Nicky Deasy is Co-Founder and former Managing Partner at The Yield Lab Europe, one of the largest early-stage venture capital funds in the EU focused on the intersection of sustainability and agtech. Since stepping back from the day-to-day running of the fund, she is an Investment Committee Member at biotope by VIB, as well as advising a number of startups and investment funds focused on improving the environmental and carbon footprint of the agrifood industry. She shares her thoughts on how innovative ag- and food-tech startups can help us tackle climate change.
By Amy LeBlanc. Header image: Nicky Deasy.
Q: What are the big sustainability challenges you’re passionate about addressing?
Nicky Deasy: “Our modern agricultural systems are hugely problematic for the future of both humanity and the natural world. People look at rolling fields of crops, or green fields with happy cows munching grass, and it looks natural and wholesome. But in reality, our fields are ‘green deserts’: monocultures full of chemicals, with little biodiversity, and farm animals are contributing significantly to climate change and biodiversity loss. It is estimated that 70% of all farmland is used to grow crops that are used to feed farm animals, and these crops require a lot of chemical fertilizers and pesticides to produce, and consume a lot of water. These fields provide no suitable environment for the natural world, and are largely devoid of wildlife, insects and biodiversity.
“There are a lot of aspects of our current agricultural systems that are problematic, including heavy use of fresh water and harmful chemicals like pesticides and nitrogen fertilizers, which run off into rivers and groundwater, causing eutrophication, damage to wildlife, and issues in drinking water. Fertilizers and manure on fields create nitrous oxide emissions, and ruminant animals like cows and sheep emit methane – both far more warming greenhouse gases than carbon dioxide – 320 and 86 times more warming than CO2, respectively. Unfortunately, current incentives for farmers mean that there’s often little incentive to change in the sector. Our systems are designed to produce cheap, safe, plentiful food while neglecting the long-term consequences for the environment.
“We urgently need to change our methods and transition from legacy solutions to more sustainable agricultural practices, which is where I believe next-generation biotech innovations have a huge role to play.” – Nicky Deasy
“But this system won’t serve anybody well in the long run: if we continue employing these unsustainable practices, food will inevitably become a lot scarcer and more expensive, because climate change will result in large parts of the world becoming unsuitable for agricultural purposes. Just these past two years, there has been widespread drought in the US, heatwaves, and massive flooding in Pakistan and Europe. We’re going to see more of these types of volatile, extreme weather events in the future as climate change worsens, which will put pressure on our global food systems. In addition, we have an obesity and health epidemic which places a huge burden on public healthcare systems, much of it caused by poor diets. And farmers struggle with low incomes, long hours, health and safety issues, high debt burdens, problems sourcing labor, high risks from failed harvests (which will only increase with more extreme weather events), and low returns on capital. We urgently need to change our methods and transition from legacy solutions to more sustainable agricultural practices, which is where I believe next-generation biotech innovations have a huge role to play.”
Q: What are some of the specific hurdles that need to be overcome in the agrifood industry?
Nicky Deasy: “There are essentially two main issues blocking progress: cost and yield. There has been an erosion of farmer incomes over the past 30 to 40 years, which are now very low. The profit margins for farmers – as well as for food companies and retailers – are very thin. This is a problem for startups attempting to bring new technologies to market, because they struggle severely with the price point. If a farmer has two cows and feeds one a standard, cheap diet which results in say 1 ton of methane, and feeds the other a specialized diet that results in 30% less methane but which costs the farmer more, that farmer gets paid the same for the output of both cows. There’s no financial incentive for the farmer to pick the greener option. New solutions are usually more expensive, making it hard for the farmer to justify using the pricier product. And therein lies the challenge: who is going to pay the farmer to adopt more sustainable methods?
“We need further innovation in the agricultural sector to overcome these performance challenges, if next generation technologies are to be deployed at scale.” – Nicky Deasy
“The other major issue concerns yield. We need to be able to produce enough food to feed a growing world population of 8 billion people, and unfortunately many sustainable solutions struggle to compete with older products in terms of the sheer amount of food produced. Take insecticides, for example: it is better for the environment if you refrain from spraying a field and killing beneficial bugs, but if you don’t protect your plants from insect pests, then you lose on average up to 25% of the harvest. The same applies to other crop protection products which prevent crop diseases. Likewise with chemical fertilizer: we know it causes problems with water eutrophication and nitrous oxide emissions, but it has a major impact on crop yields. We need further innovation in the agricultural sector to overcome these performance challenges, if next generation technologies are to be deployed at scale.”
Q: What role do early-stage biotech startups have to play in tackling these issues?
Nicky Deasy: “The main role for these startups is to inject the next generation of technologies into the agrifood industry. There has been huge consolidation in this sector over the past 30 years,. As a results of all of this M&A activity, the percentage of revenue that is spent on R&D has fallen over that period, and the R&D that takes place within the large corporates is often focused on incremental improvements to existing core technology platforms, rather than creating something truly new.
“Biotech startups are uniquely positioned in having the speed, flexibility, and drive to foster the truly disruptive innovations we need to tackle climate change.” – Nicky Deasy
“This is why entrepreneurs are so essential: because these are the people in the ecosystem who are coming up with the genuinely novel ideas, and who have the expertise in their particular domain to be able to push the envelope on really cutting-edge science. Startups also have lower overheads and more internal flexibility, which means they can move a lot faster than large companies, and with lower costs. Biotech startups are uniquely positioned in having the speed, flexibility, and drive to foster the truly disruptive innovations we need to tackle climate change.”
Q: What are some of the specific challenges that early-stage biotech startups in the agrifood space are facing?
Nicky Deasy: “The main problems for startups are usually regulatory and funding. The regulatory process is often very slow with agriculture. Plants and animals simply take a certain amount of time to grow, which means experiments and field trials are long, and many things can go wrong which are outside your control. And if your end product is going to be eaten, the safety regulations are stringent. But, as we’ve seen with the COVID-19 pandemic, there are ways of speeding up the regulatory process without cutting corners. I think we really need to accelerate this process, to get solutions to market faster.
“Agrifood startups also often have a hard time raising funds. It is challenging to get investors to back your idea if it is going to take a long time and cost a lot of money to validate your technology. Biotech incubators like biotope can really help startups overcome this hurdle: they can help startup teams develop a business plan and build enough proof-of-concept to attract investors.”
Q: What are some of the other ways in which incubators can help these startups?
Nicky Deasy: “One of the big advantages of being part of an incubator like biotope by VIB is that you’re immersed in an ecosystem of people who have the expertise and industry connections you need to succeed. The European Union is a particularly good place to be, with the European Commission taking the lead in trying to tackle the environmental footprint of the agricultural industry. Countries like the Netherlands, Denmark, and Belgium are really standing out as thought leaders in the space, and I think Flanders is a great place to have the biotope program because it has a supportive academic, regulatory, and public funding environment for new biotech startups.
Read this article to find out more about biotope by VIB!
“Another thing that helps is having a number of young companies housed together, because it can be quite an isolating journey for entrepreneurs otherwise. It’s also nice to have contact with other founders who have already been through the incubator and gone on to be successful; they can provide mentorship, support, and even just a bit of inspiration to new entrepreneurs entering the program.
“Another thing that makes biotope great is the fact that it has such a strong biotech component. A lot of newer technologies within the agrifood space tend to be IT related, because digital companies are cheaper, faster, and easier to bring to market. But I think it’s deep science and biotech that is going to fundamentally change the way we do things in agriculture. I believe that biotope is an important and useful program and am delighted to be part of it!”
