Reduzindo Riscos: Investindo em Biorracionais e Navegando em Cisnes Negros

OUÇA AQUI

Bob Trogele, Independent Board Member, Investor and Entrepreneur of Trogele Energy & Consultancy shares his insights into the why, how, and who for investing or partnering in the ag biorationals space and gives some warnings for common mistakes and pitfalls. Learn how to be a savvy investor by applying careful consideration to five checkpoints. Listen to the podcast to hear this information as well as Trogele’s analysis of the 2024 Black Swans.

*Below is an edited and partial transcript of the podcast

Avoid Biological Companies with these 8 Traits

1. Lack of Focus

Companies that try to get into too many markets too quickly will run out of cash. They don’t link their innovation model to what the market need is, which causes problems for smaller companies.

For the larger entities, can they handle an entrepreneurial culture? In the past several years, we’ve seen a lot of acquisitions by bigger companies. A few years later, what happened to that acquired biological company? Big companies prioritize their investments. If a big business acquires a biological business with a lot of small projects, are they willing to finance those small projects? The answer is usually no. The company is going to finance their big projects, and the biological company won’t progress.

2. Cultural Misfit

When biological companies are brought into a traditional synthetic company, there can be very different views of the industry, investment, markets and so on. Will the culture of the acquired company fit in with the values and mission of the investing company?

3. No Market Access Plan

If a company brings a grower a biorational product, the grower needs education. That takes meetings with farmers. That kind of education and confidence building takes money. Companies have to put salespeople in the field and show the farmer how to use the product.

4. Not Understanding the Biological Business

Do they understand the biological business? Microbes are living organisms. It’s biology. Do they really understand how to manufacture the product and invest in a pipeline? There’s a lot of learning required to bring biologicals to market successfully.

5. Lack of Positive Cash Flow

The company on the sell side has to be a cash flow positive business. Investors in the biorational space are not willing to take the risk on businesses unless they have a positive cash flow.

6. UnRealistic Business Model

Does the biological company have a business model that is going to generate a high adoption rate? What is the business model. Investors need to know all the details.

7. Lack of Product Efficacy

Also, is there proof that the product works? How does the product work? How does the mode of action work? Investors need to understand all of this information.

Five Due Diligence Checkpoints Before Investing or Acquiring a Biological Company

Check out these five categories and questions when considering acquiring or investing into a biological company.

Management Team

Who is the CEO? What is that person’s track record? Have they done this kind of business before?  Have they invested personally or are they just on the receiving end?

Executable Business Model

Is the business model executable? Can they actually implement it? Is it differentiated enough? Is it focused enough?

Financials

Are they cash flow positive? Are they treating the investor’s money like their own money or are they being wasteful? Do they have valuable assets, intellectual property, and revenue? What is the adoption rate for their products?

Intellectual Property

There are a lot of gray areas in intellectual property, do you have protection of your biological product? Did they spend time and money searching to see what they are creating is really protected? Can another company copy what is being produced?

Culture

What is the culture like? How are the salespeople paid? Are you paying them a fixed salary or are you paying them a commission? Do you have real good entrepreneurs inside your sales force? Are they getting incentives for growing the business fast or are you paying them just like anybody else? Do they have an opportunity to get a portion of the business, especially if they’re successful? Are they launching products on a regular basis? Is it a creative environment?  •