BayoTech funding round to boost development of new fertilizer-manufacturing system

FORT COLLINS — BayoTech Inc., a biotechnology startup with roots in Boulder and Larimer counties, has raised a $1.5 million Series A funding round as it works to develop a smaller, more cost-effective system for manufacturing nitrogen fertilizer.

Cofounder and chief science officer Scott Dyer said Tuesday that the hope is to be able to take the system to market about two years from now, helping not only drastically reduce the cost of producing fertilizer but also the transportation costs associated with delivering it to the end user, thanks to the BayoTech system’s compact nature.

BayoTech’s system alters the chemical reaction used to produce hydrogen — one of the key inputs for making ammonia, which is then used to make the nitrogen fertilizer used on crops — so that 25 percent less natural gas is required. Dyer said the cost of natural gas is the largest cost of producing fertilizer, and that about five percent of all natural gas in the world is consumed in the manufacture of ammonia for fertilizer.

In addition to increasing efficiency, the system can be shipped in three 40-foot shipping containers. The system can be used to produce 50 tons of urea, or nitrogen fertilizer, per day — enough to produce 16 million bushels of corn, according to BayoTech.

That small size of the system means that farm-services companies such as Agfinity, Crop Production Services or other distributors could theoretically produce fertilizer locally and then sell it to farmers, rather than buying from a third party, having fertilizer shipped in, and then selling it.

The BayoTech system will sell for about $15 million, Dyer said, noting that one customer has already said it would like to purchase the output of 100 BayoTech systems per day.

“So when we get to (the commercialization stage), the product will already be sold prior to us putting a facility in the ground,” Dyer said.

Dyer said the Series A funding, which came from Cottonwood Technology Funds, will help BayoTech build a prototype of the hydrogen-producing portion of the company’s system.

BayoTech’s technology was developed at the Sandia National Laboratory in Albuquerque, N.M., and licensed to BayoTech.

Dyer — who is based in Fort Collins and whose background includes stints with companies such as Deere, Sandoz and Monsanto — cofounded the company about a year ago with CEO Justin Eisenach and chief technology officer Milton Vernon. Eisenach, founder of Gerard’s Bakery and former president of Agrebon, is based in Louisville. Vernon, a retired nuclear engineer, is based in Albuquerque, where BayoTech has three other employees and is developing the hydrodgen prototype. Dyer said it’s yet to be determined where the company will be based once it reaches commercialization.

While the focus of BayoTech right now is on the manufacturing of fertilizer, Dyer said the technology could also be used strictly for hydrogen as a fuel source for vehicles.

“We’ve chosen fertilizer because that’s our background,” Dyer said.