By making better, greener alternatives to petrochemistry, Zymergen sees a huge economic and environmental opportunity
As the smoke from a dozen wildfires darkened San Francisco, Josh Hoffman took his two children outside to see the surreal morning sky. It looked like a dystopian scene from Blade Runner 2049.
“My kids were scared because the sun never rose, and when it did it looked like a dying planet,” says the CEO of Zymergen, a biomanufacturing company. In the apocalyptic skies, Hoffman saw the end of times that so many warn about if we don’t get a handle on climate change. “It’s not going to be solved with gentle nudges to use a little bit less power. We need real technology-based innovation.”
Warmer, drier conditions, increased drought, and a longer fire season…these are just a few potential results of climate change. But by making better, greener alternatives for the $3 trillion petrochemistry-based chemicals and materials industry, Zymergen sees a huge economic and environmental opportunity.
Investing in the future of manufacturing
Investors see the opportunity, too. In September, Zymergen announced one of the largest deep tech investments of 2020 — $300 million — to accelerate its pipeline of high-performance chemicals and materials. The investment includes initial Series D funding led by Baillie Gifford, Baron Capital Group, Perceptive Advisors, and a number of current investors. Zymergen expects to raise additional capital in Q4 as part of the Series D round.
Hoffman says about 60% of Zymergen’s cash is going to new pipeline and platform developments, and another 20% is going to sales and marketing for existing products such as Hyaline, a bioelectronic film that will probably end up in your next smartphone, laptop, watch, or television. Hoffman says to expect two more product announcements in the next 18 months.
“We’re doing what you’d expect for a company at our stage,” he says.
To appreciate Zymergen’s rapid progress and the potential for synthetic biology companies to sustainably transform the $3 trillion chemical and materials industry, you only have to go back 10-15 years to see where the field began.
Competing with a barrel of crude oil
In the early 2000’s, many of the brightest minds in synthetic biology (Jay Keasling, George Church, and Chris Somerville, to name a few) started companies and institutes to apply their new biotechnology toolkit to the biggest, most important problem they could think of: reducing carbon emissions by replacing gasoline with biofuels. Upstarts like Solazyme, Amyris AMRS +2%, and Gevo GEVO +2% went head-to-head with Big Oil by trying to make biofuels that were cost-competitive with dirty fossil fuels pumped out of the ground.
In retrospect, this was about the hardest problem they could choose. Besides just overcoming the technological challenges of using biology to make a commodity chemical, these early innovators were also up against an industry with trillions in infrastructure, decades of experience, and deeply entrenched interests. Synthetic biology continues to fight the good fight in companies such as Joule, Sapphire Energy, Synthetic Genomics, Qteros, and many others. But in today’s world of cheap oil, where the United States spends ten times more on fossil fuel subsidies than education, biofuels remain economically challenging.
This led the synthetic biology industry to seek different ways to compete with a barrel of oil. It turned its attention to the smaller non-fuel part of the barrel that yields products like perfumes, skis, running shoes, toothpaste, and even medicines. These so-called high-value compounds represent much of the value of petroleum. This is where Zymergen sees the opportunity.
“I think you’re going to see a huge drop in demand for oil,” Hoffman says. First, he believes companies like Zymergen will succeed in using biology to make better high-value products than you can get from oil. He also believes there will be a drop in the demand for fuel as Tesla TSLA +1.9% and other electric cars become mainstream and affordable. And here Hoffman is quick to point out that tech companies like Tesla are winning on performance, not sustainability.
“It’s not that Tesla is a great electric car. It’s just a great car,” he says.
Simply better products
In the chemical industry, Hoffman says that people have been cracking hydrocarbons and putting the resulting building blocks together to make chemicals and materials for 150 years. He says product innovation in the industry has slowed to almost nothing, and here’s why: If you crack a hydrocarbon, you will get around 15 intermediates, maybe a couple of hundred base monomers, and a limited number of polymers. But biology gives you many more building blocks with untapped properties. Zymergen thinks of petrochemistry like a black & white silent film, and biology like multichannel, live streaming, interactive entertainment.
Hoffman sees giants like Dupont and BASF as two of Zymergen’s future competitors (Zymergen’s Hyaline film is already competing with Dupont). He says biomanufacturing has better economics than petrochemistry.
“We don’t have to build a $200 million plant to bring a product to market,” he says, instead using reusable bio-based fermentation that makes capital expenditures much lower.
Also, he says biomanufacturing processes are safer. “Every time a hurricane hits the Gulf, you hear about chemical plants blowing up or spills sickening people and animals. When you make stuff with biology, it’s a winery, not a refinery. In biomanufacturing, you might spill some corn sludge on the ground, but people don’t die.”
The father of green chemistry
n a move that signals and validates Zymergen’s sustainability aims, the company announced in July that world-renowned green chemistry leader John Warner joined Zymergen as a Distinguished Research Fellow to lead outreach, ideation, and commercial explorations around sustainability and green chemistry. As much as anyone, Warner embodies the Zymergen ethos to “partner with biology.”
“Biology outperforms humans hands down, not only in the things it makes but also how it makes things,”
Warner says. He says that making many of humankind’s best products requires heating to high temperatures, putting under high pressure, and/or using harsh chemicals. “Biology does most everything at room temperature and pressure, with water as the solvent,” he says.
Warner says when you do chemistry in a multi-ton reactor, there is no expectation that it’s going to be compatible with the environment. But if you start your reaction in a living organism — as with the engineered fermentation approach of Zymergen and other synthetic biology companies — he says, “That’s an interesting starting point.”
As far as transforming the $3 trillion chemical and materials industry, Warner says that never in history did a new technology have an easy time replacing the old technology.
“The status quo has a way of holding on to itself,” Warner says, and replacing petrochemical processes with bio-based processes is the most difficult of the twelve pillars laid out in his groundbreaking 1998 book, “12 Principles for Green Chemistry”. But, he continues, “successful companies recognize the status quo, find a way of innovating, and they succeed in the future because of that balance of defeating the inherency of the status quo to move forward.”
To hear Josh Hoffman talk about it, Zymergen doesn’t simply want to move forward. It wants to take the tiger by the tail.
“We get to make better products, and we get products that aren’t torching the planet,” he says. “I’m pretty psyched about that.”
Subscribe to my weekly synthetic biology newsletter. Thank you to Kevin Costa for additional research and reporting in this article. I’m the founder of SynBioBeta, and some of the companies that I write about are sponsors of the conferences I run and the newsletter that I write.
Originally published on Forbes: https://www.forbes.com/sites/johncumbers/2020/10/10/with-300-million-in-new-funding-zymergen-aims-to-sustainably-transform-the-3-trillion-chemical-and-materials-industry/0