Biocontrol Technologies

MainImage

52,066.86€

Invested of 300,000.00€

Focused on the discovery, development, registration, production and distribution of biofungicides to control plant diseases

Finish date: 31/01/2017 Barcelona
biocontrol-technologies62

Premoney valuation

8,250,000.00€

Percentage offered

4.00%

Est. ROI

245%

Exit horizon

2020

The project

Biocontrol Technologies, S.L. is a company focused on the discovery, development, registration, production and distribution of naturally occurring microorganisms that are used as biocontrol agents against crop diseases.

It was established in 2004 as a University of Barcelona spin-off company from a patent of the microorganism Trichoderma asperellum strain T34 . The company holds an exclusive worldwide license to exploit such patent.

Since 2004, the company has developed different products varieties from the patent, being the product T34 Biocontrol® the key product.

The product is innovative in the control of plant disease, it are highly effective and help to keep the optimum health of the crop.

The company is looking for expanding the use of the product in most of the countries of the world, adapting it to different crops and needs (intensive, extensive, seed treatment, substrates inoculation, home and garden use, etc.)

 

Business opportunity

The problem to solve.

Plant diseases cause important yield reduction worldwide, and crop protection measures consist mostly on chemical pesticides. One of the main challenges of the 21st century, in agriculture, is to find effective strategies to minimise pesticide impact and risks, and also to reduce pesticide residues in food. Of some 1000 active substances (and tens of thousands of products containing them) on the market before 1993, only 26% have passed the harmonised EU safety assessment, due to the undesirable effects on ozone depletion, loss of biodiversity, cancer, endocrine and neurological disruptions. Nowadays growers do not have enough sustainable, efficient and cost-effective tools to control crop diseases. Moreover, the European Commission (EC) established a framework to implement (2014) a sustainable use of pesticides, through Integrated Pest Management (IPM). It emphasises the use of biological control as the main solution, environment forecasts, resistant plant varieties, etc, being chemicals the last choice if no other solution exist. Biocontrol Technologies with the product T34 Biocontrol will contribute to solve this problem. 

 

Problem

Biocontrol Technologies solution /opportunities

Growers and consumers demand safer and efficient products to treat crops and that comply with the regulations in EU and USA (local growers and exporters to these markets)

The company has the EU and USA authorisation of an efficient active substance (Trichoderma asperellum, strain T34), a sustainable bio-pesticide to control plant diseases.

The lack of registered bio-pesticides in the EU (around 40) and not for all crops and diseases

T34 Biocontrol has proved its efficacy again many diseases of many crops in several countries where is is commercialized (Egypt, USA, UK...). One of the aim of the company is to extend the number of crops and diseases where the product is authorized.

Biological products mostly used in greenhouse and to less extent in intensive and extensive field crops.

The product T34 Biocontrol, already in the market, target intensive high value crops but the company is developing new formulations to reach  field extensive crops, where there is very limited biological solutions available.

The implementation in Europe of maximum residue limits (MRL) in food for each pesticide

Microbial agents like T. asperellum, T34 have been recently proved to be exempt of residues (no MRLs).

 

 

 

Investment & Exit

The company is looking for 300,000 euros that will be used for four projects (see the graph)

 

 PRE-MONEY VALUE OF THE COMPANY

In accordance with the sales forecast expressed in the distribution agreements and including other countries where the company is negotiating a contract or is looking for distributors, the future cash-flow have been calculated, taking the next assumptions: 

Annual discount rate for 2016-2025 free cash flows 20%
Annual discount rate from 2026 onward free cash flows 10%
Annual cash flow growth rate from 2025 onwards 2%

The previous assumptions gives to the company a value of 12.7 Millon Euros and after deducting the debt (1 M Euros), the post-money value of the company is 11.7 Million Euros. Assuming that to achieve the sales forecasts the company need to invest 1 Million Euros, the pre-money value is 10.7 Million Euros. 

The current funding round is to raise 300,000 Euros. To promote the participation of many investors and given the minority participation offered and the willing of the company to close this round ina short time, the company offers a pre-money value of 8.25 M de Euros to the investors that commit to participate during the pre-campaign.  For the investors that decide to participate once the round have been launched the pre-money value will be 9.25 M Euros. Then, for the ones that invest during the pre-campaign will get a discount of 23% and the ones that invest during the campaign will get a discount of 15% from the 10.7M Euros calculated using the future free cash flows.

 

PROFITABILITY OF THE INVESTMENT AND EXIT

The company is seeking to offer a high profitability for the investors that bet for the company, in this regard four non excluding scenarios are considered:

  • Distribute between the 20 and 40% of the profits to the shareholders through dividends starting at 2020:  offer to the investors a return on the investment, creating value and making attractive to stay in the company. 
  • Buyout of shares: operation made by the company or by the founders, who are willing to promote company's growth and are open to increase the number of shares directly controlled by them. 
  • IPO to the Alternative Equity Market: bet to make the company to grow, increase its visibility and offer an exit to the investors selling their shares in the market.  The company will analyze where to make the Initial Public Offer, in Spain or abroad. 
  • Sell Biocontrol Technologies to one of the major players of the sector: many multinational groups may have interest to acquire a company which have developed a biofungicide product already authorized and with growing sales.  The pesticides markes is living a consolidation process wiht many operation at this moment. 

REASONS TO INVEST IN BIOCONTROL TECHNOLOGIES:

Drivers

 

Francesc Peremiquel

Administrator and founding partner

PhD in Architecture by the Universitat Politàcnica de Catalunya (UPC). 

Urbanism professor in theUPC. Long academic career as professor and researcher.

Agricultural businessman. Long career in technical consulting, contruction and real state promotion. Several high officer positions in the urbanism department of the City Hall of Badalona. Expert on project management and planning. 

Eduard Fernando

General Manager

Degree in Economics by Universitat Pompeu Fabra and Master degree in economic and business Internacionalization by the Universitat de Barcelona.

Experience in business internacionalization and project and associations management.

He joined the company in 2015.

Maria Isabel Trillas

Scientific Advisor, T34 inventor and fouding partner

Master of Science (Phytopatology) Ohio State University. PhD in Biology by the Universitat de Barcelona (UB).

Professor at the Universitat de Barcelona. 30 years experience teaching plant fisiology and phytopathology. Research focused on the biological control of plant diseases. Author of many papers in scientific publications on this topic. Extensive experience in managing competitve reasearch groups.

Joel Buxeda

Company's attorney and partner

Degree in Law by the Universitat de Barcelona and Juris Doctorate in Business and Corporate Law (Nova Southeastern University, USA)

More than 10 years of experience in corporate and commercial law. Florida, New Jersey (USA) and Barcelona bar member. 

Attorney at Law in Anglès Buxeda Advocats SLP since 2011.

In 2013 he started to work with the company and become a partner in 2016.

Eva Casanova

Regulatory Affairs responsible and founding partner

PhD in Biology by the Universitat de Barcelona (UB)

Author of several papers in scientific publications on the field of plant fisiology, plant phytopathology and microorganism - plants interactions. Extensive experience in the preparation of the documentation needed to get the authorization of a plant protection product. Also in the management of efficacy field trials with biological and chemical products. 

José Pedro Sánchez

Sales Manager

Degree in Agricultural Chemistry by the Universidad de Almería.

More than 15 year fo expetrience coordinatig agricutural advisors teams. 

Follow up of the product in the field, technical assistance, product's promotion, market research and evaluation of the competition. Expert in the management of the product and in charge of training the technical staff of the distributors. 

He joined the company in 2008.

Rosa Maria Noguera

Quality Control and R+D support

Agriculture Technical Engineering by the Universitat Politècnica de Catalunya

Experience as an agricultural advisor and in managing efficacy studies for the evaluation of chemical and biological products. 

She joined the company at 2006.

Manuel Avilés

Scientific advisor and founding partner

PhD in Chemistry by the Universidad de Sevilla (USE).

Professor at the USE, more than 25 years of experience in teaching phytopathology and researching about biological and chemical control of plant diseases.   

Author of several papers on this field in different international publications. 

 

Partners & Associates

Besides the partners descrived in the previous point, a key partner for the company is the University of Barcelona:

 

University of Barcelona

The company is an spin-off of the University of Barcelona because it was founded to develop a patent owned by the University after receiving an exclusive licence to develop it. 

The University, through the company  "Cultura Innovadora i Científica UB, S.L.U" is also one of the founding partners of the company, controlling at this moment the 2.4% of the shares.

The "Fundació Bosch i Gimpera" is a foundation of the UB dedicated to the promotion of entrepreneurship among researchers and professors and facilitate technological transmission from the university to businesses and society. The University delegates its representation in the partners meetings to the Foundation who is in charge of follow-up the spin-offs of the university. 

 

Other collaborators:

The law firm ANGLÈS BUXEDA, linked with the partner and company's attorney Mr. Joel Buxeda, is in charge of legal assitance of the society in a corporate and commercial level. 
ABANTE PICH AUDITORES is a firm that until 2015 have been in charge of revising and make the audit of the financial statements of the company.  Besides that, they have advised the company in the elaboration of its accounting. Mr. Antonio Puig, partner-accounts auditor, has leaded the audits to the company.
Since the end of 2015 MITANNI is the firm that prepares the accounting of the company and aslo acts as fiscal advisor. Mr. Lluis Mansilla. is the accountant of the company.
The firm leaded by Mr. Valentí Pich is in charge of the labour contracts and the taxes related to it. 
WAGNER is an American consulting firm located in Delawere specialized in the registration of plant protection products in the USA and Canada. WAGNER advise the company in the submission of the documentation and with the talks with the EPA (Environmental Protection Agency).
RATIONALE is a British consulting firm specialized in the registration of biological plant protection products in the European Union member states. It is leaded by Dr. Roma Gwynn, who has an extensive experience and she is well recognised by the sector. 
AGR is a French consulting firm  managed by Mr. Bernard Charlot. Mr. Charlot has been involved in the pesticides industry for more than 40 years with several responsabilities, including being the President of Syngenta France. AGR advise the company to find new partners and distributors worldwide. 
DEYGEST is a Catalan company dedicated to the production and commercialization of plants protection and nutrition products environmentally friendly. DEYGEST collaborates with the company to introduce its products in the Middle East, where DEYGEST has an extensive experience. 

 

DISTRIBUTORS:

Los distribuidores son los encargados de comercializar el producto en primera persona, por este motivo son un aliado natural e imprescindible para el éxito de la empresa, la empresa cuenta en la actualidad con contratos de distribución para diferentes países con los siguientes distribuidores:

INDUSTRIAS QUIMICAS DEL VALLÉS 

IQV belongs to the business group MAT Holding, which operates in the plant-protection and water industries. Since 1935 they provide farm owners the most effective and sustainable solutions for protecting their crops. IQV has become a leading global producer of fungicides for agricultural use, with an established presence in over 55 countries on all 6 continents. With two production plants in Spain, one in Mollet del Vallés (Barcelona) and another in Cheste (Valencia), the company have the capacity to produce 30,000 tonnes of copper-based active technical ingredients a year, as well as 30,000 tonnes of formulations for both own-brand packaging and that of other industry companies. IQV AGRO is the exclusive distributor of the product in Spain, Italy and Portugal and it is the first biological product that includes in its porfolio. 

KWIZDA AGRO

The Kwizda corporate group has a leading market position in industry and trade in the field of life sciences in Austria and its neighboring countries. The cornerstone of the company’s success is its consistent focus on pioneering technology that makes it possible to repeatedly set new standards on the market. In this sense, this is a pioneer company in Austrian pest management. Since 1926, they have decisively helped to shape the development of modern pest management in Eastern Europe with lots of knowledge and commitment. KWIZDA is distributing Biocontrol Technologies products in Hungary, Poland, Greece, Romania, Bulgaria, Austria, Croatia, Slovenia, Slovakia, Czech Republic, Montenegro, Bosnia Hercegovina, Albania, Macedonia and Serbia. With KWIZDA the company is working to develop new products based on T34. 

BIOBEST

As the first company ever to commercially supply bumblebees in 1987, Biobest continue to lead the way in bumblebee pollination. Based in Belgium, this company offers more bumblebee species to deal with pollination needs in various parts of the world than any other supplier does. In addition, Biobest is a leader in natural crop care systems: they make a strong first line of defense in Integrated Pest Management as natural pollination goes hand in hand with biological control of pests and diseases. BIOBEST is the distributor of the company in France, Belgium, Netherlands, Denmark, Germany, Poland, USA and Canada. BIOBEST covers well the high value crops. 

FARGRO

Fargro Ltd is a horticultural distributor based in Arundel, West Sussex (United Kingdom). They are a leading distributor and supplier of exclusive horticultural products including agrochemicals, niche hardware and machinery products. Their network of distributors both in the UK and Ireland ensure that products are represented on a British Islands. FARGRO distributes the T34 Biocontrol in UK and Ireland and it was the first distributor to sign an agreement with the company.

SHOURA

Shoura Chemicals originally known as ‘Tawkilat’ is the leading agrochemicals company in Egypt. It is currently the primary distributor and representative of leading multi-national agrochemical companies. The company deals with more than 150 products; namely pesticides, fertilizers, industrial chemicals, growth regulators, as well as a new seeds division. Having established a massive customer base in Egypt, Shoura Chemicals added a technical support unit to investigate and offer necessary solutions for all the farmers' needs. T34 Biocontrol was the first biofungicide that SHOURA incorporated in its portfolio in 2014.

FRANCISCO BELMONTE

He is a professional with an extensive experience in the market of agriculture insumes. He had been Sales Director  of PROBELTE, Spanish manufacturing company fo plant protection products, having a pharma and an biotechnology division. He promoted chemical as well as biological products for the control of plant diseases. He is the representative of the company in Dominican Republic where he is established since he retired. 

 

Besides the mentioned distributors the company is currently negotiation distribution agreements for countries like Kenya, Peru, Chile, Mexico, Turkey, Tunisia or Morocco. 

 

MANUFACTURERS

The company is working at this time with three European manufacturers specialized in the production of plant protection products based on microorganisms. We prefer to keep their names confidential. The three companies can assure the supply of the product in enough quantities to cover the demand for the next years. 

Product/Service

T34 Biocontrol® is highly effective against a wide range of diseases. It supports the plants in developing its defenses which will protect it from future pathogens. In addition, helps the plant to take advantage of the soil resources, which improve plant’s health and accelerate its growth, increasing the yield of the crops and the size of the fruits. The product is already commercialized in Egypt, USA and UK. The summer 2016 the sales permit was achieved for France, Belgium and Netherlands and before the end of the year will be granted for Spain, Portugal and Italy. From 2007 to 2010 was also commercialized in Spain with a provisional permit.

 

ADVANATGES OF T34 BIOCONTROL

  • High protection in front of many plant diseases, mainly soil diseases, but also foliar ones (preventive and curative effect), proven efficacy similar to chemical products. 
  • Growth promotion effect for plants and roots, it increases the yield and the profitability of the crops.
  • Easy application, due to the formulation (easy to suspend in water and to apply), no LMR, it can be applied close to harvest. 
  • Recomended product for Integrated Pest Management (IPM) programmes and for biological agriculture.
  • Safety for human and animal health with no chemical residues on plants or fruits.
  • T34 has no negative effects on non-target organisms (arthropods, bees, earthworms, Daphnia, Lemma and fishes) and allows the re-establishment of the microbial equilibrium in agro ecosystems.

DISEASES AND CROPS

In the chart below you can see the diseases and crops where we have proved the efficacy of the product:

 

Diseases

Crops

Soil diseases

Fusarium oxysporum

Tomato and ornamental crops (carnation, cyclamen, …), pine trees

Rhizoctonia  spp.

Cucumbert, turf and potato

Sclerotinia spp.

Lettuce, sunflower, onion and garlic

Pythium spp.

Cucumber, tomato, pepper and pansies

Macrophomina spp.

Strawberries

Phytophthora spp.

Strawberries and pepper

Ralstonia solanacearum

Tomato

Leptosphaeria

Sunflower

Erwinia

Poinsettia

Gibberella fujikuroi

Rice

Cephalosporium Sphacelotheca

Maize

Foliar diseases

Botrytis cinerea

Grapes, strawberries and tomato

Pyricularia oryzae

Burkholderia glumaee

Rice

Didymella bryoniae

 

Melon, watermelon and cucumber

 

Market

Biopesticides market represents around 3% of the global market of pesticides nowadays, an small market share with a high potential according to all the studies, with a double digit growth for the next years. The biopesticides market growth is explained by the regulatory changes that are increasing the quality and safety standards regarding residues, the respect for environment and human health. Another explanation is the increasing demand from growers and consumers for environmentally friendly products (ecological fruits and vegetables) and effective solutions that respect the environment.

Marketing & sales

Biocontrol Tehcnologies core business is the development of microbial solutions to control plant disease. The commercialisation strategy is to find leading national/multinational distribution companies in each market to commercialize the products, the chosen distributors should have large commercial teams and experience in agriculture inputs. BIOC provides all technical information of the product (promotion campaigns) to assure the proper dissemination of this technical product and organizes training for the field commercial agents. These strategies are very well accepted by distributors and growers. In the table below it is showed the characteristics of targeted distributors in different markets:

  • Large chemical companies: good market share, good presence in different territories around the world, good teams to understand new product and with a wide experience in pesticides market.
  • Middle size/regional chemical companies: good market share in certain areas, specialization in specific market segments, good distribution network and teams with a good knowledge of the market. 
  • Biocontrol companies: different sizes companies leading the distribution of biological solutions for specific segments.
  • National/Regional agricultural inputs companies: solvent, with a wide distribution experience and a good control of direct sales. These companies include a wide portfolio of products besides plant protection products like fertilizers or other agriculture inputs. 

In the chart below there is a map with the current distributors of the Company (dark green countries), we also include the countries where there is at least one distributor interested or the agreement is in discussion (light green countries) and in yellow places where the company is planning to take actions in the near future to find a distributor:

 

Roadmap

The Strategic Plan si summarized below:

The 300,000 Euros raised in this round will be invested in Objective 1 and 2 of the Strategic Plan. This amount coverns the funding needed for the year 2017. The funds needed to complete Objective 2 will come from the sales of the company, from grants (SME Instrument for instance), from public loans (CDTI, ENISA...) and from a possible second funding round in one or two years.

The Objective 3 is a project already started together with one of the distributors and manufacturer, we expect to launch a new granule formulation soon.  In addition, we are working with a seed company to apply T34 directly on seeds. 

The Objective 4 has also started. The current phase is based on screening. Starting from a microorganism collection built by the company in the last year, the microorganisms are being classified and analyzed to see which ones have a potential to become a plant protection products. Depending on the development chosen (as a plant protection product, as a plant growth promoter or as a fertilizer)  the funding needed to complete this project will be different but for sure it will requiere mucho more investment. 

The Objetivo 5 will be implemented in 2017 when the company will change the governance system going from an Administrator to a Board of Directors including independent board members that can contribute from another perspective to the definition of future strategies.  

Regarding the staff structure, also in 2017 the company plans to strenghten the organization in different lines: 

  • Sales Department: to cover fairs and international events and also support the distributors networks and follow up the sales. Really related with Objetive 1.
  • Regulatory Affairs Department: in each new market where the company wants to introduce the product it is a must to submitt an application to get the authorization and sales permit, strengthening this department will allow the company to speed up the submission of applications and the introduction of the product in the market. 
  • Administration Department: with the aim distribute the tasks better and have everyone focused on their tasks. 
  • R+D and Quality Control: to be able to attend the increase in sales (more number of quality controls of the product) and to perform and control the trials needed to reach Objective 2 and accelerate Objetives 3 and 4.

 

Forecast

Financials

PROFITS & LOSSES 2013 - 2015:

  • From 2013 to 2015 Biocontrol is focused to get authorisations and sales permits to be able to commercialize the product.
  • Biocontrol Technologies turnover (ingresos) show an  strong growth in the last three years (CARG 20,72%) because of the first sales permits achieved in some markets and because of the entrance into distribution agreements.
  • The EBITDA also shows a positive trend in the last years, reaching €209k in 2015, a 40% higher than in 2013, representing a 37% of the sales, the company is profitable despite the reduced number of sales
  • The amortization refllects the R+D expenses related with the main activity of the company, and during the last two years, even after including the amortizations and the financial expenses, the company is capable to have a positive result.

 

BLANCE SHEET 2013 - 2015:

  • The Fixed Assets (Activo no corriente) maily includes the intangible asset based on the R+D made (personnel, trials, patents development...).
  • The deferred income tax assets (Activos por impuestos diferidos) are linked with the losses of previous years (before 2014) that will be deducted from future profits. 
  • The stocks (Existencias) are low because the company orders the product to the manufacturer once receive the order from the distributor, reducing the time that it keeps the product in the warehouse.
  • The clients (Clientes por ventas y prestaciones de servicios) are the distributors that own money to the company and that will pay the given invoices as agreed in ther payment terms.
  • The equity (Patrimonio Neto) reflects a negative figure because it is not included the amounts corresponding to the participative loan that are considered as Equity when analyzing the solvency of the company. 
  • The suppliers and creditors (proveedores y creditores) are the normal ones in a 
  • The financial debt is linked with the development of the product since the beginning of the company and are maily soft loans from public entities and a particicipative loan from UNIFORNOD I+D. 

Investment details

PRE-MONEY VALUE OF THE COMPANY

In accordance with the sales forecast expressed in the distribution agreements and including other countries where the company is negotiating a contract or is looking for distributors, the future cash-flow have been calculated, taking the next assumptions: 

Annual discount rate for 2016-2025 free cash flows 20%
Annual discount rate from 2026 onward free cash flows 10%
Annual cash flow growth rate from 2025 onwards 2%

The previous assumptions gives to the company a value of 12.7 Millon Euros and after deducting the debt (1 M Euros), the post-money value of the company is 11.7 Million Euros. Assuming that to achieve the sales forecasts the company need to invest 1 Million Euros, the pre-money value is 10.7 Million Euros. 

The current funding round is to raise 300,000 Euros. To promote the participation of many investors and given the minority participation offered and the willing of the company to close this round ine the next months, the company offers a  pre-money value of 8.25 M de Euros to the investors that commit to participate during the pre-campaign.  For the investors that decide to participate once the round have been launched the pre-money value will be 9.25 M Euros. Then, for the ones that invest during the pre-campaign will get a discount of 23% and the ones that invest during the campaign will get a discount of 15% from the 10.7M Euros calculated using the future free cash flows.

Exit details

PROFITABILITY OF THE INVESTMENT AND EXIT

The company is seeking to offer a high profitability for the investors that bet for the company, in this regard four non excluding scenarios are considered:

  • Distribute between the 20 and 40% of the profits to the shareholders through dividends starting at 2020.

 The company will be able to generate a free cash flow in the next years and the willing of the current mainly partners is to distribute a fraction of the net profits among the shareholders. 

  • Buyout of shares by founding partners or by the company itself. 

Founding partners, and specially Dr. Peremiquel and Dr. Trillas, are willing to keep their shares of the company for a long period and work to make the company a leader in developing biological solutions to control crop diseases. In this regard, they will study the possibility to buyout the shares of the investors willing to exit from 2020 on. They will also consider to buy the shares directly.

  • IPO to the Alternative Equity Market.

An option to give visibility to the company, get more funds and give an option to exit to the investors in the moment that the Initial Public Offer (IPO) will take place. The company will analyze the best moment to make this move and the country where it should be done. It will be important to have completed most of the Strategic Plan. 

  • Sell Biocontrol Technologies to one of the major players of the sector.

Only a few companies are capable to develop a plant protection product from the patent to the commercialization, many spin-off are sold in previous stages of development. Biocontrol Technologies has kept its independence and is willing to do so in the future but many multinational groups of the pesticides sector may be interestes to acquiere a company like Biocontrol. Biopestices market is growing fast and it can be attractive to add to a portfolia a registered product as T34 Biocontrol. The pesticides markes is living a consolidation process wiht many operation in the recent times. 

Most important operations in the recent years:

REASONS TO INVEST IN THE COMPANY: