Birmingham-based agtech startup Chonex is banking on making it big.
The company is taking on the regenerative agriculture sector with a product designed to restore health to degraded soil.
And the company is picking up momentum, garnering a nearly $6 million raise last summer and a $2.5 million raise in January. It is now looking to raise a $40 million funding round, which it hopes to close in three months.
CEO and founder Michael Lynch said most of the capital from the most recent round of funding went to hiring an investment bank, growing the team and building a plan to scale the company.
The team now consists of a chief operating officer, a research and development specialist, a chief revenue officer and marketing specialist, an operations and quality specialist and a chief financial officer. The company has 12 full-time employees and five to six part-time.
The $40 million will help Chonex scale through building a new plant.
Chonex has a pilot plant that has been running for a few years, but it is now in the process of designing a much larger plant in which Brian Piotrowski, Chonex COO, said the concepts of an Amazon warehouse will be utilized, such as automated guided vehicles. The idea is for the design to be efficient and scalable. The plan is to open the first commercial site in Robertsdale, though the company hopes to eventually expand into Florida. The initial plant will employ 30 to 50 people, including operators, managers, engineers, field service techs and sales people and potentially an entomologist.
“It’s gonna ramp fast,” Piotrowski said. “I think that’s going to be a challenge.”
He added Chonex is looking to build a culture and offer benefit plans that are attractive to skilled employees during a challenging time for hiring.
Chonex’s growth comes as the regenerative agriculture market is also growing rapidly.
“We need 25% of today’s market to reach our financial objectives,” said Aaron Goy, CRO and marketing specialist. “And so that’s where we’re going to hitch our wagons. We’re heading to regenerative ag and only regenerative ag, and we’re preparing to set ourselves up as the standard for biomass conversion.”
Lynch said the time is right to ramp up growth because the largest food companies in the world have increasing regenerative agriculture needs.
“In the last four years, the product’s been validated both from the technical standpoint on the biology we deliver, the amounts of it, what they do and then some of the deliverables in the field: the soil changes, the yield, the resiliency of the plants that we’re seeing in a number of different geographies, growing zones, crops,” Goy said. “So bottom line, we’re ready to go.”
Data was collected in 18 states on 50 farms.
Its product, StrongSoil, is intended to improve farmers’ finances and make agriculture more sustainable by solving the issue of modern plant genetics’ production capabilities outpacing soil’s natural capacity. The product regenerates soil health to improve crop resilience, drought tolerance and reliance on fertilizers as well as the ability to farm new land.
Chonex makes 97% of the raw materials for its product, which comes from using the byproducts of black fly larvae that are fed chicken manure.
It is Chonex’s first year collecting money with the product in market, but it has been in the market through trial use for three years.
“We want to keep it local,” Piotrowski said. “A lot of Alabama folks have pulled together and supported Michael over the last four or five years to really make a very viable product that works. Through that support, we’re able to go a little more global.”
