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which is paying “millions” while it prepares to launch a new kind of food crop seed, which will need to win FDA approval before it can reach the market, hopefully in a couple years, Todaro says. If that happens, Targeted Growth will stand to collect a “big royalty,” he says.
Energy works differently. Instead of collecting licensing fees on products other people make, Targeted Growth has decided to make the revved-up seeds for renewable fuels themselves. Camelina is used to make jet fuel, and what Todaro calls “Sugarcorn” is used as a feedstock for simple sugars that are refined into ethanol. The other energy-producing organism is genetically-modified algae, which, Todaro admits, is years away from becoming commercially viable. “We understand how hard algae is,” he says. “We’re doing the science, not just trying to do a press release.”
OK, but how does this all add up on the income statement? Targeted Growth has been around since 1998, and it isn’t yet profitable. The company walked away from a financing term sheet last fall, in which it could have raised tens of millions of dollars. Todaro was unapologetic about this point (which I’m sure must make many entrepreneurs scratch their heads in this environment). The company has raised $32 million in venture capital since May 2006, from Capricorn Management, AllianceBernstein, Integra Ventures, and WRF Capital, among others.
“We have deep-pocketed investors, and we’re much closer to profitability than people think,” Todaro says. “We create more value by building up our science than by selling or licensing today. I’d rather make $10 tomorrow than $1 today.”
Confident as he may be, he wouldn’t go so far as to predict when the company will turn profitable. He didn’t name any names when I asked him to pick a peer, or a competitor that’s trying to do something quite like Targeted Growth. “There are very few companies like us. The time horizons are quite long. It’s not an obvious place to be. It’s really not for the faint of heart.”