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$5.8 billion invested by VC’s in bio-based chemicals; focus shifts to disruptive synthetic biology.

$5.8 billion invested by VCs in bio-based chemicals; focus shifts to disruptive synthetic biology (Pic courtesy of Zymergen Data Science).“VCs have shifted focus this year to commercializing bio-based products that offer improved performance, not just greener replacements for petro-based compounds…”

New research has found that synthetic biology start-ups have raised 53% of all VC funding in bio-based materials and chemicals, as venture firms flock to technology platforms such as DNA synthesis-as-a-service. Venture capitalists have pumped in $5.8 billion into bio-based materials and chemicals (BBMC) start-ups since 2010, reflecting the drive for sustainability, performance, and alternatives to petroleum feedstocks. While from 2010 to 2015, the investment focus was on drop-in replacements for established chemicals, in 2016 VCs focus has shifted to disruptive synthetic biology (synbio) and conversion technologies, according to Lux Research. Synbio startups attracted over $300 million, accounting for 53% of all VC investment in 2016 (up to October 11th ), and three of the top five deals. Fermentation and catalysis had funding shares of 20% and 16%, respectively.

VCs in 2016 have taken a step back in the value chain to focus on upstream technology platforms like DNA synthesis-as-a-service and automated genomic engineering and lab equipment, said Victor Oh, Lux Research Analyst and lead author of the report titled, Show Me the Money: Where Is Venture Capital Placing Bets in Bio-based?

Synbio companies are embracing information technology like BioCAD and BioLIMS to create disruption and to integrate new digital genetic tools like CRISPR gene editing, he added.

$5.8 billion invested by VCs in bio-based chemicals; focus shifts to disruptive synthetic biology. (Source: Lux Research)

Lux Research ( @LuxResearch) analysts built a database of companies and investments in the BBMC space. Among their findings:

  • Synbio poised to grow bigger.The top five VC investments Zymergen, Gingko Bioworks, Twist Bioscience, Elevance Renewable Science and Bolt Threads reveal an emphasis on automating synbio. These five have raised $430 million in total, and growth of these platforms should lead to even bigger numbers for the segment in 2017.
  • Spider silk catches fancy. Spider silks superior properties over those of conventional fiber materials like nylon and silkworm silk have prompted big deals, like $82 million for Bolt Threads over the last two years. Japans Spiber and Germanys AMSilk have also pulled in big deals, and up-and-comers like Araknitek and Spiber Technologies may be up next.
  • Low oil hits drop-ins, substitutes. Amid low oil prices, VCs have shifted focus this year to commercializing bio-based products that offer improved performance, not just greener replacements for petro-based compounds. About 80% of VC investment in 2016 was on improved products, as opposed to only 46% from 2010 to 2015.

The team at LBio-Based World Quarterly Issue #4ux Research have a complimentary webinar coming up, The New Face of Bio-based: How Performance Enables Sustainability in Tomorrows Products, on January 17 at 11:00 EST. And data in this articles is taken from a report, titled Show Me the Money: Where Is Venture Capital Placing Bets in Bio-based? is part of the Lux ResearchBio-based Materials and Chemicals Intelligenceservice.


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