(Bloomberg) -- Synthetic biology startup Zymergen Inc. has raised $300 million in a new funding round—a signal of investors’ confidence that biological science can be harnessed in novel ways to manufacture products.
The funding round was led by Baillie Gifford & Co., the U.K.-based funds giant, with participation from Baron Capital Inc. and a sovereign wealth fund that declined to be identified, said Josh Hoffman, Zymergen’s chief executive officer and co-founder. Other investors included existing backers DCVC, True Ventures and SoftBank Group Corp.’s Vision Fund.
The fresh cash influx will finance Zymergen’s methods for making materials from polymers to pesticides, and comes almost two years after the Vision Fund led a $400 million round in the company. That round valued the startup at $1.05 billion valuation, according to shares-trading site SharesPost. Hoffman declined to provide the current valuation.
Zymergen’s technology works by manipulating the genetics of microbes. The startup’s scientists run the microbes through hundreds of thousands or even millions of tests, and use machine learning to see which result yields the most promising outcome. Once the scientists design the ideal microbe, they get the microbes to produce molecules via fermentation. Those molecules become part of the animal feed, industrial coating, or whatever the final material the company is developing.
“It’s a viable strategy,” said Frances Arnold, a Nobel Prize-winning professor of chemical engineering, bioengineering and biochemistry at the California Institute of Technology. “The whole premise of the field is you can make molecules the way nature makes them, cleanly, sustainably, often from renewable resources.”
Despite being seven years old, Emeryville, California-based Zymergen still has few tangible products to show off. It is shipping materials to companies, but for the most part won’t name them. The startup said that’s largely because of agreements with customers including big agricultural companies who want to keep their competitive edge a secret, and manufacturers who aren’t quite ready to unveil their Zymergen-based merchandise.
“There’s going to be unquestionably a bit of a delay” as customers incorporate the materials into their products, said Zach Serber, the chief science officer.
One of the few companies Zymergen has publicly said it is working with is Sumitomo Chemical Co. In an announcement earlier this year, Zymergen and Sumitomo said they had developed a transparent polymer film that bends yet retains its strength, with possible applications in electronics—think mobile phones that fold in new ways. Serber likened the possibilities to those created when liquid-crystal displays replaced bulky cathode-ray technology, ushering in a wave of innovation.
No products using the technology, which has been in development for four years, have yet been announced. But Zymergen said it expects that the film, called Hyaline, will be in use in consumer electronics gadgets later this year.
“One of the challenges in the Valley is the timeline to bring real physical products to market is a little bit longer than venture capitalists are used to,” Hoffman said, adding that by chemical-company standards, four years is impressively short. “This takes real time. This isn’t a thing where you can fake it till you make it.”
The company has also hit other milestones. Last month, Zymergen and agricultural sciences company FMC Corp. announced a partnership to find alternatives to chemical pesticides. And the company has already tweaked a microbe found in catmint and used it to formulate a not-yet-commercialized insect repellent for humans.
Zymergen has taken a wide-ranging approaching to industries and products, while other startups using similar science have been more targeted. Santa Monica, California-based startup Provivi Inc., for example, recently received regulatory approval for its pheromone targeting the fall armyworm, which ravages corn crops in Mexico. The product was developed using synthetic biology. “The pheromones would be too expensive to make using previous chemical routes,” said Arnold, the Nobel prizewinner and a Provivi co-founder.
A growing number of startups owe their existence to fermentation combined with engineered microbes. That’s how Impossible Foods Inc. makes its burgers, Bolt Threads Inc. makes its silk, and Pivot Bio Inc. makes its fertilizer. Ginkgo Bioworks, a Boston-based startup, has raised $789 million and, like Zymergen, sells components based on its engineered microbes to make end products including scents and sugar replacements, in multiple industries.
Some synthetic biology companies have struggled to live up to investor expectations. Amyris Inc., where some Zymergen executives previously worked, went public at a price of $16 a share a decade ago, shot up to more than $250 a share soon after, and now trades at about $3.
©2020 Bloomberg L.P.
Advertisement