Our last blog post explored how we could create an agricultural cluster in northeast Ohio and why we should develop a self-sufficient food economy in the region. We know that an industry cluster can be defined by a set of firms that can benefit from their physical proximity and shared expertise. But it can sometimes be difficult to grasp the full meaning of industry clusters and to develop a working strategy around them. Today we will explore the St. Louis agtech cluster and discover what is behind a successful cluster.
The 500 miles around St. Louis, Missouri has access to 77% of all U.S. corn acres and 81% of all U.S. soybean acres. But geography alone did not create the city’s booming agtech cluster.
A Brookings report in 2018 highlighted the agglomeration effect of St. Louis’s agtech industry: firms share not only facilities, suppliers, and skilled labor, but also industrial knowledge and long-term developmental goals. Biotech firms, research institutions, and economic development organizations partner up to create the infrastructure and build a community for innovation.
Innovation districts like 39 North and Cortex were developed to give the cluster a physical anchor and key partners such as BioSTL, Danforth Plant Science Center, and St. Louis Economic Development Partnership build the cluster’s development strategy together.
Here are some of the main reasons why the St. Louis agtech cluster has been such a success:
Funding at developmental stages. Agtech firms often face high regulatory hurdles that are especially difficult for startups. To help startups carry their products further, many investors and incubators in the St. Louis region are willing to go beyond seed investment. BioGenerator, the investment branch of BioSTL, offers multistage investment for plant science startups.
Accelerators like the Yield Lab focus on late-stage developments and help firms apply for governmental grants and find paths to the market. Investors are able to lure investments (3/4 of BioGenerator’s fund) from outside the region by demonstrating the cluster’s competitiveness.
Scientists are the backbones of this cluster. The St. Louis region boasts the highest concentration of plant science PhDs in the world. The Danforth Center alone employs close to 200 scientists and engages in a wide range of plant science research, such as food security, crop improvement and sustainability, and sustainable bioenergy. Danforth receives a yearly budget of $30 million and its scientists, whose 20% of research time is dedicated to commercializing their findings, bring in millions of dollars of federal grants.
Networking events to build a community with shared goals. Events and conferences such as the annual Ag Innovation Showcase create a targeted networking experience for researchers, entrepreneurs, investors, and policymakers from both in and outside the region. Aside from showcasing new agtech innovations, these events help promote the goals of local agtech players and create opportunities for investments, practice-sharing, and joint ventures. Cluster-based events and gatherings, such as the Venture Café, introduce newcomers to the agtech cluster and help build strong community networks.
Public-private partnership. St. Louis Economic Development Partnership played a crucial role in developing the St. Louis agtech cluster and filling the gaps in funding and long-term planning. It connects public and private funding to businesses and offers finance tools, tax abatements, and lab spaces (e.g. Helix Center) for agtech startups. It also spearheaded the 39 North innovation district and collaborate with private firms and organizations in cluster strategies, incubation, and foreign direct investment attraction.
Despite being significantly smaller than the region’s finance industry, St. Louis’s agtech industry has seen significant wage growth since the early 2000s, with bioscience wages 50-60% higher in the cluster than the statewide average in Missouri. It has remained a high priority for the region’s economic development over the last two decades, because of its competitiveness and the industry’s significant future growth opportunity as the global population increases. The region is committed to continuing building the cluster and their collected bet on the longer-term seems promising.