Chromatin raises $36 million in Series E financing round, adds Wood Creek and GE Capital Equity as investors

Grain sorghum’s fast-moving champion raises a wad of cash to accelerate its growth. Reflecting on what lies ahead in 2014 for Chromatin, CEO Daphne Preuss takes time with The Digest.

In Illinois, Chromatin, Inc., an agriculture technology company, announced the first closing of its Series E financing round, expected to total $36 million. Wood Creek Capital Management, an investment manager focused on investing in real assets and intellectual property, including agricultural resources, led the round. Other participants included GE Capital, Equity, as well as funds that had participated in earlier rounds of financing: BP Alternative Energy, IllinoisVentures, the State of Wisconsin Investment Board, and Adventures IV, LLC.

With its Series E round, Chromatin has successfully raised over $70 million of equity.

The new lead investor, and Chromatin’s progress

“Wood Creek really like the space,” noted Chromatin CEO Daphne Preuss, taking a short break with The Digest after the big capital raise. “They look at global agriculture in a really interesting way, and they’ve been looking at sorghum for some time. “Wood Creek’s comprehensive understanding of global water and land resource limitations makes the firm an ideal fit as an investment partner for our company. It’s never easy to raise money, but to find capital that is value-add, that’s special.”

So, why is grain and biomass sorghum faring so well in the equity markets. when elsewhere on the biofrontier, everything is a struggle?

“We have significant revenues now,” said Preuss, “and largely fund operations out of that, so it helps that this is growth capital to accelerate progress, rather than development capital. We have 90 international trials in progress, plus 50 in North America.

“But it’s more than that. The world is looking for more protein right now, especially less water intensive. There are opportunities in Africa, Asia and especially China, South America as well as at home here in North America. We do business in 8-10 African countries. And there is a lot of interest there in ethanol, in Africa and China, and in alternatives to corn for biofuels. Plus biopower. Meanwhile, we see in South America that there’s a transition from free range to feedlots and a more intensive livestock industry, so forage sorghum becomes more important.

Why sorghum, why now?

But, why sorghum and not, say, some of the other novel crops that are coming along, in terms of finding favor in the markets?

“There’s a lot to be said for a focus on a single crop that already has a strong grower base. Where there is an opportunity to bring strong improvement in yields with new hybrids. For us, sorghum was sort of a goldilocks crop. Corn, for example, was way too consolidated. Sorghum was just right.

So, what’s going to be done with growth capital?

“Immediately, we’ll be adding in sales and marketing, both existing and new territory. Obviously this is a big year for us already in terms of this transaction and other big opportunities that may come along, but the year for us will really be about but also a lot of blocking and tackling, the sales team getting out there and moving product.

Chromatin is bringing a range of innovations to sorghum — a high‐yielding, nutrient‐ efficient, and drought tolerant crop that can meet the growing global demand for sustainable food, feed and biomass production. Significant market demand for Chromatin’s proprietary sorghum products is driving the company’s rapid growth. “Chromatin will use the capital it has raised to support additional expansion and to accelerate product development and differentiation for sales in both the U.S. and international markets,” said Daphne Preuss, Chromatin’s CEO. ”

Bob Saul, a Managing Director at Wood Creek, has joined Chromatin’s Board of Directors. “Wood Creek’s analytical team, led by Nick Schupbach, identified sorghum as a high value investment opportunity supported by strong macroeconomic drivers,” said Saul. “As we explored opportunities to invest in the crop, we saw in Chromatin an opportunity to deploy our capital to return predictable and significant growth. We are impressed by the company’s trajectory, by its growing portfolio of high value intellectual property, and by its leadership team.” “

Macquarie Capital served as exclusive financial advisor and placement agent for Chromatin in the financing transaction.

More about Chromatin here.