Ag-tech startup Athian, which was launched just over a year ago by Greenfield-based Elanco Animal Health Inc. and Indianapolis-based High Alpha Innovation, expects to close a $5 million round of seed funding by the end of the month.
Athian also expects this month to begin beta testing its first software product—a platform to help dairy farmers measure, verify and monetize their carbon-reduction efforts. The company is officially based in Indianapolis, though six of its seven employees, including CEO Paul Myer, live outside of this area. Myer lives in California.
So far, Athian has secured seed investments from three industry partners. The lead investor is Elanco, which makes animal health products for livestock and pets. Other investors are Rosemont, Illinois-based Newtrient LLC, which advances manure-management technologies for the dairy industry; and Tyson Ventures, the corporate venture arm of Springdale, Arkansas-based meat producer Tyson Foods.
Myer said Athian is working to secure two addition seed investors by the end of this month to close out its $5 million seed round. Myer said the seed investments are in the form of convertible notes—loans that will convert to equity when Athian raises its Series A funding.
Myer said Athian’s funding strategy is to gain investments from key industry partners first, which should make it easier to attract dairy farmers to use Athian’s platform. That, in turn, should make it easier to attract more traditional venture firms for Series A funding in the future.
Athian’s initial product is designed for use by the various parties in the dairy production chain—both the individual dairy farms and the large co-ops and retailers that they supply.
Cows produce a great deal of methane gas, a contributor to climate change.
“The entire industry needs to move the needle on climate change,” Myer said. “Athian’s approach is, no single company can do that on their own.”
Here’s the way Athian’s business will work:
Farms can use Athian’s software platform to measure the amount of greenhouse gases their operations generate. They can also use the platform to verify the emissions reductions they achieve by taking specific actions—by using a feed additive that makes their cows less gassy, for instance.
Once those emissions reductions have been verified by an independent third party, the farms can earn carbon credits—and Athian will have a marketplace where the farms can sell those credits to meat packers, large retailers or others. Those entities will be in the market to buy carbon credits, Myers said, because so many of them have made commitments to reduce their greenhouse gas emissions and because the purchase of carbon credits can help them achieve those goals.
When a farm sells its carbon credits on Athian’s marketplace, the farm gets 75% of the revenue from that sale and Athian takes 25%.
The idea is that the revenue from those carbon credits will fund the farmers’ emission-reduction activities, Myer said. “The grease that makes all this work is the carbon credits that get purchased at the end of the food chain.”
Athian will kick-start the process by pre-selling carbon credits—essentially, paying farms in advance for the first round of emissions-reduction activities.
The company has 15 dairies signed up as beta testers for Athian’s software, with testing set to begin this month. Once the product for dairy farms launches, Athian plans to roll out products aimed at other agricultural markets including beef, pork, poultry and fish.
To date, Athian has been focused on engineering and product development. Myer said the company will use its seed funding to hire its first sales and marketing employees, and to add to its development staff. If all goes according to plan, Myers said Athian should have close to 20 employees by the end of this year, with more growth in 2024.