A Vancouver startup that uses wireless technology and a chemistry trick to prevent the spread of crop-damaging insects has secured one of the biggest financings in Canada’s clean-technology sector.
SemiosBio Technologies Inc. raised $102-million in an equity deal led by Morningside Group, a private equity firm controlled by billionaire brothers Gerald and Ronnie Chan, heirs to a Hong Kong property fortune. Early investors also sold an undisclosed stake in a side deal.
It’s the fourth big financing for a Vancouver-area clean-tech firm in the past year, following deals for organic pest control maker Terramera Inc., alternative energy developer General Fusion Inc. and Carbon Engineering Ltd., which sucks carbon dioxide from the air.
Like Terramera, SemiosBio’s signature offering is bug-control technology aimed at reducing the use of insecticides. At the heart of the company’s product are synthesized chemicals that mimic pheromones, natural chemical signals that pests send out to one another.
The SemiosBio copycat, sprayed at controlled intervals from canisters mounted in orchards and vineyards, confuses male insects. Their instincts tell them they are heading toward fertile females, but instead they fly into a fog of phony pheromones and perish before propagating.
“We send them on a wild goose chase,” said SemiosBio chief executive and founder Michael Gilbert. “They only have enough energy for one flight and they waste it on us.”
The process prevents pests from multiplying and destroying valuable crops such as lemons, apples, grapes, almonds and pistachios. As pheromones are specific to bug types, SemiosBio can target individual classes of pests, leaving bees alone. Its process has been certified as organic for commercial use by California against navel orangeworm, an enemy of almond growers.
While use of pheromones for “mating confusion” and other biopesticides is widespread in pest management, SemiosBio’s patented offering is more than that. The pheromone dispensers are part of solar-powered sensor wireless networks it installs on farms, enabling growers to also monitor pest counts in traps, temperature, frost and soil conditions and plant diseases.
Growers access the data on their smartphones and can change the pace of spraying within minutes. “They are the first to bring networking to mating confusion,” said Mel Machado, director of member relations with almond handling giant Blue Diamond Growers.
“It’s a really good and innovative system [that has led to] a definite decrease in overall damage,” as improved yields cover the cost, said Derek Liu, in-house pest control adviser for Chowchilla, Calif.-based almond grower Agriland Farming Co. Inc., which uses SemiosBio on 21,000 acres. “That keeps our clients happy.”
SemiosBio doesn’t charge for equipment or upkeep, but levies a subscription fee ranging from US$50 to US$200 for each acre a year to its 500-plus customers, primarily growers of nuts in California and apples in Washington State.
“A lot of companies in agriculture technology would just sell a system to a grower and they’d have to manage it themselves,” leaving many with outdated or unused equipment, Mr. Gilbert said. "Technology always breaks, especially in an environment as harsh as agriculture. I was convinced we had to take that burden [off] growers and take it on ourselves.”
Revenue has grown by an average of 150 per cent over the past three years and exceeds USS$20-million annually. Mr. Gilbert said he has 4-per-cent market penetration in the United States and less than 0.1 per cent globally.
The big play for the 160-person company is data. SemiosBio sensors collect 350 million data points daily. “This is where it gets really exciting,” Mr. Gilbert said. “We have the largest data set ever collected in agriculture in some of the highest value crops. I have no doubt we’ll start solving some major problems on both the quality and yield our farmers get.”
Mr. Gilbert spent his teen years living on a hobby farm east of Ottawa. (His “hardcore organic” mother preferred squeezing potato bugs by hand than using pesticides.) He earned a biochemistry degree at the University of Ottawa and a doctorate at the University of British Columbia, then worked in drug development until his employer, Cardiome Pharma Corp., was acquired and he found himself out of work.
He started SemiosBio in 2010, building on his long-held interest in using pheromones to manage insect behaviour. Mr. Gilbert initially targeted bed bugs, but discovered there was more potential in agriculture.
While farmers sprayed pesticides every few weeks, they had to apply costly pheromones every few hours – a laborious, expensive and inefficient process. He figured it was better to administer pheromones remotely, as needed. It took him more than two years to create a wireless network that could communicate around signal-blocking plants and water; it was commercially available in 2014.
He also got a hand from government agencies, including Sustainable Development Technology Canada, which provided three-quarters of his first $10-million in funding. “Michael and his team have shown you can take public money as your base and take your company into full commercialization in a short period of time,” said CEO Leah Lawrence said.