These farmers raised $50 million to fight climate change with fungi


Five enterprising co-founders have found themselves at the root of solving climate change – literally. The team behind agricultural startup Loam Bio has developed a seed treatment to help crops store more carbon in the soil, benefitting farmers and the world.
Tegan Nock and Guy Hudson, co-founders of Loam Bio. | Image source: Supplied

From devastating bushfires to catastrophic floods, farmers are on the front-line of climate change. It’s fitting, then, that a group of agricultural experts have come together to build a solution to our runaway carbon emissions.

Farmers Mick Wettenhall and Tegan Nock, Aussie filmmaker-turned-cattle-breeder Frank Oly, agronomist Guy Webb and UK climate expert Guy Hudson joined forces in 2019 to form Loam Bio. Hudson, originally from the UK but now an Australian citizen, has built his career in climate and clean tech across businesses big and small. On a research visit to Australia, he found himself in the back of Webb’s ute.

“We were in dusty and drought-stricken far-west NSW, and on the dashboard was a copy of the [Intergovernmental Panel on Climate Change] report,” Hudson says. “I quickly realised that we were two of the only people who had actually bothered to read it cover to cover.”

Webb told Hudson about University of Sydney Professor Peter McGee’s research on the role of microbial fungi in increasing both volume and stability of carbon in agricultural soils. Nock, originally a farmer from Bogan Gate near Parkes in NSW, was connected to Webb thanks to his work as an agronomic advisor. Like many farmers, Nock understood the importance of carbon in soil health, how it helped the land withstand climatic extremes by increasing soil water retention capacity, for example. But she didn’t know there were tools that could help sequester more carbon in soil.“I knew we absolutely needed to improve our soil health,” Nock says.

“Climate change is the biggest existential risk to agriculture. Farmers cop droughts the worst, floods hit them the hardest.” The team of five began working together to investigate the effect of fungi to address climate change at scale. They devised a seed treatment made of fungal organisms. Crop seeds are coated in a microbial inoculum (beneficial microorganisms applied to soil and plants) before sowing, and plants then work together with the microbial organisms to build additional carbon in the soil. After all, points out Webb, soil is the world’s largest carbon sink.

The benefits are two-fold: more carbon in the ground means healthier, stronger crops, and less carbon in the atmosphere. It’s not a big leap for the industry. Farmers already use nitrogen-fixing bacteria to help grow their legume crops. Why couldn’t they adopt carbon-fixing fungi?

“We’re all aware that we need carbon removal – not just mitigation. But when we look at most of the technologies available to us, they’re either expensive, relatively slow to scale up, or politically challenging,” Hudson explains.

“For the first time in a very long time, it felt like this was a solution that could actually scale with the speed that was necessary to really address this problem.”

Loam Bio is now developing seed treatments for 14 crops. It plans to launch a barley seed treatment in Australia next year, and eventually roll out more seeds for common crops such as wheat and canola. Nock says that in trials of the barley seed treatment, Loam Bio was able to increase carbon in the soil by, on aver-age, 6.5 tonnes compared with the previous year.

In 2019, the company raised a $10 million seed round, led by Horizon Ventures (also an early investor in California-based Impossible Foods, which develops plant-based meat substitutes). Mike Cannon-Brookes’ Grok Ventures also invested in that round. In the middle of 2021, the group raised $40 million with existing and new investors, including the founder of software group Salesforce Marc Benioff.

The capital has allowed the business to grow faster than its founders believed possible. Not only is Loam Bio established in Australia, it has also incorporated in the US to conduct field trials there and in Canada. Of their 61 staff of geneticists, microbiologists, soil scientists and research economists, more than 50% work on product development.

“Farmers are absolutely getting hammered by the effects of climate change,” says Nock. “It gets hard to maintain hope. But it is really heartening that the work we do can put tools into everybody’s hands.”

Dual problem

Australia’s agricultural industry is in a unique position. It is on the frontline of the effects of climate change, and it is a major contributor to the problem.

Agriculture represents about 13% of Australia’s greenhouse gas emissions, according to the Climate Council. Most of that is methane gas from cows and other livestock, and from fertiliser and decaying plants and vegetables.

Agriculture and associated land clearing release about 115 million tonnes of greenhouse gas into the atmosphere every year.

Two-fold solution

Soil is the world’s largest carbon sink. It can store carbon dioxide for hundreds – if not millions – of years. Carbon in the soil also has a two-fold effect: it can reduce the emissions in the air and increase the health of plants.

This is because carbon is the primary energy source and building block for plant tissues. Carbon is converted through photosynthesis into simple sugars, which helps plants build starches, carbohydrates, cellulose, and proteins.

Coating seeds with Loam Bio’s inoculum made from certain fungal spores helps plants sequester carbon.