After 10 years in existence, Flagship Pioneering spinout Indigo Ag is planning to reach breakeven in about a year's time.
Flagship was the lead investor in a new venture capital round that closed at over $250 million, Indigo announced on Sept. 15. The company had not raised capital since July 2022, when Baillie Gifford, Empede Capital Partners, Molini Besozzi Marzoli, and Timon Capital backed a $150 million Series H, according to data from PitchBook.
Other backers in the new round include the State of Michigan Retirement System and Lingotto Investment Management.
Since Indigo last raised capital, the company has had multiple rounds of layoffs: one in March 2023 that some employees described as "massive" and another last month. Indigo declined to disclose how many workers were impacted on both occasions, and in an interview Friday, CEO Ron Hovsepian declined to say exactly how many people Indigo currently employs. The company had just over 1,000 people — 72 people in Boston, 242 in Memphis — as of February 2021.
Hovsepian took over as CEO in September 2020 after a career mostly spanning software firms, including IBM and Intralinks. Under his leadership, Indigo has redirected its focus to "four primary offerings," including a grain marketing platform, a transportation platform, a carbon farming program, and biological products.
Indigo's net revenue in 2022 grew 40% year over year, the company said. Revenues for the first seven months of 2023 grow 90% compared to 2022.
Hovsepian believes the company is now on track to hit a major financial inflection point: breakeven. That's expected in the fourth quarter of 2024, in just over a year's time, he said.
"In the last three years, I would say we've closed the chapter on the startup and the visionary phase of what we were doing, and we've moved to this commercialization [phase]," Hovsepian said. "This capital is the validation of that transition."
But it was not easy to raise. Capital for all startups is hard to come by in today's financial markets, and that's especially true for later-stage raises.
Hovsepian said Indigo looked at multiple fundraising mechanisms over the last year, including the public markets, the debt markets, and the private markets.
"We saw each of those markets basically evaporate," he said.
Flagship stepping in as lead investor is also unusual; the venture creation firm, while it typically participates in follow-on rounds for its startups, does not usually lead past a Series H, where Indigo is.
Hovsepian is hoping that with the fresh infusion of cash, Indigo will become a more sustainable company — and thus more attractive to other types of investors. He plans to take Indigo public, although he declined to name a timeline.
"As I'm looking out on the horizon, I do believe, as an independent trusted partner of the agricultural industry, we should be a public company," he said. "It's the best place for us to exist, because you want all the light to come in and see all the things we've done."
Indigo will also use some of the funds to hire, despite the layoffs over the last year. The startup's largest operational base is still in Boston, which is home to its discovery lab. Hovsepian said he's looking for scientists, technologists, and industry specialists to join the company.
