State Funded Missouri Startup Fund Sees Cut in Budget Allocation

David Nicklaus indicated today in the St. Louis Post Dispatch that, “When Pfizer shut down its St. Louis research operation in 2010, Joseph Monahan decided to stay.

“He founded a new company, Confluence Life Sciences, that now employs 40 scientists, including many ex-Pfizer colleagues. Confluence has attracted millions of dollars of capital from firms in Texas and Maryland and has built a successful contract-research business while working on its own new drugs, which show promise in treating autoimmune disorders and colorectal cancer.

“It wouldn’t exist, Monahan says, without the state-funded Missouri Technology Corp. MTC has invested $1.4 million in Confluence, including critical seed money back in 2011.”

The article indicated that, “MTC has made similar investments in 90 agriculture, technology and medical startups, the majority of which are in the St. Louis area. It has cashed out of a few, including Yurbuds, the ear-bud maker that was sold in 2014.

Leaders of startup-support organizations, which are also funded by MTC, cite the state money as a major accelerant behind St. Louis’ entrepreneurial renaissance. Without it, they say, we wouldn’t have so many new firms popping up in places such as downtown, the Cortex district and Creve Coeur.

“The money, however, is about to slow to a trickle. The Legislature cut MTC’s appropriation to $2.5 million for fiscal 2018, which begins July 1, from nearly $23 million this year.”

The Post Dispatch article added that, “Officials haven’t decided how to allocate the smaller pot of money. The MTC funds three main programs: operating funds for innovation centers; grants to support groups such as Arch Grants and ITEN; and direct investments in startup companies.”

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Iowa State University Extension Bulletin: Forms of Property Ownership

A recent update from Iowa Sate University Extension (“Evaluating Your Estate Plan: Forms of Property Ownership“) pointed out that, “One of the major goals of any estate plan is to distribute or dispose of property after death. To make decisions in this regard, it is important to understand classifications of property as well as the various ways that property can be owned. How property is transferred upon death may be dictated by the method of ownership. In particular, when property is co-owned by two or more people, the method of co-ownership may determine who eventually owns the property.”

The Extension item noted that, “Real property includes land as well as whatever is built upon the land or attached to the land. This may include buildings, fences and subsurface tiling. Mineral rights may also be a consideration in regard to real property.

Personal property may be either tangible or intangible. Tangible personal property includes anything that can be touched – from household goods, jewelry and clothing, to livestock, machinery, stored grain, vehicles and inventory items. Intangible personal property includes assets such as bank or brokerage accounts, stocks, bonds and insurance policies. These intangible properties may be represented by a piece of paper, but the actual property is intangible.”

The update discussed methods of property ownership in greater detail, highlighting: Fee Simple Ownership of Real Property, Tenancy in Common, Joint Tenancy, Tenancy by the Entirety, and Life Estates.

A PDF copy of the Iowa State update is available here.

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Crop Insurance Deadline Nears

A news release yesterday from Purdue University indicated that, “Indiana corn producers have until June 5 to get their crops planted or replanted in order to qualify for full federal crop insurance benefits. The deadline for soybean growers is June 20.

“Coverage is reduced by 1 percent per day for crops planted during the late-planting period, which lasts 25 days after the planting deadline for each crop.

Michael Langemeier, Purdue University agricultural economist and Purdue Extension cropping systems specialist, said farmers should check with their insurance agent for specific details of the policy they enrolled in last March.”

The news update explained that, “‘Policies differ,’ Langemeier said. ‘With the significant rainfall and planting delays we’ve experienced this year, it is very important for producers to know what their policy will and will not cover.’

“Prevented planting coverage could become an issue in some locations, he said. Under some policies, farmers can plant a cover crop on land they have claimed for prevented planting coverage, but cannot harvest forage until after Nov. 1.

“Prevented planting coverage is intended to protect growers if they are unable to plant their crops by the deadline or in the late-planting period. Benefits apply to machinery, land rent, fertilizer, field preparation, labor and repairs and other planting costs but do not cover lost revenue.”

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Lack of Slaughter Capacity an Issue for Farm-to-Table Restaurants

Bloomberg writer Deena Shanker reported earlier this week that, “Despite ever-increasing customer demand for noncommodity meat, there aren’t enough slaughterhouses to keep up. It’s a major hitch in the supply chain—keeping supplies down, prices up, and making the already grueling job of farming even harder.”

The article indicated that, “Even at Blue Hill, which exemplifies the aspirational closed-loop, farm-to-table meal, slaughter of pigs and sheep requires a trip off premises. Under USDA regulations, farm staff must take these animals to a federally inspected facility to serve it at the restaurant or sell it at the Stone Barns store, though an exemption for small amounts of poultry staying in the state allows them to slaughter their chickens, turkeys, and ducks in an on-site, state-certified facility.

“Stone Barns is more fortunate than many other farms, said Jack Algiere, the Center’s farm director. The slaughterhouse is ‘very close, considering,’ he says. Others are forced to ‘drive two, three, four hours for processing.'”

The Bloomberg article added that, “While the situation varies from species to species and state to state, sellers of noncommodity pork, beef, and chicken agree: there simply aren’t enough facilities to humanely and safely kill their animals.

“The numbers are stark. In 1967 there were 9,627 livestock (cattle, calf, hog and sheep) slaughtering establishments in the U.S. That same year, Congress passed the Wholesome Meat Act, requiring producers to use a USDA-inspected facility if they sell meat across state lines. A mass consolidation of the meat industry followed. Today, commodity meat is dominated by large companies. Just four companies sell about 85% of America’s beef and the pork and chicken markets are similarly controlled by huge corporations. By 2016, there were only about 1,100 federally inspected meat and poultry slaughterhouses in the country.

“But customers are increasingly demanding free-range meat from smaller producers that, largely because of the lack of slaughterhouse, aren’t able to supply it fast or cheap enough. Volume sales for free-range meat, for example, was up 26.9 percent in 2016, while conventional was down 0.5 percent, according to data from Nielsen Fresh.”

This week’s article stated that, “Just a handful of large slaughterhouses handle a disproportionate amount of that American meat: Of those approximately 1,100 facilities, 215 large slaughter establishments (defined as 500 or more employees) produce about 75 percent to 90 percent of the country’s volume. At the Smithfield plant in Tar Heel, N.C., for example, approximately 30,000 to 34,000 hogs are reportedly slaughtered each day. At the other end of the spectrum is Dealaman, the only federally inspected hog slaughterhouse in New Jersey, which processes a paltry 1,200 pigs a week.

“The explanations for the struggles of the small slaughterhouses vary but inevitably come down to two interrelated factors—regulations that favor large meatpackers and uneven enforcement of those regulations.”

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House Approves Reducing Regulatory Burdens Act of 2017, Upending an EPA Pesticide Rule

Associated Press writer Michael Biesecker reported yesterday that, “The House on Wednesday passed a Republican-backed measure reversing an Environmental Protection Agency requirement that those spraying pesticides on or near rivers and lakes file for a permit.

“The chamber voted largely along party lines to approve the Reducing Regulatory Burdens Act of 2017. In the preceding floor debate, the bill’s supporters said the rule requiring a permit under the Clean Water Act before spraying pesticides is burdensome and duplicative. EPA already regulates pesticide safety under a different law that gives the agency authority to place restrictions on when and where spraying can occur.

“The current EPA rule was put in place after a lawsuit was filed by environmentalists and commercial fishermen. They claimed the agency was failing to adequately prevent pesticide contamination in protected waters. A federal appeals court agreed in 2009, forcing EPA to start requiring the permits.”

The AP article explained that, “The bill now heads to the GOP-dominated Senate, where a similar version previously failed to pass under threat of a veto by then-President Barack Obama. Supporters now hope to send the measure to the desk of Trump, a Republican who has made rolling back government regulations a focus of his administration.”

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Americans Buying More Organic Products Than Ever, Survey Shows

Kristen Leigh Painter reported on the front page of the business section in today’s Minneapolis Star Tribune that, “Americans are buying more organic food and household products than ever, according to a new survey.

“The research — released Wednesday by the Organic Trade Association, the nation’s leading organic industry group — offers a glimpse into how the market is developing and where there is the greatest demand for organic products.

Sales of organic food and goods crested at $47 billion in 2016, an increase of more than 8 percent over the previous year.”

Graph from The Minneapolis Star Tribune.

The article noted that, “And while there are a growing number of organic personal care and household products on the market, food still accounts for the vast majority of all organic sales, with $43 billion last year. Organic food now boasts more than 5 percent of the nation’s total food sales.”

Ms. Painter added that, “Fresh fruits and vegetables are most consumers’ gateway purchase into organic. It is easier to understand the potential benefits of buying raw produce that was grown using organic methods than it is to grasp how organic standards translate into a processed or packaged food, or especially household products.

Meat and poultry is another segment showing strong consumer demand for organic. Sales of organic meat and poultry grew more than 17 percent to $991 million last year, marking the category’s biggest yearly gain.”
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Small Investors Show Little Interest in U.S. Startups

Bloomberg writer Lizette Chapman reported last week that, “It’s been a year since U.S. rules went into effect enabling anyone — not just the ultra-wealthy — to buy a slice of a startup.

“Turns out, few are interested.

“Investors sprinkled about $38 million across 142 companies since May 2016 when Title III of the JOBS Act allowed equity crowdfunding for non-accredited investors, according to data from industry tracker NextGen Crowdfunding LLC.”

Graph from, “U.S. Startups Fail to Attract Crowd of Small Investors,” by Lizette Chapman. Bloomberg News (May 19, 2017).

The Bloomberg article noted that, “The slow start is a rounding error in the larger system — venture investors plowed more than $69 billion into startups during 2016, according to the National Venture Capital Association — and a little surprising, according to Richard Swart, a founding board member of the Crowdfunding Professional Association.

“‘Everyone in the industry thought there’d be more uptake,’ said Swart, who also serves as chief strategy officer at NextGen. ‘We all expected these numbers to be 2X to 5X what these numbers were.’

“Swat said the practice is still in its infancy. Wefunder, StartEngine and SeedInvest are the primary crowdfunding platforms, and many founders aren’t aware that equity fundraising is an option. Of those who explore it, many decide it’s not worth the hassle and expense.”

Last week’s article added that, “Technology startups, quite understandably, have largely ignored the new fundraising option because they benefit more from the existing system. Founders can raise an unlimited amount of money from accredited investors without spending a dime or having to broadly publicize company financial information. Cash from those investors is more valuable, too, because it comes with investors’ expertise and personal networks that founders can tap to hire employees and win customers.”

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FarmStart Surpasses $10 Million in Investments to Startup Agriculture Ventures

A news release last week from Farm Credit East stated that, “FarmStart, an innovative Northeast program to help individuals get started in farming, announced it has invested more than $10 million in beginning farmers’ businesses. Since the program’s inception just over 11 years ago, it has committed more than 10 million dollars to 221 beginning farmers.

“‘Farm Credit East has a long-term commitment of helping individuals get started in farming, forest products and commercial fishing,’ said Bill Lipinski, Farm Credit East CEO. ‘We recognize the demands for capital and financial management skills that can make it difficult to establish a new business, so we’re pleased to provide through FarmStart the capital and support to get them started.’

“‘Surpassing $10 million in FarmStart investments is an exciting milestone and indicates the continued interest of young entrepreneurs to enter the industry,’ commented Lynn Weaver, FarmStart program manager.”

The update added that, “The first initiative of its kind in the United States, FarmStart helps to fulfill Farm Credit’s vision of a vibrant, entrepreneurial agricultural community today and tomorrow. The program invests working capital of up to $75,000 to help new northeast agricultural businesses become operational. A FarmStart advisor also works with each participant to help the new business stay on track toward achieving their business objectives. In addition to the 221 beginning farmers, FarmStart has also invested in a startup farmer-owned cooperative and a food hub enterprise.”

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Two Purdue Agricultural Startups Receive Funding

A news release yesterday from Purdue University indicated that, “Two Purdue University agriculture-based startups each have received $50,000 investments from the Purdue Ag-celerator, a plant sciences innovation fund operated by Purdue Ventures, the capital access arm of the Purdue Foundry, with assistance from the Purdue College of Agriculture, Purdue Research Foundation’s Office of Technology Commercializationand the agricultural industry.

“One recipient is Akanocure Pharmaceutical Inc., a startup commercializing an innovative synthesis platform that will allow them to synthesize complex polyketide building blocks to act as crop protection agents (fungicides and herbicides). The other is VinSense LLC, a company developing a software platform to help grape growers and winemakers optimize quality and yields in their vineyards.”

The news item noted that, “The Ag-celerator is a $2 million fund supported through a Purdue Moves initiative and designed to provide critical financial support for Purdue innovators wishing to commercialize patented intellectual property or Purdue know-how technologies in plant sciences, including areas of research in crop optimization, hybrid and seed development and precision agriculture.”

Yesterday’s update added that, “Previous Ag-celerator investments went to Phicrobe LLC, a startup commercializing an innovative method for the inexpensive and rapid detection of pathogenic E. coli in food and food product environments, that received $75,000 in funding and Hydro Grow LLC, a startup developing a refrigerator-sized automated device to grow vegetables in consumers’ homes, that received $25,000.”

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Retail Real Estate Continues to Slide

Adam Samson reported earlier this week at The Financial Times Online that, “Shares in companies that own and manage US shopping malls and other retail properties dropped on Tuesday, the fourth-straight decline, amid mounting anxiety over disappointing sales at department stores and clothing retailers.

“The S&P 500 retail real estate investment trust index dropped 1.9 per cent on Tuesday, and has tumbled 6 per cent since the end of trade last Wednesday.”

The FT article stated that, “Investors have been fixated on a string of sales misses in recent days disclosed by the best-known US department stores, such as Macy’s, Kohl’s and JC Penney.”

Mr. Samson added that, “In a sign of the rising jitters, shares in Simon Property Group, the biggest US mall operator, have slid 7 per cent since last Wednesday to $154.13.”

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