Q&A with Mike Wilbur, Kevin Chen on Cavallo Ventures’ Latest Bet
Cavallo Ventures, the venture capital arm of Wilbur-Ellis, announced last week its seven-figure investment in Crop Enhancement Inc., an innovator of sustainable agrichemical products for enhancing crop yields.
With its investment, Cavallo Ventures aims to accelerate the development of Crop Enhancement’s breakthrough crop protection technology in the United States — particularly for the production of high-value fruit and vegetable crops.
CropLife chatted with both Mike Wilbur, President and CEO of Cavallo Ventures, and Kevin Chen, CEO of Crop Enhancement, on the background of the new investment, and what we can expect to see next with the company’s technology and marketing.
CropLife: How did you meet? Take me through the timeline.
Mike Wilbur: We were introduced by Greg Young, who is with Spruce Capital, one of the early investors in Crop Enhancement. I got to know Kevin much better when he asked me to be on a panel he was hosting at the Silicon Valley AgTech Conference last year. Obviously, I was intrigued by the product and we developed a relationship that way, and then I engaged more of the Cavallo team and the Wilbur-Ellis team, and we did in-depth due diligence on not only the technology, but the market fit. I think we talked for many months. (Cavallo Ventures Board Chair) Dan Vradenburg was heavily involved. That conference, back in May 2018, was when it all started.
Kevin Chen: I was moderating a panel called ‘The Future of Crop Protection,’ and asked if Mike would participate. The Silicon Valley AgTech Conference has been going on for the last four to five years, and last year was the highest turnout with 1,000 people. As part of that panel, we were really fortunate to be able to coordinate with Mike and offer the channel/retail perspective. Through that process I got to meet Mike and know Wilbur-Ellis a little bit more. It was a really great connection.
CL: Was there one thing that caught your eye, or what was it that really got you thinking about making this investment?
MW: When we started the Cavallo Ventures corporate venture arm, one of our pieces was: our customers and the general public want safer, non-toxic chemistries to be sprayed. When you look at Wilbur-Ellis’ business, we do so much in the fresh markets, that the products we spray end up in the human food chain. So, we’re constantly looking for newer, safer alternatives and biological solutions. As I looked at Kevin’s product, it seemed to be a very good fit strategically for us and in the crops we care about.
CL: We spoke more than a year ago for an article for CropLife’s sister publication, AgriBusiness Global. What has changed and progressed since then?
KC: Since we spoke in 2017, a few major developments have occurred. At that time, we were primarily looking at the initial crop we were working on, which was cocoa. We had an interesting lead provided by one of our initial investors to a large food company – that was what got us in cocoa in the first place. A lot of people asked us, ‘Of all crops, why did you pick that one?’ It turns out there are a lot of problems in cocoa cultivation, and we were able to demonstrate performance in that crop.
Since that time, we have initiated several more efforts in different fruits and vegetable crops. We’ve made a lot of progress in understanding problems related to coffee, and how our technology can help coffee growers. We are working in several countries within Latin America to field-trial our products in coffee plantations.
We also started to make headway into fruits and vegetables here in the U.S. As a matter of fact this year, we have several trials already planned. As Mike alluded to, demand from consumers is for sustainably produced fruits and vegetables. Our technology’s approach actually fits quite well into that scheme.
Another development is that we now have an even better understanding of how our product works. From an ag point of view, we have a much better understanding today than we did a couple years ago on the specific modes of action, and that’s been helpful. In terms of regulatory work, it takes time.
We are far along in our initial regulatory work that we started and continue to make progress on that front with regulatory packages that are going on here in U.S. and in Southeast Asia.
CL: Do you have a timeline on regulatory approvals?
KC: We are working with the agencies, and I don’t have anything to announce today, but our initial work in Indonesia is extremely promising. We expect to have an announcement shortly.
As far as the U.S., things are going to fluctuate because of the shutdown, but we have a timeline we’re tracking to internally here.
CL: What regulatory category does Crop Enhancement’s product fall into?
KC: Regulatory wise, it really depends on each region’s regulatory schemes. Under EPA, the product will be registered as a biopesticide. Once you get that determination, it’s pretty straightforward. Because of the technical approach we’ve taken, we’ve able to go into a faster regulatory process than a synthetic might. All the ingredients in our formulation are exempt from requirements of residue tolerance. It’s critical, because that supports the comment earlier that consumers want food that is sustainably produced. We were very careful to make sure the approach we take is compatible with demands of the consumer.
CL: Can you tell us more about your trademark product, CropCoat?
KC: With CropCoat, we are utilizing a new mode of action, which is based on physical controls. Think of a physical film or barrier between the crop itself and the environment. That’s important because that is the interface where insects and disease take hold: at the surface between plants and the environment. Our inspiration is taking a look at how barriers work traditionally – things like meshes and nets – and being able to innovate a new way of making that same mode work better.
Essentially what we have is a sprayable, biodegradable coating. The ingredients that we selected are exempt from residue tolerance. As the film degrades on the surface of the crop, it wears off over a period of time. There are no regulated residues at all in the technology, unlike with traditional insecticides and fungicides.
CL: What crops are you field-trialing here in the U.S.?
KC: The crops we are working on here in the U.S. are strawberry, which is a great model crop for the pest-crop combination we are looking at, and in vegetables, we’re looking at the Brassica family: broccoli, cauliflower, and kale. These are crops that have a higher crop protection budget than commodity crops, and it’s a good place for us to start out. We’ve shown good performance.
We have targeted soft-bodied insects, so things like spider mites that are broad-spectrum pests and that affect fruits and vegetables. When we look at the pest-crop combinations, that’s what led us to select some of these initial fruit and vegetable crops.
MW: On our side, we are going to be testing the product on various pests that impact apples and cherries.
CL: Previously, you’ve discussed how worker safety is a significant benefit of this technology and its application.
KC: The way it’s used and applied is quite simple. Whatever equipment the grower is currently using is used; no changes are needed. As far as the process of using it, it’s pretty simple as well – we provide training and education to our partners. There is nothing disruptive in that respect. We want to make it easy for the grower to adopt.
CL: Mike, from the retail perspective, how do you want to make this technology to make a difference for Wilbur-Ellis customers?
MW: We are interested in providing solutions and options to our growers, and customers are asking for safer products to use. That’s really where our interest is – we see that trend happening. We see the conversion from conventional to organic happening. There are just not enough really good options out there, so to the degree that we can to help bring more of them to market and commercialize them, we’re excited to do that.
CL: Is the plan for CropCoat to be marketed exclusively through Wilbur-Ellis?
KC: As far as the company is concerned, we feel there is a lot of value to being able to work with the channel itself, and in the future to market and sell the product. At this moment, it’s a little early to comment on any of the commercial tactics.
We’re doing trials this year, and we continue to do follow-on trial work in tropical crops like coffee. Specifically in Southeast Asia, where we’re a little bit further along relative to the U.S., we’re at that point of talking to channel partners there to establish our go-to-market strategy in that region.
CL: What is next for Crop Enhancement given this new investment?
KC: Part of the reason that we’re excited is the partners and investors that we speak with, tell us, ‘Wow, this is something pretty unique. We haven’t seen an approach like this, but it totally makes sense.’ When you think about where crop damage occurs, it occurs right at that plant-environment interface. So being able to skirt that boundary through using a product like CropCoat, it just kind of makes sense. We get that feedback a lot, whether it’s from growers or investors. That’s been very encouraging, and we’re just really thrilled to be able to work with Cavallo.
What you’re seeing here in terms of CropCoat is really the first product we have in our pipeline. As we continue to grow the company, we will be developing additional products that utilize this same principle – of acting at that plant-environment interface – whether it be controlling pests or disease. In the future, we will be looking at improving drought tolerance of plants or improving the ability to withstand UV radiation or excessive heat.
We are also looking to extend the shelf-life of fruits and vegetables after they’ve been harvested. A lot of that shelf-life deterioration occurs right at that plant-environment interface. This is the beginning of this type of approach being evaluated and introduced into the market.
MW: We’re excited for this approach not only for the in-season applications – but also for the promise of the post-harvest applications and extending shelf-life.