by Claire Kinlaw

John Selep, a Larta Principal Advisor for USDA commercialization assistance programs, in recent conversation with Larta, reflected on his enthusiasm and optimism for the continued growth of an agricultural innovation ecosystem in the Sacramento, California region.  John’s personal story combines a family connection to growing food – his family had a small Midwest orchard where they grew their own produce – with a career in technology.  John’s dad grew up around farms but like many of his generation he became an engineer following WWII.  John has pleasant memories of fall days spent with his siblings harvesting, quartering, coring, grinding, and jarring applesauce and pears along with the aroma of cinnamon from bubbling applesauce.  Fast forward more than 30 years later after a career as an engineer in Bell Labs and HP that brought John to the Sacramento region, and John is engaged in bringing together the pieces to foster commercialization of agricultural innovations in his area.

Why does an agricultural innovation ecosystem matter for the Sacramento region?

John and Larta share the conviction that Innovation drives economic growth and creates jobs.  During the 2009 economic downturn John and other business stakeholders in the Sacramento region identified agricultural technology as a sector that could generate economic growth if innovation could be fostered in an area-wide ecosystem.  According to John, Sacramento’s value proposition for entrepreneurs and investors in ag-and-food technology is a higher probability of success in  creating of successful companies through “innovations connecting closely with the farm”

What building blocks does Sacramento region have for building an agriculture innovation ecosystem? And what is missing or needs cultivating?

 In early conversations in the business community, a number of factors pointed to agriculture and food technologies as logical areas where the Sacramento region could compete effectively.  Factors that support the creation of an agricultural innovation ecosystem included:

• An agricultural heritage through proximity to producers of high-value crops
• Proximity to a world-leading agricultural research institution, UC Davis
• The ambition to be a leader in innovation

Proximity to producers of high-value crops

The Sacramento region includes a cluster of counties at the north end of California’s Central Valley. These northern agricultural counties produce significant harvests and revenues from crops such as: wine grapes, berries, stone fruits, nuts, rice, tomatoes, and milk.  While many of these growers face mounting pressure from the availability of water and rising costs for labor, land and regulation, the high value of the specialty crops they produce can readily justify investments in innovative solutions to address these challenges.

In addition to primary farm assets, the Sacramento region is the home of tomato processing infrastructure that produce major quantities of the world’s processed tomatoes for sauces, paste, whole canned tomatoes, ketchup, and juice.  Other significant food-processing industries headquartered in the region include almond and nut processing, rice milling, beer and wine production, olive oil production, canned fruit production and specialty producers of diverse products from soy sauce to Japanese saké.  With access to farmers, farm operations, and value-added producers, entrepreneurs have every opportunity to develop a deep understanding of real commercial and technical problems and challenges that agriculture faces and to create viable commercial solutions.

Academic research and development to spur innovation

The Sacramento region is home to UC Davis, a world class academic institution with active research and education in plant science, food science, veterinary medicine, engineering, and business.  UC Davis has been consistently rated among the top research institutions in the world for agriculture and forestry, and veterinary science.  The sheer volume of research conducted at the university offers great potential to spin out new innovations in agriculture, food production and processing.

The university is actively promoting this potential through programs like Venture Catalyst established by the Office of Research to provide researchers with resources to form and grow new ventures, the UC Davis Food and Ag Entrepreneurship Academy developed by the UC Davis Graduate School of Management and sponsored by the Child Institute for Innovation and Entrepreneurship, as well as the more recent food and agriculture entrepreneurship focused initiatives led by the World Food Center, and SmartFarm with its 15 acre farming innovation demonstration center.

What has been done to date?

A number of successful pioneer Ag-and-food technology companies have spun out of UC Davis and UC Davis alumni, including Calgene, an early pioneer in plant biotechnology acquired by Monsanto in 1996; Agraquest, a biopesticide innovation company acquired by Bayer CropScience in 2012; and Arcadia Biosciences, a specialty plant breeder that had its IPO in 2015.  The region has become home to a cluster of vegetable-seed breeders and crop-protection R&D facilities representing a who’s-who of the global ag bio-tech players.  Alumni from some of these more-established companies have in turn founded a growing number of startups, and the region has a built a growing reputation as a cluster for microbial crop protection and plant microbiome startups.

Those that aim to expand the Silicon Valley “technology triangle”, beyond San Jose and San Francisco in the Bay Area to include Sacramento still face challenges to building a thriving agriculture entrepreneurial environment including;

• A lack of infrastructure to support early-stage agriculture and food companies
• Insufficient capital focused on the risks and rewards of entrepreneurship
• A need for greater numbers of area researchers to engage in entrepreneurship

One group working to strengthen support for early-stage ag-and-food companies in the region is AgStart, a startup business incubator in Woodland, CA, just north of Davis, which provides office space, mentors, and connections to local farm operations for early stage agriculture innovation companies.  The AgStart program was initially founded in 2013 as part of a U.S. Economic Development Administration grant that AgStart shared with UC Davis, and its programming has evolved considerably as it has gained more experience with ag-and-food entrepreneurs and their needs.  John is President of the 501(c)3 non-profit that currently supports AgStart, and also serves as a member of its Mentor Network providing pro bono advice and counsel to AgStart’s startup company clients.  AgStart has received support from larger Ag Technology companies in the region, including Bayer CropSciences and HM.Clause, a global vegetable seed breeder, as well as local financial services firms and other service providers.

Another collaborative relationship to strengthen entrepreneurship in the Sacramento area is a collaboration between UC Davis and the Sacrament Angels, a membership-based angel investment organization, for which John is a Board Director.   To encourage and support a greater number of University faculty, post-docs, and graduate students to take their research and inventions out of the academic environment to create new ventures, the Sacramento Angels collaborate with the UC Davis Center for Entrepreneurship to host ‘Angels on Campus’, a regularly-scheduled pro-bono mentorship program that provides researchers a risk-free environment to gather commercialization feedback and to strengthen their networks among investors and the wider business community.  The program also provides angel investors an early look at UC Davis technologies. The program has been in operation since 2010, and a number of program participants have gone on to raise external financing.

Other organizations also have stepped up to provide infrastructure for early stage ventures in agriculture. HM.Clause, a global vegetable seed company with facilities in Davis, funded the establishment in 2015 of an incubator, the HM.Clause and UC Davis Life Science Innovation Center, off the UC Davis campus. The Center is equipped with biochemistry, molecular biology and chemistry lab space, and also offers 1,800 ft² of contiguous greenhouse space.  Priority access to the incubator is granted to tenant companies affiliated with  the UC Davis Venture Catalyst START™ Program.

Looking forward

When we asked John what he sees for the future of agriculture innovation commercialization in the Sacramento area, he responded that the process is likely to be a long-term campaign.  Building consensus among the many stakeholders in the northern California region, including growers, processors, and area business leaders, to strengthen the Sacramento area agricultural innovation ecosystem will take time.  Contrast this to the Western Growers Association collaboration to establish the Salinas-based Center for Innovation and Technology.  More infrastructure and mentoring support along with stronger collaborative relationships and funding mechanisms for pilot level projects on farm may be needed to grow agriculture and food innovation to a robust level.

While the process may be a long one, John is fully committed and excited about contributing to a successful outcome for the benefit of his region.  Larta awarded one of the companies from the UC Davis community that John has mentored, XTB Laboratories founded by Dr. Cristina Davis, with the first Ideas, energized prize this year at the 2016 Ag Innovation Showcase. I enjoyed the opportunity to explore with John the efforts going into building agriculture innovation commercialization in Northern California and we wish John and his Sacramento area colleagues every success in their efforts!