Meristem Crop Performance Partners with Bridgepoint to Catalyze Growth
A dive into Meristem's global ambitions, new products, future partners and how they can shift the world of crop protection with novel IP.
Index:
The Insight is the Edge: What Made Meristem Unique
Bridgepoint Investment and BIO-CAPSULE: Global Ambitions
Picks and Shovels: Horizontal IP
Product Evolution: HOPPER THROTTLE™ MaxStax™
Final Thoughts
The Insight is the Edge
Bridgepoint, a leading private asset growth investor, has announced today its partnership with Meristem, a leader in the agricultural solutions market. The transaction closed in October 2024 and financial terms were not disclosed.
Established in 2018, Meristem is one of the fastest-growing crop input companies in North America. Focused primarily on biologicals, the company sources, formulates, licenses, and delivers high-quality crop inputs to farmers, helping them produce more bushels for less cost per bushel. Meristem's solutions are highly cost-effective and eliminate significant inefficiencies in the supply chain compared to more traditional go-to-market approaches.
Press Release
Meristem Crop Performance is an enterprise that has built an impressive business, but before getting into the importance of their new capital injection I think it’s worth highlighting what, at it’s most basic, enabled the Meristem team to get to this point.
In The Insight is the Edge I stated that insights are fundamental for the success of any business.
An insight is defined as:
the capacity to gain an accurate and deep intuitive understanding of a person or thing.
This can be a customer, a technology or a market for example. An insight that is actionable is what differentiates a business. Acting on an insight allows a company to be different and an insight is core to having a unique strategy. As Michael Porter said in Competitive Strategy:
Underlying the concept of generic strategies is that competitive advantage is at the heart of any strategy, and that achieving advantage requires a firm to make choices. If a firm is to gain advantage, it must choose the type of competitive advantage it seeks to attain and a scope within which it can be attained…The worst strategic error is to be stuck in the middle, or to try simultaneously to pursue multiple strategies. This is a recipe for strategic mediocrity and below-average performance, because pursuing all the strategies simultaneously means that a firm is not able to achieve any of them because of their inherent contradictions.
The business needs to see something different than their competitors and lean into it.
Meristem Crop Performance is a perfect example of a company who’s founders, Mitch Eviston and Rob McClelland, had a unique insight that lead to the founding of Meristem in 2018.
Mitch and Rob had insight into several areas that have enabled them to build a profitable business generating more than $150 million in annual revenue on more than 10 million acres, with 8 million acres of those including biologicals:
The amount of dollars going to the channel (distributors + retailers) out of what the farmer was paying, giving them an understanding of the opportunity to cut costs out of the end price to the farmer.
There was a lower margin, more competitive segment (synthetic crop protection) that everyone else could fight over and a growing, higher margin segment that they could differentiate on: biologicals. They opted to lean into biologicals. They also acknowledged that the channel was poorly positioned to readily sell these products because of knowledge base and current incentive structures. Mitch Eviston even said to me: “If we launched our products through the channel, we wouldn’t be around today.”
They knew the challenges with biologicals and began building out intellectual property that could enable them to not only keep biological organisms living throughout the value chain, but deliver adequate CFUs to the soil through current farmer practices. Some of their IP includes their BIO-CAPSULE packaging and distribution system (more below), and novel approach to adjuvants taking on a Coca-Cola-like strategy.
They acknowledged that there was a segment of farmers that was sophisticated and equipped with the right assets (application equipment, storage etc) that they could sell direct to and build out their own channel. They also acknowledged that they needed experienced staff to be able to do this and hired accordingly.
When combining these insights together, you get the start of Meristem Crop Performance.
From there, their business has grown rapidly.
Bridgepoint Investment and BIO-CAPSULE: Global Ambitions
Bridgepoint Group is an international alternative asset manager specializing in private equity, infrastructure and private credit. Bridgepoint currently has $72 billion of assets under management.
Until this investment, Meristem had been bootstrapped!
Having enough working capital can be challenging in times of rapid growth. In conversation with Meristem they stated they have multiple incoming partnerships that require a large up front investment to build out product, which meant they needed to ensure they had adequate cash reserves— taking on investment to fund inventory for agreements vs. speculative technology.
The investment number was not stated, but given that Meristem has $150 million in revenue, has 30%+ operating margins and has multiple patents that are generating revenue through licensing agreements today, it’s likely the business was valued well into the hundreds of millions.
Meristem is the type of business private equity firms find and invest in— stable and growing businesses with IP.
There is another aspect that makes Meristem attractive to Bridgepoint: they are invested in Rovensa, one of the largest independent bio-based companies globally.
Rovensa has acquired numerous companies in biostimulant, biocontrol and bionutrition space, including:
Agro-K
Microquimica which now operates as Tradecorp do Brasil
Idai Nature
Grupo Agrotecnología
Oro Agri
Cosmocel
For context of Rovensa’s size, I’d speculate they have total revenues of ~$1 Billion, with 80+% of that coming from biologicals— one reason I suggested they could be an acquisition target for BASF.
Birdgepoint acquired a majority stake in Rovensa in 2017 for €456 million.
Bridgepoint now owns around 40% of Rovensa, having sold a portion of their stake to Partners Group in a €1 Billion transaction in 2020.
There is a synergistic portfolio opportunity for Bridgepoint here: