St. Louis-based agriculture technology startup CoverCress Inc. (CCI), which is bringing a new cash crop to market, has inked a commercial partnership with an industry giant and secured fresh funding.
CoverCress and Chesterfield-based agribusiness Bunge Ltd. (NYSE: BG) have entered into a “long-term commercial partnership” that will involve processing grain from the St. Louis startup’s crop to develop renewable fuels, the two companies said Tuesday afternoon. CoverCress said the grain it provides to Bunge will be produced through its contracts with farmers to plant its crop on their land.
Founded in 2013, CoverCress has developed a rotational, oilseed cash crop to provide winter and early spring soil cover between corn harvest and soybean planting. It says its crop, based on the native plant pennycress, will produce low carbon intensity oil that’s slated to be used to produce fuels. The crop can also generate revenue as animal feed and high-protein meal.
The commercial partnership unveiled Tuesday deepens the relationship between Bunge and CoverCress. Bunge Ventures Ltd., Bunge’s venture arm, in 2021 led CoverCress’ Series B-1 funding round. For Bunge, its partnership with CoverCress comes after it announced in recent months the creation of a joint venture with San Ramon, California-based Chevron Corp. (NYSE: CVX) focused on using crops to create low-carbon renewable fuel sources. In a news release, Bunge and CoverCress said the St. Louis startup's crop is "ideal as a lower carbon intensity feedstock to help meet the growing demand for renewable fuels."
“Bunge is pleased to expand our relationship with CCI to continue to develop next generation lower carbon feedstocks, which will also help meet the growing demand for renewable fuels. We believe rotational cover crops will play a key role in our strategy in connection with the recently announced partnership with Chevron. Together, we share a commitment to sustainability and reducing carbon in our value chains,” said Greg Heckman, Bunge CEO.
In addition to the commercial partnership, Bunge said Tuesday it increased its investment and ownership in CoverCress through the startup's newly raised Series C-1 funding round. Chevron U.S.A. Inc., a subsidiary of Chevron, made an equity investment in CoverCress as part of the Series C-1 financing. CoverCress CEO Mike DeCamp said the startup raised $26 million through its Series C-1 round, which closed Tuesday.
“Chevron continues its efforts to build a leading renewable fuels business by investing in all parts of the value chain,” said Mark Nelson, executive vice president of Downstream and Chemicals for Chevron. “This investment in CCI advances our efforts to secure a diversified source of lower carbon intensity, reliable feedstocks for our forthcoming joint venture with Bunge."
CoverCress CEO Mike DeCamp said the startup’s commercial partnership with Bunge marks a major milestone for the company and creates a “true farm-to-fuel value chain all the way from the farm field into a diesel truck tank” for its crop.
The deal comes as CoverCress has transitioned from an R&D startup to commercialization. In 2021, CoverCress had a soft launch of its crop, planting it on several hundred acres, and DeCamp said he expects the crop to be grown on somewhere between 10,000 to 15,000 acres this year for its full commercial launch.
“With the farmer demand we have to date, it really looks like demand is going to exceed supply for this year,” DeCamp said.
Several local investors have backed CoverCress since its founding. CoverCress received its first investment from BioGenerator, the investment arm of local innovation hub BioSTL, and has also received capital from the St. Louis Arch Angels, Hermann Cos., Prolog Ventures, Cultivation Capital, Yield Lab, Missouri Technology Corp. and St. Louis County Port Authority.
CoverCress is headquartered in the 39 North agriculture innovation district in Creve Coeur and has more than 20 employees. CoverCress was named as one of St. Louis Inno's 2022 Startups to Watch.
