Angel investors' $500,000 aims to boost sales of dairy-based health products.
The word mastitis can strike fear into the heart of even the staunchest dairy farmer. The painful udder infection is the most common disease in dairy cows and can have a huge impact on milk production.
Antibiotics are the most common treatment, but using them means the cow must be isolated, sometimes for weeks, and the milk thrown away.
However fledgling Hamilton company Quantec has received a $500,000 windfall to further develop its unique non-antibiotic treatment for bovine mastitis.
The cash injection - half from Waikato-based venture capital fund Central Capital Investments, half from the New Zealand Venture Investment Fund - will be spent on further testing of the mastitis treatment, and on boosting sales of Quantec's other products - breath mints and chewing gum, and a soothing cream for skin conditions such as acne - which will be on sale in the United States and China this month.
Quantec co-founder Dr Rod Claycomb says the Asian market is more open to natural products, while US customers are more demanding, and want as many independent clinical trials as possible.
"A lot of companies have made misleading claims about their natural products and that's led the [US] industry to really make sure what types of scientific justification [companies] actually have."
Quantec tries to rely on hard science, he says, but clinical trials can take up to a year, and don't come cheap.
"You can't run a proper clinical trial for under $40,000-$50,000; it can stretch to $100,000 depending on how many subjects you're testing."
Claycomb spent two years pitching to Kiwi angel investors, and also tried his luck in the US.
New to the idea of making sales pitches, and with a science and engineering background, he says he was forced to "de-science" his language and put everything into terms that business investors would understand. So, to explain what Quantec does, he says: "We pull [the product] out of the milk, isolate it and turn it into a freeze dried ingredient."
Eventually, Hamilton venture capitalist Central Capital Investments (CCI), which had previously turned him down, called Claycomb back for a re-pitch, and the deal went ahead.
Rory MacGillycuddy, spokesman for the NZVIF seed-funding partner Angel Link, says Claycomb's and co-founder Dr Judy Bragger's tenacity and intensity sold the idea to CCI, as did the fact that the technology could address two markets: human health and animal health.
"As the dairy industry gets more lucrative an unproductive cow is an opportunity cost. And on the human health side, they'd already progressed well in trials."
Federated Farmers dairy chairman Lachlan McKenzie estimates that mastitis can cost about $200 in treatment and lost milk production for every cow. "You have to hand milk them, treat the infection, isolate the cow ... it takes a lot of time and energy at a time when you don't need the extra hassle."
Quantec is a spin-off of dairy equipment firm DEC International, one of the world's first companies to invest in "online" or "at cow" milk sensors, which measure various components - such as fat, protein and progesterone - as the milk flows from the cow. This information helps farmers spot certain diseases, or deficiencies in the milk, and saves them from manually taking samples and waiting for lab tests.
Claycomb was headhunted from his US-based agricultural engineering job in 1999 to set up the New Zealand branch of DEC's milk sensor R&D programme. He and Bragger discovered IDP (immune defence protein), a naturally occurring group of proteins in milk that fight infection.
As well as the potential to treat bovine mastitis, the pair discovered it was also an effective ingredient in human health products.
In 2007 DEC spun off that part of the business and next year Bragger and Claycomb bought and named the company.
Now based in the Waikato Innovation Park, Quantec outsources making of the finished human health product that goes into lozenges, creams and gum. It licenses use of the animal health ingredient.
Claycomb says the natural products market is huge, and having a milk-derived product differentiates Quantec from the competitors. It does, however, mean vegans and people allergic to dairy can't use the products.
"But we rely on the fact that New Zealand has a great image in the world of dairy.
"The fact we're from New Zealand gets us a seat at the table quite quickly."
Angel Link's MacGillycuddy says a high level of joint ventures between regional angel investment groups is helping to give small companies the New Zealand Inc approach to get them off the ground.