Agriculture tech startup Phytelligence shuts down after losing dispute over Cosmic Crisp apple variety

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Cosmic Crisp, a promising new apple variety, was at the center of a legal dispute between Phytelligence and Washington State University. (Phytelligence Photo)

Phytelligence, a Seattle startup behind a novel method of rapidly growing fruit trees, is shutting down just months before the launch of Cosmic Crisp, a highly anticipated new apple variety at the center of a dispute between the company and Washington State University.

Earlier this week, the company’s board of directors unanimously authorized management to appoint a general receiver to administer and liquidate its assets, according to a Sept. 25 message to shareholders from Phytelligence CEO Glen Donald, obtained by GeekWire.

Phytelligence CEO Glen Donald. (Phytelligence Photo)

“After careful consideration and deliberation, Phytelligence’s Board of Directors has determined that the company is insolvent, and cannot continue to operate as a going concern,” Donald told shareholders in the message, without detailing the reasons for the decision.

Donald did not respond to requests for further information about the closure.

Phytelligence grew and sold plants using a system based on technology developed by Washington State University professor Dr. Amit Dhingra that used a nutritious gel to help fruit trees like apples, cherries and pears mature faster with higher survival rates.

“It’s obviously a big disappointment – not only for the wonderful team of talented employees at Phytelligence adversely impacted by this, but equally disappointing for the farmers who embraced, and need, their technology,” said Steve Rector, treasurer of Cowles Company, which led a $7 million funding round for Phytelligence in July 2017. “The Phytelligence protocol is still the best method out there, and perhaps through this process there will be an effort to continue to find a way to utilize their technology. There’s a big market and a big need.”

Phytelligence had been battling WSU in a pair of lawsuits that argued over the startup’s use of the Cosmic Crisp apple variety, which the New York Times has called “the most promising and important apple of the future.” The juicy new apple, a cross between Honeycrisp and Enterprise, is known for its taste and long shelf life.

In its lawsuit, Phytelligence claimed that WSU wrongly blocked the company from commercializing Cosmic Crisp. In its own counter-lawsuit, WSU alleged that Phytelligence improperly sold thousands of Cosmic Crisp trees to a grower.

A judge dismissed Phytelligence’s case against WSU in July. The role of the dispute in the decision to close the company isn’t clear, but closure is an about-face for a company that just 14 months ago was raising millions and hiring rapidly.

Over the course of its lifetime, Phytelligence raised nearly $23 million from investors that included Cowles as well as Avrio Capital, Technology Acceleration Partners, Keiretsu Capital, WRF Capital, C&O Nursery and Van Well Nursery, according to PitchBook.

But more recent events signaled that the company was struggling. Donald took over as CEO of Phytelligence earlier this year, following the departures of former CEO Ken Hunt as well as co-founder Tyson Koepke. The startup laid off an unspecified number of workers around the same time. Around 60 employees list Phytelligence as their employer on LinkedIn today, down from 100 in January.

In his message to shareholders, Donald wrote that the board “has concluded that it is in the best interests of the company to make a general assignment of its assets for the benefit of creditors and to file a petition to appoint a general receiver to administer and liquidate such assets in accordance with the Washington Receivership Act.”

In addition to its Seattle offices, the company operated facilities in Pullman, Wash., and a tissue culture lab in Portland, Ore.

Source: Geek Wire

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