunities as well; in the same way we brought this tech from [crop] agriculture to animal health, we see lots of other areas for biological controls – from domestic products to the plants on your apartment balcony.”