As startup-in-ascent metaphors go, they don’t get more on-the-nose than Qantas Flight 96 from Los Angeles to Melbourne on Jan. 28.
The 15-hour journey took place in Boeing’s state-of-the-art Dreamliner 787-9, but it wasn’t your run-of-the-mill intercontinental crossing. The 13,000-kilometre trip was the first flight between the United States and Australia propelled by a blend of traditional jet fuel and oil from a mustard-like seed called carinata.
The historic flight was part of a new partnership between Australia’s biggest air carrier and a small Gatineau biotechnology firm called Agrisoma Biosciences that will see the Quebec company provide Qantas with a regular supply of aviation biofuel by 2020.
As part of the deal, the two companies will work with Australian farmers to grow carinata on 400,000 hectares of land Down Under – enough to produce more than 200 million litres of biofuel a year and fulfil up to 50 per cent of Qantas’ annual fuel needs. After the seeds are crushed into oil, what’s left over will be turned into a protein-rich meal that can be fed to animals.
Agrisoma CEO Steve Fabijanski says the Qantas deal is just the first of many more to come for his fledgling firm. The sector is still in its infancy, he notes, with fewer than five per cent of all flights now powered by biofuels, but he thinks the LAX-to-Oz flight could be just the catalyst it needs to get cleared for takeoff.
“The biofuels industry is a bit of a chicken and an egg. We all want biofuels, but if it’s not there, who’s going to produce it? And no one’s going to produce it unless they’ve got the raw materials to start with.”
“The biofuels industry is a bit of a chicken and an egg,” he says from the company’s Gatineau head office. “We all want biofuels, but if it’s not there, who’s going to produce it? And no one’s going to produce it unless they’ve got the raw materials to start with.”
The agreement with Qantas is just one of several partnerships Agrisoma has established to grow carinata, which is now being harvested for the company in the southern United States and South America.
The company says its Carinata-based fuel produces nearly 80 per cent fewer carbon dioxide emissions than fossil fuels. With 70 airline members of the International Air Transport Association pledging to cap greenhouse-gas emissions by 2020 and reduce them to 50 per cent of 2005 levels by 2050, Fabijanski believes his product could go a long way toward helping the industry reach those lofty goals.
The firm already has deals with a couple of other major carriers in the works, and its CEO believes at least a third of the 300 billion litres of fuel burned by the industry each year will eventually be replaced by biofuel.
“It’s going to take a while, but I think there’s a very strong commitment by the airlines to do this,” he says. “We’d like to be a big part of that, obviously.”
A biologist by profession, Fabijanski first took note of carinata about a decade ago. The plant is similar to canola in the way its oil is processed and is able to thrive in both hot, dry climates and cool, damp conditions. Its oil isn’t fit for human consumption, but researchers – including scientists at the National Research Council and Agriculture Canada who helped develop the product – discovered it had all the makings of a viable fuel.
“We started to look at this and say, ‘This could be an actual substitute for petroleum,’” Fabijanski says.
Boon for farmers
Carinata’s proponents tout it as the ultimate win-win for the environment and producers. It’s typically planted when fields used for growing other crops are fallow, meaning it doesn’t take away land from food production and helps replenish nutrients in the soil.
“That’s been our mantra all along is that we know agriculture has cycles and places where things grow in well-established patterns,” Fabijanski explains. “We’re really looking at the areas where it’s been either impossible to grow food or you can squeeze a second crop in between food crops.”
Carinata is also an economic boon for farmers, its backers contend, because the fuel and the meal give producers dual sources of revenue from a plant that’s grown when fields would otherwise be barren.
“The next revolution you’re going to see in innovation is going to be happening on the farms, and it’s due to companies like Agrisoma,” says George Mahmourides, business development manager of Quebec-based industry group BioFuelNet Canada, who has followed the company’s progress since its beginning.
The 10-year-old private enterprise now has deals with partners in Florida, where the crop is grown during the winter, as well as in South America.
Agrisoma has teamed up with Finnish biotechnology giant UPM to harvest carinata on more than 20,000 hectares of farmland in Uruguay, with plans to double the amount of land in production next year. The partners are also conducting trials in Brazil and aim to bring farmers in Argentina on board next year. Agrisoma is also testing the crop in the Mediterranean and has long-term ambitions of partnering with growers in the massive Chinese market.
Only two facilities in the world currently refine aviation biofuel, one in Los Angeles that works with Agrisoma and another in Oslo, limiting the amount of carinata-based fuel that can be produced.
Biofuels are also anywhere from five to 20 per cent more expensive than traditional fossil fuels, but Fabijanski says both those hurdles will eventually disappear as more and more airlines look to make good on their pledge to cut carbon dioxide emissions and more refineries are built to meet demand.
Now at more than 30 employees, Agrisoma has been doubling its annual revenues since it began selling its seeds a couple of years ago. About two-thirds of its sales come from outside Canada.
The firm has landed more than $23 million in venture financing since 2014, including a $15.4-million Series-B round in late 2016 led by Montreal-based Groupe Lune Rouge and Cycle Capital Management. Agrisoma is set to announce another round of funding in mid-March that will include a pair of additional high-profile institutional investors.
“We’re the overnight success that nobody knows about,” Fabijanski says with a chuckle.
Cycle Capital founder and managing partner Andree-Lise Methot says Agrisoma has cleverly managed to create a product that benefits everyone in the supply chain from farmers to airlines while helping protect the environment, calling it “an amazing situation.”
Mahmourides agrees, praising Fabijanski for combining the theoretical expertise of a scientist with the resiliency and business acumen of a seasoned entrepreneur.
“Sometimes, being an academic is a liability in getting things done in the business community,” he says. “Often, companies start off with a PhD (as leader) and then they go to a businessperson. But Steven has been able to manage both sides of that equation – the technical as well as the business.
“He’s become the poster boy of the bioeconomy.”
Tips for going global
Agrisoma CEO Steve Fabijanski spoke with OBJ about the challenges of doing business in international markets. Here are some excerpts from his interview:
What’s the biggest lesson you’ve learned from going global?
“The Canadian brand is important. I also think that just being really honest in finding long-term partners is the key for an industry like this. We operate on annual crop cycles, so you don’t get to do 10 reiterations in a year. You’ve got one year to get it right, so having strong partners that understand that cycle is also really important for us.”
What advice would you give to a company that’s looking to expand beyond Canada’s borders?
“Pick one or two places and do it well. For us, we went into Europe pretty early. It took us about five years to establish some key partnerships in Europe, but we were very careful to make sure in developing those partnerships that we were able to keep everybody on board all the time. We could have tried to do 10 things at once. Invariably, you fail. So I think the biggest advice is find one region where you know you’re going to fit and find one good partner and really work hard to prove that that model works before you do anything else.”
What are the pitfalls companies need to watch out for when expanding into foreign markets?
“Overstating what can be done, because you’re always judged against what you do, not what you say. There’s big gap between saying, ‘We’re going to boil the ocean’ and it really turns out to be a teapot. There’s going to be a lot of challenges to repair that. For us, it’s always been about making sure that you are able to get done what you say you’re going to get done.”