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FEATUREWhat if our factories could breathe?
Using microbes to produce chemicals and fuels has long been a dream, but now a third wave of technological developments is making it economically viable.
What if instead of using the usual methods to create chemicals, fuels and other products, we can employ life itself, harnessing the double helix to power our industry?
Using living microorganisms to carry out industrial functions has existed on a relatively small scale for some time. However, it has been difficult to scale up engineered — or synthetic — biology to an industrial scale, and thus making the processes commercially viable has remained out of reach. That is now changing.
The biggest hurdle in getting microbes to do your bidding at a large scale is the same thing that makes them so interesting in the first place – they’re living things, and they respond to their environment as living things do.
They’re not always predictable, they’re sensitive to where they live, produce waste by-products that are useless to the process, and – like all living things – they die. Individual organisms can malfunction just as easily as man-made tech. For microbes, whose lifespans can sometimes be measured in days, evolution itself becomes a force that needs to be factored in.
A big part of the solution is genetic muting: silencing the parts of an organism’s genetic code that don’t serve you. You stop them from expressing any elements or functions other than exactly those which perform the task you want them to.
The road to engineering biology for industry can be roughly broken up into three waves. The first wave began with figuring out how to use plants or organic fermentation systems to produce desired outputs in the first place. It was followed by a second wave, which sought to leverage emerging technologies like AI and automation to speed up the process and reduce the cost of the process design.
The third wave, which we have now entered, takes a deeper dive inside the cell itself and engineers it to do exactly what you want, reducing the cost of the actual end-product.
One area that may benefit from this third wave is biofuel — a potential key to decarbonising the transport sector, particularly areas like aviation, but challenging to produce at scale. However, companies like Viridos, which is using algae to produce biofuels for heavy transport like aviation, are demonstrating new ways to ramp up production.
What Viridos has been able to successfully demonstrate where most others have not, is the ability to take these algal populations and cultivate them outdoors – essentially in big ponds – as opposed to the controlled indoor tanks that may be more efficient but are far costlier and more difficult to scale. The challenge is controlling the population so that it can survive any contamination in the pond, but also not growing so fast it becomes toxic to itself.
Last summer, Viridos hit a production milestone of 9.1 grams of bio-oil per metric metre per year for its open pond system – 10 grams is considered the threshold beyond which the system becomes economically viable.
Another sector making use of synthetic biology is food – both for humans and livestock. Companies like California-based Calysta are working to make animal feed/food material using gases as an input.
Gases, including nitrogen and oxygen, are used as feedstock for microbes, which then produce protein that gets collected and reconfigured into different kinds of feed. It is starting with feed for fish and other livestock, with plans to expand into pet food markets and ultimately into ingredients for human food.
Breaking into the human food supply chain will be more of a challenge, as microbe-based protein may sound unappetising to the ear of the average consumer. One thing it does have going for it is the contrast with other proteins like insects, which trigger a stronger disgust response from consumers. The popularity of other microbe-based products such as spirulina and miso also bode well.
Using gas as feedstock also sets up a convenient symbiotic relationship with energy companies, which often have to deal with the costly problem of stranded assets – having to store gas somewhere without an economically viable way to transport it to market. This kind of fermentation operation provides another offtake avenue that prevents them from having to burn the gas off.
It’s often said that without a petroleum industry, there will be no chemicals industry. But the chemicals sector, like so many others, is now looking to decouple from fossil fuels. New methods are being developed by companies like DMC Biotechnologies to use microbes to produce an ever-growing catalogue of chemicals and intermediates that can be used across many applications.
Previous attempts at creating chemicals through microbes tended to focus on one or two end compounds. Despite some successful projects in the past, it ultimately took too much time and money to scale them, as each new strain and scale required teams to go back to the process engineering, according to DMC’s co-founder and CEO Matt Lipscomb.
DMC has taken a different approach, says Lipscomb, creating a standardised process to engineer the microbe, thereby eliminating much of the leg work that would otherwise be involved to produce at any scale, making it predictable and somewhat standardised.
What DMC now has is a library of what it calls “chassis strains”, which have been pre-optimised for various combinations that result in different chemicals on the other side, provided that different routes are selected along the organism’s metabolic pathway. Dextrose is the main feedstock used, and when combined with different sets of enzymes and different energy needs, you will end up with different chemicals.
“There may be 16, 20 or 25 different chemical conversion sets that are all happening within the microbe – that’s what all the different enzymes do, and the microbe itself has the native machinery, the chassis, if you will, to get to a lot of that,” says Lipscomb.
He describes what happens inside the cell as a river with different branches. By throwing different enzymes into the mix, you can redirect where the carbon and energy go within that metabolic flowchart and ultimately end up with a different chemical.
“One set of metabolism reaction kind of gets you to alanine or certain other amino acids, another set gets you to the terpenoids family, another set gets you to the fatty acid family.”
DMC’s main offering is alanine, an amino acid that can be used to make a range of pharmaceutical products, health supplements or other products like detergents, but it has several other amino acids in development. These include valine, leucine and isoleucine, which can be used in human and animal nutritional products. Low- calorie sweetener xylitol is also in the pipeline, along with a wide range of compounds that have yet to be announced.
DMC uses E.coli as the primary microbe platform, mainly because it already is the best-understood microbe in the world, and the company is looking at using a yeast host. Between those two, you can cover most of what is possible through microorganisms, according to Lipscomb.
Reaching commercial scale
DMC has started to reach real commercial scale since raising a series A round in 2019, through which it was able to take multiple products to commercial scale. It was able to demonstrate viability at a 3,000-litre scale at a facility in Delft and was able to take its lead product to full 85,000-litre commercial scale in Germany in 2021.
This kind of technology brings the costs down to the point where chemicals are in play, according to Matt Jones, managing director at Solvay Ventures, which backed DMC as part of its $39m series B round last year, and whose parent company is in search of more sustainable chemical inputs and diversifying away from petroleum.
“Historically, it’s always been you can use these biological processes for pharmaceuticals, more and more you can use them for food. Cost and price points and value points to also disrupt chemistry requires this third wave, and so what excites us is that the techno-economics are getting to the point where it can actually work as a displacement of petroleum,” says Jones.
Coppelia Marincovic, partner at Solvay Ventures, says DMC was one of the few biotech companies it has seen that can actually deliver on cutting costs on chemicals. “If you go into specialities that are very expensive, which a lot of other biotech companies are doing, it’s hundreds of dollars per kilogramme, so you’re tackling really small markets. DMC’s technology enables almost semi-commodity markets – very large markets – and so this is why we think this is transformational.”
Plenty of obstacles remain, however, before micro-based chemicals go mainstream. The most obvious one is simple capacity constraints – it takes an eye-watering amount of money to put steel in the ground and get facilities built, which is exacerbated in today’s fundraising environment where both equity and debt are much harder to come by than they were 18-24 months ago.
The economics around biofuels and sustainable aviation fuels are difficult, but not impossible. Feedstock prices for SAF are almost as high as the fuel itself, and given the quantities of fuel the airline industry needs, it will take time for alternative fuels to make a dent in terms of market share.
One bright spot is the growing buy-in from corporates – both in terms of investment and off-take – for sustainably-sourced industrial materials compared to 20 years ago, especially the more customer-facing corporates.
Governments also have their part to play in the push for more sustainability. Legislation such as the Inflation Reduction Act in the US, and its heavy climate focus, also incentivise companies to cut their fossil fuel use.
Finally, there is an inertia factor. A relative lack of success stories in the space hasn’t helped its momentum, according to Lipscomb. “We need more proof points because there is still a fair bit of very valid criticism. If you look at the 2000s and some of the companies that have gotten public in the last couple of years, it’s been a pretty rocky road. The industry needs some successes to really build the credibility and get the flywheel turning.”OpinionINVESTOR VIEWSMichael MitsakosCo-founder and CCO Arkeon Biotechnologies
The more cases we have that show how industrial biotechnology is superior in terms of costs and reliability, there will be a gradual shift to explore biotech as an alternative way of producing things.Matt LipscombCo-founder and CEO DMC Biotechnology
We need more proof points because there is still a fair bit of very valid criticism. The industry needs some successes to really build the credibility and get the flywheel turning.Matt JonesManaging director Solvay Ventures
You can use these biological processes for pharmaceuticals, more and more you can use them for food. What excites us is that the techno-economics are getting to the point where it can actually work as a displacement of petroleum.profilesStartups to watch1 of 12
- Based: UK
- Founded: 2013
- Funding to date: $17.9m
Jellagen is a UK-based developer of medical grade collagen type 0 for use in tissue engineering and regenerative medicines. The collagen used is derived from jellyfish rather than typical mammal sources, which creates a purer and more versatile substance.
The startup was founded in 2013 by marine biologist Andrew Mearns Spragg, now the company’s managing director and chief scientific officer. Spragg has a doctorate in marine biotechnology from Heriot-Watt University and was awarded a Royal Society of Edinburgh Enterprise Fellowship at St. Andrews University in 2000.
Jellagen has raised $17.9m since its launch, most recently a $10.8, series A round in 2022, with backing from investors including the Development Bank of Wales and the seafood production corporation, Thai Union Group.2 of 12
- Based: France
- Founded: 2016
- Funding to date: $23m
Microprep, a spinout from the University of Toulouse, creates natural bio stimulants and herbicides, using molecules known as micro- peptides. These regulate gene expression without altering plant DNA. They can be used to stimulate germination, flowering and growth of crops and are a chemical-free alternative to weed control.
Thomas Laurent, the CEO and founder, is a former management consultant and also worked in business development at Toulouse Tech Transfer’s green technologies division for two years, taking research from French public labs to industrial markets.
Founded in 2016, the company has since raised $23m in funding and most recently a $8.8m series A+ round in 2022. FMC Corporation’s venture arm, FMC Ventures, provided financing alongside venture firms such as Sofinnova Partners and Fall Line Capital.3 of 12
- Based: France
- Founded: 2015
- Funding to date: $27.6m
PILI, which was spun out of Université PSL’s Innovation Fund, produces sustainable dyes and pigments to reduce the environmental footprint of the colour industry. By combining industrial fermentation and green chemistry, PILI’s technology generates high performance colour ranges from polymers to paints and coatings avoiding the use of energy and toxic solvents.
It was founded in 2015 by Thomas Landrain, Marie-Sarah Adenis, Guillaume Boissonnat and Jeremie Blache, the company’s CEO. Blache has a venture capital background, while Landrain has extensive scientific experience having acquired a doctorate in synthetic biology at the Insitute of Systems and Synthetic Biology.
PILI has raised $27.6m in total funding, with its latest funding round occurring in early 2023 when it raised $15.8m in a series A round led by Bpifrance with participation from SOSV and Elaia. The company is working on delivering its product to its first customers and setting up a production unit.4 of 12
- Based: US
- Founded: 2021
- Funding to date: $8m
Robigo engineers microbes to create environmentally friendly crop protectants, removing the need for chemically dangerous and soil-damaging pesticides. The technology targets agricultural diseases while being safe for beneficial microbes and human consumers.
US-based Robigo was founded in 2021 by Andee Wallace, CEO, and Jai Padmakumar, who served two years as Robigo’s chief scientific officer. Wallace is a biological engineering and pesticides expert with a doctorate from MIT in the engineering of diatom peptides for the synthesis of silica nanomaterials. Padmakumar also has a doctorate in microbiology from MIT.
Since its launch, Robigo has raised $8m in funding, including a $7m in a seed round led by climate tech fund Congruent Ventures in early 2023. Participants in the seed round included First Star Ventures, a US-based AI and biotech focused venture firm, and Good Growth Capital.5 of 12
- Based: Czech Republic
- Founded: 2016
- Funding to date: $3.7m
Sampling Human, a spinout of University of West Bohemia, has developed an early detection platform for diseases, harnessing genetically engineered cells to analyse other cells in their environment. The platform can detect and classify a small number of cells in a sample of millions through reagent kits and liquid biopsies.
The technology is an advance on standard diagnostic processes which can only sort cells individually and can only analyse one sample batch at a time.
Based in Czech Republic, Sampling Human was founded by Daniel Georgiev, the acting CEO, and the chief scientific officer Bob Englert. The spinout has raised $3.7m in funding, including a $2m raised in 2022 led by Luxembourg-based venture capital firm, i&i Biotech Fund with venture firms such as Longevitytech.fund and Formic Ventures participating.6 of 12
- Based: Australia
- Founded: 2021
- Funding to date: $40.5m
Samsara Eco, an Australia-based startup, has developed enzyme-based technology to enable the infinite recycling of plastic waste. The technology breaks down complex plastic polymers into their original chemical building blocks known as monomers. This reversion can make new virgin-grade monomers without needing fossil fuels to process new plastics again.
Founded in 2021, the startup was founded by CEO Paul Riley, who has 30 years of experience in venture capital and private equity.
Samsara Echo has raised $40.5m in funding, most recently in a $34.7m series A round in 2022, which was backed by corporations such as the Clean Energy Finance Corporation and Woolworths Group’s corporate investment unit, W23. The company also launched a partnership with the Australian National University in 2021 to expand its library of plastic-eating enzymes.7 of 12
- Based: US
- Founded: 2022
- Funding to date: $10m
BlueStem Biosciences is a startup based in the Midwest of the US creating chemicals through anaerobic fermentation. The company hopes the chemical platform will be used by the agricultural and petroleum-based industries to push towards a bio-based future.
The company was co-founded by Billy Hagstrom, the CEO, and Tyler Autera, the chief technology officer, in 2022, who between them have 28 years of experience in biotechnology. Previously, Hagstrom was the executive vice president of strategy and development at Green Plains, a Nasdaq-listed biorefining company, and Autera was the president and
co-founder of US-based company Cannalysis, a premier cannabis testing lab. The startup has raised $10m in total funding. In 2022, BlueStem Biosciences closed a $5m in a pre-seed round with, US-based venture firm Zero Infinity Partners leading the round with other venture firms.8 of 12
- Based: UK
- Founded: 2021
- Funding to date: $15m
Constructive Bio, a spinout from Cambridge University’s MRC Laboratory of Molecular Biology, is developing ways to create new bacterial genomes from scratch and to reprogram organisms’ genetic codes to produce polymers.
Its technologies have created virus-resistant organisms that turn living cells into sustainable bio factories.
Constructive Bio was launched in 2021 by genetic coding expert Jason Chin, who serves as the startup’s chief scientific officer. He is the winner of the EMBO Gold Medal and Royal Society’s Francis Crick Prize for this research and is also a fellow of the Academy of Medical Sciences.
In 2022, the spinout raised $15m in seed funding from deep tech investors such as OMX Ventures and Amadeus Capital Partners.9 of 12
- Based: Denmark
- Founded: 2019
- Funding to date: $5.9m
Denmark-based Cysbio is developing metabolic engineering and synthetic biology approaches to create bacterial cell factories for the production of biochemicals for renewable feedstocks. Its technology can produce selected amino acids through microorganism fermentation and patented sulphated phenolic compounds. These chemicals have uses in the food, pharmaceutical and functional polymer markets.
Spunout from Novo Nordisk’s Foundation Center for Biosustainability in 2019, Cysbio’s founders include CEO, Henrik Meyer; Alex Toftgaard Nielsen, the chief scientific officer; director, Christian Bille Jendresen; and Hemanshu Mundhada, director.
The startup has raised a total of $5.9m, most recently through a 2022 seed round backed by Zhejiang NHU, the China-headquartered chemicals company. Zhejiang has also established a partnership to commercialise Cysbio’s technology.10 of 12
- Based: US
- Founded: 2014
- Funding to date: $53m
US-based DMC Biotechnologies has created a biomanufacturing platform to make chemicals through precision fermentation. It focuses on the production of specialty chemicals, flavours, fragrances and natural products. The DMC platform, which uses a two-stage fermentation process that decouples growth from production, allows precision fermentation to be scaled up beyond what was possible before.
Matt Lipscomb, the CEO, and Duke University graduate Mike Lynch founded DMC in 2014.
Lipscomb has over 20 years of experience in research, starting his career as a scientific consultant at CBR International Corp, a subsidiary of the contract research organisation, Novotech Australia.
DMC has raised $53m to date, including a $34m series B round in 2021 with participation from US-based energy company Breakthrough Energy and manufacturing conglomerate Michelin.11 of 12
- Based: US
- Founded: 2016
- Funding to date: $2.1m
US-based Foray is creating tree-based materials, such as oils and resins, without the need to cit down trees. Similar to lab-grown meat, the startup’s bioreactors grow the “useful” parts of a tree.
Ashley Beckwith, the founder and CEO, launched Foray in 2022. She based the startup on her PhD work in mechanical engineering at MIT. She also served four years at Colorado State University’s Mechanical Engineering Department holding positions such as a mechanical engineering mentor and a research intern for the biomaterials research and engineering laboratory.
To date, Foray has raised $2.1m in funding, from venture capital firms such as The Engine, an MIT affiliated firm, and Boston- headquartered firm Pillar VC.12 of 12
- Based: Canada
- Founded: 2017
- Funding to date: $15m
Genecis Bioindustries is a Canadian organic waste processing startup. The company uses specialised bacteria to convert food scraps into bioplastics that can be used in the food packing and medical tools sector.
The company was founded in 2017 by Luna Yu, the company’s CEO, who came up with the idea while studying environmental science at the University of Toronto.
Genecis has raised $15m in funding, most recently a $7m in a series A round in 2022, led by venture firm Kholsa Ventures, with food manufacturing corporation Heinz Group participating. In early 2023, Genecis received an undisclosed investment from Amazon’s Climate Pledge Fund, through its Female Founder Initiative, which invests $50m in female-founded climate technology companies.
ANALYSISEngineering the Biofuture
In a sense, humankind has been putting microorganisms to work since the ancient Sumerians started brewing beer some 6000 years ago, or when we first began to use yeast to leaven bread. But today, our new-found ability to edit the DNA of microorganisms means they can be tweaked to produce everything from speciality chemicals to food proteins.
Synthetic biology, or the re-engineering of biological systems, is an umbrella term for a vast number of technologies — from cell and gene therapies that can combat diseases like cancer, to developing new mRNA-based vaccines against Covid, to growing cultured meat in a lab. Some of the healthcare benefits are relatively well-publicised and have dominated media headlines. But there are other uses that are less well-known, from agriculture to new materials development.
For this report, we have looked at these more nascent uses, excluding the more mature areas such as cell and gene therapies and plant-based protein production.
This market still tends to be somewhat modest in size — depending on definition — but is seen as having high growth potential.
One report from Brainy Insights estimates the size of the synthetic biology market to have been worth nearly $12bn in 2022 and expects it to grow to nearly $56bn by 2030. It attributes this tremendous growth potential to scientific breakthroughs and innovation which have made it possible to apply biology to so many areas.
Similarly, according to a report by BCC Research, the synthetic biology world market was forecast to increase from an estimated $9.5bn in 2021 to $33.2bn by 2026, at a compound annual growth rate (CAGR) of 28.4%.
Our narrowly defined area of synthetic biology (excluding food and alternative protein applications) only really began to take off with venture capital investors in 2018-19, according to PitchBook’s data. Corporate-backed deals have remained a relatively modest portion of those deals – oscillating between 15% and 30%.
Median deal sizes and median post-money valuations have remained fairly modest. Most deals have been at a seed and early stage. However, those figures have been growing, evidencing its high growth potential perceived by investors.
Geographically speaking, the US and Asia have been the primary regions where engineering biology VC deals have taken place and much less so Europe.
Biotechnology and medicine
Gene editing and so-called “designer babies” have been some of the most talked about breakthroughs on the healthcare side. This has come with some controversy, such as in the last of the He Jiankui affair in China in 2018, where the first genome-edited HIV-resistant babies were brought to life. At the same time, Car-T cell therapy, where a patient’s own cells can be used to combat cancer, are giving hope to many.
But there are a number of other ways that healthcare is using engineered biology.
A great case in point is sitagliptin, sold under the brand name Januvia, a drug commercialised by Merck and used for treating type 2 diabetes. In simple terms this drug increases the secretion of insulin and supresses the releases of glucagon, which drives glucose levels to normal, according to Nature magazine and Wikipedia.
Xiylo, a University of Bristol spinout, similarly discovered a molecule that binds only to glucose, and turned that into a “smart insulin” company, helping diabetics. It was acquired by Novo Nordaisk in 2018.
Agriculture and food
Synthetic biology in the agriculture and food market is expected to witness significant growth in the coming years – from an estimated $3.2bn in 2020 to $14.12bn by 2025, at a CAGR of 34.56% during that period, according to a report by BIS Research. Driving factors behind this expected growth include the growing need for global food security, heightened consumer awareness of the importance of nutrition and greater investments in research.
Potential applications in agtech and foodtech range from crop yield management and development of disease and pest- resistant crops to the improvement of soil health, optimisation of food processing as well as enhancing food nutritional value and food safety.
There are many promising startups in this space. California- based Pivot Bio, for example, is developing a microbial solution that replaces nitrogen fertilisers. It has received backing from several corporate VCs including Tekfen Ventures, Bunge Ventures and Leaps by Bayer, according to PitchBook.
Similarly, Colorado-based DMC Biotechnologies develops bio-based chemicals designed for low-cost, sustainable transformation of multiple product markets. The company is backed by Solvay Ventures, the venturing arm of chemical producer Solvay, according to PitchBook.
Engineering biology is also making strides in materials that could be greener and more sustainable. A case in point would be an application of synthetic biology to the textiles and apparel industry. It is all about living organisms with the potential to become bio-fabrics.
Big global clothing brands have a sustainability and emissions problem when it comes to synthetic fabrics. Artificial leather is made from petroleum derivatives and needs harsh chemical treatment to make it feel and look like real leather, as a blog post on Cleantech.com explains.
The post identifies several startups (Modern Meadow, Provenance Biofabrics and VitroLabs) that specialise in making bioleather, without animals being involved. Modern Meadow makes such leather from yeast-expressed collagen, the primary component of skin, and claims to do it at costs on par with traditional leather. Provenance Biofabrics similarly uses collagen to create leather.
Another interesting application is the harvesting of spider silk. Also known as super silk, protein fibre spun by spiders is five times stronger than steel and more elastic and waterproof. It is, however, very difficult to farm and mass-produce. As the CleanTech.com blog post notes, today genetically engineered hosts (e.g. yeasts, silkworms and goats) can be used to get spider silk. Two companies specialise in this – Bolt Threads, which works with yeast, and Japan-based Spiber which uses E.coli.
Bio-engineered materials can go beyond fabrics and textiles. According to Nature magazine, hyaline films are made from diamine monomers produced by engineered organisms that were optimised using a suite of robotics to build millions of strains in parallel. Such films are clear, flexible and robust to make them suitable for flexible electronic devices like wearables.
The engineering and synthetic biology sector faces some challenges in scaling. While nature may have developed enviable chemistry, bio solutions are not always easy to harvest on a large enough scale to be commercially viable.
As a piece by the Manhattan Institute declared, “despite decades of hype, as well as years of mandates and subsidies, biofuels have never made a significant dent in our need for oil.”
According to IEA data, bioenergy is the largest source of renewable energy globally, accounting for 55% of renewable energy, but only 6% of global energy supply.
The time horizon required for these technologies to mature and in some cases obtain regulatory approvals, are also a challenge for VC and PE investors.
In the case of environmentally sustainable materials, the biggest economic hurdle may be inability to price-compete with commodities like oil and gas or conventional chemicals.
Thus, engineering biology has a long and bumpy way ahead but its disruptive potential is large enough for investors to take an interest.
STARTUP PROFILEMaking proteins out of air – how CO2 can solve the food industry’s climate crisis
Satisfying a growing world population’s hunger for protein is not easy to do in an environmentally sustainable way. Although a wave of plant-based products and vegan alternatives have hit the market, even these come with a carbon footprint about 37-57% that of actual meat.
Other protein technologies must come into to play to solve the problem — and producing protein using engineered micro-organisms is one of them. Arkeon Biotechnologies, an Austrian startup, has created archaea microbes to convert hydrogen and carbon dioxide into 20 proteinogenic amino acids. These acids can be used to create alternative protein ingredients, essential for human health whilst being both sustainable and regenerative.
There are a number of companies producing proteins using precision fermentation, but Michael Mitsakos, co-founder and chief commercial officer, says Arkeon’s process is different from that of competitors.
The amino acids we produce are excreted outside the cells of the organisms,” he says. “Whereas other ‘CO2-to-food’ companies do not excrete amino acids at all as it remains as part of the biomass they are producing.”
Examples of other CO2-to-food-based startups that do not excrete amino acids include AirProtein, a US-based company that has developed AirMeat, which raised $107m over two funding rounds with corporate investors including ADM’s corporate arm, ADM Ventures, Barclays and Alphabet’s GV.
Arkeon Biotechnologies was founded in 2021 by Gregor Tegli, the CEO; Gunther Bochmann, the chief technology officer; Simon Rittman, the chief scientific officer and Mitsakos. The founders have a combined 43 years of experience in the venture capital and biotechnology sectors.
Rittman served six years as the principal investigator and head of the archaea and physiology and biotechnology group at Universitat Wien and Mitsakos was the venture partner for three years at Purple Orange Venture, a Germany-based seed fund.
A promising investment climate
Engineering biology startups have garnered interest from corporations such as Leaps by Bayer and CPT Capital, but Mitsakos says there is still work to be done to convince investors it has mainstream potential.
“I believe the more cases we have that show how industrial biotechnology is superior in terms of costs and reliability, there will be a gradual shift to explore biotech as an alternative way of producing the things we need for our industries,” he says.
Biotechnology startups must also have “operational and financial excellence” to survive, says Mitsakos. A recent study by Labiotech.eu found that a growing number of these startups are failing, due to flawed financial strategy and mediocre science.
“Launching a biotech company from scratch would be a great challenge for any entrepreneur. Having that combination of business co-founders, scientists and technology and engineering experts has helped propel Arkeon to success and can help other startups thrive too,” says Mitsakos.
Certain engineering biology companies have attracted large amounts of funding, especially in the food sector, such as Motif Foodworks, a US-based precision fermentation company that has raised $343.5m since its launch in 2019.
However, applications of engineering biology in other sectors have struggled. Pembient, a US-based company which is creating a bio-fabricated version of elephant ivory to replace illegal wildlife trading, has only raised $500,000 since its launch in 2015.
To ensure that all these bioengineering startups receive equal funding, Mitsakos says that a stronger biotechnological infrastructure needs to be developed.
“The sector needs to make sure that we have enough capacity in terms of facilities and bioreactor capabilities. Also, partnerships
with corporations, industrial companies and government institutions can help provide the resources to allow the businesses to develop,” he says.
Corporations and other venture investments
Arkeon has raised a total of $11.2m in funding, including a
$7m seed round in 2022 which saw venture firms Square One Foods, Synthesis Capital and ReGen Ventures participating. Mitsakos says the capital raised is being used to forward technological upscaling and industrial partnerships.
“The next steps for the company are to increase production output to commercial levels,” says Mitsakos.
Aside from venture capital firms, corporations that have also invested in Arkeon include ICL, an US-based global specialty minerals corporation that supplied $2.9m in early 2023 to the startup.
“We were initially approached by ICL regarding a collaboration that evolved into a full partnership and investment,” Mitsakos says. “At the beginning, we were interested in how ICL wanted to use our amino acids for their products, and from there they became a real investor and partner for us.”
He continues: “I do not see any downsides with working with corporations for investment. Though ICL is our only corporate investor, the ability to work on product applications and investment has been a great combination.
“The operational expertise and closeness to market that ICL brings to the table are important, highly valuable and beneficial for both of us,” says Mitsakos.
Mitsakos is motivated by the thought of fixing the food systems through engineering biology.
“Decoupling food production from resource-intensive agricultural practices and instead using electricity and gases to produce food is an approach to the global climate challenge,” he says. “With Arkeon we’re not only utilising CO2, but we’re also converting it into food, without the need for more agricultural land. Our technology is independent of agriculture, resilient to changing conditions due to climate change, and a way to produce protein sustainably for a growing population.
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