2016 was a turning point for the bio-based materials and chemicals (BBMC) space as the industry realigned to sustained low oil prices, shifting consumer demand, and emerging regulatory drivers. In our latest report, we highlight the big bets investors placed in 2016 (client registration required). To emphasize these trends, we round-up some of the major announcements throughout the year and summarize them into the three key themes outlined below:
Synthetic biology advances with machine learning and robotics
- This year, two companies alone in the BBMC space raised over $200 million combined in VC funding: Ginkgo Bioworks (client registration required) closed a $100 million Series C in June and Zymergen (client registration required) raised $130 million in its Series B in October. Significant funding rounds mirrored explosive growth, especially in talent acquisition as both companies more than doubled employee count in the past year. By integrating machine-learning, robotics, and high-throughput engineering, Ginkgo Bioworks and Zymergen are helping customers improve existing strains and dramatically reduce the timeline for commercializing new molecules in the flavor and fragrance, food ingredient, healthcare, agricultural, and specialty chemicals markets.
- In particular, Ginkgo Bioworks has been more public about its relationships, announcing important strategic partnerships with ex-competitors Amyris and Genomatica (client registration required for both) in June and September, respectively, while also adding Cargill and Archer Daniels Midland (ADM) as customers in September. Through its foundries for automated genetic engineering, Ginkgo Bioworks is quickly becoming an important nexus between gene design, DNA synthesis, and fermentation scale-up to disrupt the synthetic biology space.
Performance takes top priority in enabling sustainability
- In areas like consumer packaged goods (CPG), bio-based materials are becoming increasingly important in meeting the rising demand for sustainable materials with improved functional properties (client registration required). Spider silk stood out in 2016 with significant funding announcements as well as corporate involvement highlighted by companies like Bolt Threads (client registration required) raising $50 million in Series C financing in tandem with a partnership with Patagonia in May. Adidas was the latest to take on spider silk for applications in high-performance textiles by unveiling its Futurecraft Biofabric concept shoe in November with German-based AMSilk (client registration required). Consumers are still expecting the Goldwin’s official commercial launch of its “Moon Parka” in collaboration with Spiber (client registration required) in Japan, but The North Face displayed the prototype in its New York City flagship store just last week.
- While bioplastics have traditionally suffered low market penetration due to high cost and poor performance, companies like Avantium (client registration required) buck the trend by developing its polyethylene furanoate (PEF) for packaging applications with partners like Coca-Cola and Danone. In October, BASF formed a joint venture (JV) with Avantium to accelerate commercialization of furandicarboxylic acid (FDCA), a precursor for PEF. Multinationals continue to be a major driving force in the bio-based space with internal sustainability initiatives, but the ones prioritizing performance will differentiate business execution from competitors in the near-term.
Bio-based becomes the new face of personal care and cosmetics
- The personal care and cosmetics sector is a key growth driver within the BBMC space due to its high-value, low-volume end markets (client registration required). Most notably, since announcing its squalene-based beauty brand Biossance in 2015, Amyris has made significant strides this year to build out its product line launching a rose face oil, cleanser, make-up removing cloths, eye gels, and face masks. In June, Amyris also announced a “multimillion-dollar” partnership with Givaudan to develop active cosmetic ingredients, further demonstrating its commitment to strengthening its product portfolio in the personal care industry.
- Bio-based materials innovation is also pervading the cosmetics space to support the development of new chemical agents. For example, researchers at Pennsylvania State University are developing self-healing polymers based on proteins found in squid teeth for applications like cosmetics or medical sutures. JeNaCell (client registration required for both) develops bacterial cellulose via non-GMO fermentation to produce a carrier material for active skin care and cosmetic ingredients. While spider silk’s applications for textiles are more apparent, spider silk producer AMSilk also develops cosmetic ingredients such as its Silkgel and Silkbeads.
The three themes above capture a paradigm shift within the bio-based space towards digitalization, high-performance bioproducts, and sustainability. We expect these areas to be the key opportunities that readers should not miss going into 2017.
By: Victor Oh