Merck acquires Raleigh-based Targan and its poultry tech
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Pharmaceutical giant Merck is acquiring a Raleigh company whose technology helps poultry producers identify the sex of chicks and vaccinate them.
Why it matters: Merck's acquisition of Targan, whose labs are located in a redeveloped Kroger on Six Forks Road in Raleigh, gives Targan access to Merck's global reach while delivering a significant exit for local investors.
- Targan's automated technology can sort days-old chicks by their sex, a useful tool in commercial farming, where egg-laying hens are a valuable commodity, and vaccinate them via a spray method more accurately.
Driving the news: The price of the sale was not disclosed by Merck or Targan, but Justin Wright-Eakes, the founder of Raleigh-based Oval Park Capital, said it could be a pivotal moment for his investment firm.
- In a region that has long complained about a lack of access to early capital, potential wins like Targan can help keep money flowing into the next generation of startups in the region.
- Targan's most recent funding had come in the form of a $100 million financing agreement with Symbiotic Capital in March.
Zoom in: Oval Park, founded in 2018, was one of the earliest investors into Targan, which now employs more than 100 people, and invested in the company across five funding rounds.
- "It's our first position and by far our biggest position," Wright-Eakes told Axios. "While I'm prohibited from giving the actual number, I can say that the proceeds coming back to Oval Park basically return every dollar that we've deployed into every company to date."
State of play: Wright-Eakes hopes that it validates his firm's decision to invest in hardtech — physical technologies and engineering-based products — rather than software.
- Oval Park primarily invests in the Southeast, and around 40% of its investments are in local companies, including startups like the antiperspirant company Carpe, the climate tech company Natrx and imaging company Swir.
What's next: Wright-Eakes said he hopes the success of Targan and some other investments will help it complete funding for its second investment fund.
- Oval Park, whose headquarters are in North Hills, is targeting a $100 million fund.
- The firm's first fund raised $20 million. Including capital deployed through special purpose vehicles, Oval Park has invested about $87 million overall.
- Wright-Eakes said that $100 million would give Oval Park enough capital to meaningfully invest in around 20 companies and expand its staffing. He added that a third of those future investments will likely be local companies.
What they're saying: "I think Targan shows that you can build disruptive physical technology companies [in the Triangle], and get acquired by Fortune 50 companies," Wright-Eakes said.
- "It's also going to create a lot of wealth," he added. "And those people often become angel investors and founders and it will recycle through our [startup] ecosystem."