89. Grow Everything Live! A Spotlight on Scaling Biology with Ginger Dosier of Biomason and BIOME Consortia

[00:00:00] Karl: Okay, so back in 2020, which seems like a super long time ago, McKenzie issued a report that said that 60% of physical inputs to the global supply chains could be grown, meaning not manufactured, but grown, potentially using biotech precision fermentation. All the tools we talked about on the Grow Everything Podcast, they predicted that by 2040 biotech would contribute more than a trillion dollars across markets, and they could reduce the amount of CO2 that was going into the market and repurpose, um, a huge amount of land, something like two to 4 million acres of land.

[00:00:36] Karl: And the question that we want to ask and talk about today is whether the US is gonna lead this. We say grow everything. And we borrowed this from an investor friend that the Venn diagram of biotechnology and climate tech is a circle. They're both the same thing and they need each other. We also say that biotech is the restoration layer on top of all industries.

[00:00:56] Karl: So whatever the industry is. You can use biotech to produce things, but you can also use biotech to look at that industry and clean up whatever mess that industry might make. We don't like to say that, but that could be true. Um, what we're seeing is that there's been a lot of investment in China, so we'll talk a lot about China today.

[00:01:15] Karl: And they formally have declared biomanufacturing a strategic priority. This has been something they've had in the last two or three, five-year plans. And state capital is backing infrastructure. Something that we're kind of seeing here, but maybe not as aggressively as in China. They're building out a domestic supply chain and they've said they're gonna put 43 pilot scale bio biomanufacturing plants in place place by 2027.

[00:01:39] Karl: From where each of you sit as investors, how real is the gap between the US and China and how fast is it widening? Veronica, why don't we start with you?

[00:01:50] Speaker 2: Thank you. Um, for me, I think we need to be. That question, probably the framework should, needs to be rethought. 'cause I worked in China for 20 years. Um, the way that the Chinese market is structured is fundamentally very different from how US market is structured. And in fact, it's, uh, changing. It's changed even more in the last, when I was there in late nineties to I would say mid 2010, China was still developing a private economy that was converting about, used to be 80, 90% Allstate economy, and then it was receding.

[00:02:34] Speaker 2: And we, I think, I believe China got to about 50%, was driving private economy and 50% from state owned spending and state owned enterprises. Now it's continued to like be 70%. So I wanted to. Just caveat that when we talk about Chinese government investment is because it is government investment, but it's not consumer driven.

[00:03:00] Speaker 2: It is very government vindictive. Whereas the US I Ghana fundamentally has always been when, one of the things why I moved here, I came to this country and the um, mid 1980s and when I was for the biggest difference is US is a fundamentally different economy. We are a much more private. Economy and the government spending is like less than 10% of what?

[00:03:26] Speaker 2: And then really, what if we wanted something to grow? And in fact back then maybe now, the one thing that changes was like, I remember SME small medium businesses are the majority and the big corporates are the smaller part of that, maybe 50%. And then you have like, um, 30, 40% was from big corporates. Now big corporates are more SMEs is uh, has diminished, but still overall the.

[00:03:53] Speaker 2: Driver of US economy has to come from private capital, not government capital. This is one of the biggest things I, you know, I talk about up at all. But I think what DOD is doing is interesting is that with defense spending this dual use, 'cause if you think about all the technology investment that we've ever made, whether it's internet, whether it's computing, all came from military use to start, right?

[00:04:21] Speaker 2: And so I do think, um, the way that we go about, uh, creating an economy and a vibrant new technology sector is about how the government can invest early and help de-risk some of that technology. But how also the next step is how do we activate private capital to participate in that, to really grow. So I would say yes, there is a gap in terms of how much money China is putting, but that doesn't mean that we can't win.

[00:04:55] Speaker 3: Yeah, I think, um, the gap is definitely real and growing. Uh, I think something that China is excellent at is manufacturing, and I think something that the US is excellent at is innovation. Um, back in the 1960s, the US was spending almost 2% of our GDP on r and d Today, that's roughly 0.6% of our GDP China's investing, uh, in r and d to couple with their manufacturing.

[00:05:24] Speaker 3: Um, and this is a playbook that's happened before, right? Uh, EVs renewable energy, this is not new. Um, and I think truthfully, the US cannot afford to lose this race and needs to compete.

[00:05:42] Speaker 4: Yeah, I, I think that, you know, I agree with my fellow panelists, um, but uh, the thing that I think the United States could. As a government policy, do more is the creation of infrastructure, right? I think that we certainly have the founders, we have the innovation, but when it comes to for engineered biology, like large scale fermentation capacity, those are big capital expenditures.

[00:06:13] Speaker 4: And we have, you know, less than half of the capacity that China has and that gap is widening. Um, and despite, you know, innovative founders growing in the us, building those facilities yourself is very expensive and the burden to do that is high. Um, and so companies find a way to not do that. Um, find a way to use capital capacity that's elsewhere, and I think that creates a drag that is unnecessary if we're truly in a race that we wanna win.

[00:06:47] Speaker 3: Not to mention investor fatigue for all of this failure.

[00:06:52] Erum: Oh yeah, we'll definitely talk about failures that we know. We, um, have interviewed Veronica a couple times on the podcast and they wrote, she wrote, and her team wrote an incredible report called The Graveyard Report that talks about the failures of the past, specifically in the industrial biotech side, but I'm sure you'll talk more about that in a bit.

[00:07:09] Erum: But let's talk about the US side a bit more and how we can close the gap. On the US side, we have the National Security Commission of Emerging Biotechnology. Um, Ron mentioned the Department of Defense. They have their biotechnology office. There's also, there's also the National Biotechnology and Biomanufacturing Initiative, and this all points towards, um, giving, drawing, federal attention to this sector.

[00:07:34] Erum: However, we're still waiting to see if there's federal dollars coming into this sector, which will be interesting to see. But I wanted to ask you, from your perspective, being investors, does policy factor into your decision making? Do these initiatives signal anything to you?

[00:07:53] Speaker 2: I would say definitely. And in fact, uh, one of the things I like to advise our companies to is to see how we can leverage that capital.

[00:08:04] Speaker 2: And with the, obviously the massive defense budget that now we have, um, part of the, uh, things we're looking at, and we think this is a good tailwind for, uh, for biotech, especially industrial, is how we're gonna leverage those, especially purchasing, uh, procurement, how they could potentially secure more or procure more, um, products and make it.

[00:08:34] Speaker 2: Maybe requiring certain bio content in it, things like that. And I am serving on a, uh, working like policy working group for darpa. And there were a lot of discussions I can't share, but I think there's a general common consensus that this is important. To your point, it's a national security. We need to have, this helps us to build a resilient supply chain.

[00:08:58] Speaker 2: So how do we make the policies so it we can leverage the spending that we have to help the industry? Obviously that's not gonna be the whole spending as I talked about, but we, there are ways to leverage that so we can have dual use to help de-risk these technologies and therefore activate private capital to come in as well.

[00:09:24] Speaker 3: I think what's really amazing about the N-S-C-E-B report as the speed of legislative progress following, I think something like 40% of the recommendations contained within that report, uh, which was only published in April of 2025, have already been codified into law. There's another 30, 40% of the recommendations that have been introduced at both the House and Senate already, and it's rare that we see movement that quickly, uh, and bipartisan prioritization.

[00:09:56] Speaker 3: So I think that we are potentially at a point of a once in a cycle convergence of climate of capital and of national security. I don't think it will make a difference in the next 1224 months, but I think over the next five to 10 years, uh, we have the potential to have an ecosystem that is far more robust than we've seen before.

[00:10:17] Speaker 3: Um, and that can be really transformative for companies.

[00:10:22] Speaker 4: Yeah, absolutely. And it's, I think one of the reasons why the policy recommendations have translated into law more quickly than you would normally see from a committee recommendation is because this issue at this moment in time at least, is not partisan, right?

[00:10:39] Speaker 4: There's not a partisan like lines drawn around biomanufacturing. Um, and in fact, everyone across both sides of, uh, the political spectrum are in favor of, of increasing this capacity in the us. So it does make me hopeful that maybe they'll get, you know, 90, a hundred percent of those recommendations implemented, which I think would be really meaningful for the whole kind of bio economy domestically.

[00:11:07] Speaker 4: I live in DC I invest in early stage startups. Like a lot of what I spend, um, time thinking about is how to connect those startups with non-dilutive funding. The federal government is a great supporter through the D Department of Energy, the department of uh, defense. You know, darpa, there's a lot of non-dilutive grant funding opportunities available to companies in this space, and I think that that does help to fill in gaps.

[00:11:35] Speaker 4: It's not a complete solution, but certainly from the perspective of a private investor, when a company can come to you and say, Hey, you know, we have. A $10 million contract or we have a $500,000 grant, you feel like your private capital is de-risked to some degree, right? Like that extra $500,000 for an early stage startup might be a year of extra life that the company has to try to kind of find product market fit and find customers and get to default alive.

[00:12:05] Speaker 4: And that, that does make a big difference. Um, I don't think it's the whole story, but I think it's, it's a big positive.

[00:12:13] Karl: Alright. I have one more China related question and then we'll move on from geopolitics. But if you had to name one category, fermentation precision fermentation to synthetic biology, biomaterials or state support, where's the biggest gap and, and where is it most acute?

[00:12:30] Karl: Um, and why? Between our countries?

[00:12:35] Speaker 4: Yeah. I, I really think it's like large scale fermentation infrastructure. Um. I think that that's like the least sexy, you know, there's the le and it requires from, if it's going to be funded by the private sector, interest from larger institutional investors who are the most conservative of the different types of investors in allocating money.

[00:13:00] Speaker 4: And because, you know, industrial biotech has not really fully matured in the market. Those investors are generally happier to wait on the sidelines and say like, yeah, like, come back to me once, you know, five or six people figure it out and show that it makes money. Right? They're not really first loss type of, um, capital providers.

[00:13:24] Speaker 4: And so I think that that is the place where our ecosystem. Has the biggest gap between US and China, right? Because that's, that's something that the Chinese have decided to fund from a state level and, um, gives the rest of the companies within biotech in China an advantage because they have access to those facilities, uh, that are harder to access here.

[00:13:49] Speaker 3: Not to be boring, but totally agreed fermentation. Um, last year, China surpassed $137 billion in outward licensing revenue, which is astronomical. They've built the infrastructure. Um, and we just, we don't have that scale up infrastructure here. And truthfully, the private markets can't, uh, shoulder that full burden and the costs that go into that infrastructure when a company fails is again, astronomical.

[00:14:19] Speaker 3: Um, and without that, without some kind of a public private partnership to get there, I don't really see a way. So that's what we need.

[00:14:29] Speaker 2: I'm gonna not completely disagree, but I wanna bring a nuance to this question. I think the industry has been misleading startups where to focus on, and we talk about that in terms of focus on the profit pool, not the tam.

[00:14:52] Speaker 2: Guess what? We have fermentation capacity. We have a hundred billion liters of fermentation for ethanol. We have, so this is an industry that has industrialized, it's not something in the future and, but what happened in term of all those failures? The reason we haven't is this is a very different industry.

[00:15:18] Speaker 2: I come from hardware industry where this is back in 2005, the top 10% of the volume. Less than 10% was 50% of the profit pool for the mobile phone industry. We're in the same exact market where the bulk chemicals and the commodity chemicals makes no money, right? 70% of the volume back then was 10% of the profit pool.

[00:15:45] Speaker 2: The big guys can't implement make money, and we were way too ambitious in pushing these new technologies to go to those markets. Everybody focused on the tam. The tam is where you destroy value actually in this industry. And we forced these startup companies who have a novel technology to come in and try to address those markets and it doesn't work.

[00:16:15] Speaker 2: You are set up for failure. And you know, apple didn't introduce a $50 foe. We introduced a, I was at Apple, so I can say we a $600 foe when the market average was $150. Uh, Tesla introduced a $200,000 car as a first car, not a $30,000 card. Right? So there has not been any success in any new technology where it doesn't come in from the high tier and, and doesn't come in from the profit pool.

[00:16:47] Speaker 2: And I just think that our industry has done a disfavor to our own industry in terms of where investors push, the companies go to and build the infrastructure. They didn't have to build these facilities. There are lots of these smaller facilities, there's smaller, profitable market they could go to and become profitable.

[00:17:06] Speaker 2: There's a lot of capacity and there's now people are building and you don't have to build a hundred thousand ton capacity. You can build a thousand tons and 2000 tons and be perfectly fine. So that's where I would say I disagree slightly, because if we don't prove we need to put that on our own shoulders to say we need to prove we can deliver profitable companies, then private capital will come.

[00:17:32] Speaker 2: But if we push them to do things that is just not going to be profitable. Nobody ever was gonna invest. And that would be sort of the only thing I would say I a little bit of nuance on. It's not completely disagreeing, but the nuance between why I think there is, there is gap to be, you know, obviously there're spending, but I don't think that's the main reason why we can't win or why we fail.

[00:17:57] Erum: That's amazing. I love how you have ownership of it. Like investors, private capital, we need to do the lift. So you guys gotta work a little harder. Let our government relax. There's, they have a lot of other things going on. Um, but let's talk about the competitive landscape on a ground level. 'cause we were talking about on a higher level, and this race isn't abstract, it's happening.

[00:18:16] Erum: Um, I wanted to hear from you, Veronica, about a specific example of bio-based products that move from promising to commercial reality. And I know you brought some samples to show our audience. I mean, but you can just talk about, we want one or two examples so we can help ground some of this, um, commercialization On the bio-based side,

[00:18:38] Speaker 2: I mean.

[00:18:39] Speaker 2: If we talk about like products as probably most people don't and aren't even aware, that's in their everyday product, right? We know like big companies like IFF, which they do fragrance of flavor every day. You use the perfumes that you use or whatever the things that are in your food. DSM Fermin, you have mag companies, Novozyme, they have mega companies that actually are producing ingredients already in the food and personal care and things that we use every day that just most consumers are not aware, right?

[00:19:09] Speaker 2: So it's not a new industry. I, I hate to use the word like repeatedly to make that it's not a new industry. Right. Um, where it's kind of interesting, and I make that analogy with, um, and that's why I brought these things, right? These are all bio manufactured. We have shoes and like microplastic, polyurethanes that you can make shoe cells with, you can make coatings with, you can.

[00:19:32] Speaker 2: Um, we have bio produced, um, sort of personal care elements. You can. Um, moisturizer or lotions with, um, these are all already mature markets and, and we're seeing these, um, products go already in the market. And some of them now we have startups who are actually getting them, um, to have a larger, when we're what we're leveraging, I think there is a tailwind and there is a story to be told now, especially with consumers.

[00:20:02] Speaker 2: How do we get consumers to connect? And I know we're in a climate week, but one of the things I felt like, does anybody actually understand carbon zero means? I'm sorry. Like I, no consumer really understand what that means to them, but do you understand if you are digesting a credit card worth of microplastics a month, that means 12 cards a year, literally eating a credit card.

[00:20:31] Speaker 2: Do you understand what that could happen to you? And there's studies, right? It shows that. Infertility, a lots of the health issues we have today have to do with some of the contaminants, like microplastics and issues that we have with chemicals. Uh, man, chemical manufacturing. Now, if we make it bio-based and there are bio produced, we don't have those problems.

[00:20:56] Speaker 2: We'll, a consumer connect with that. So I think we have an industry storytelling issue in that we're not telling a story that consumers can connect, therefore they're not picking and choosing the products that actually uses a technology that is better for everybody. And if we start to tell the health story, I think that's my hypothesis, right?

[00:21:17] Speaker 2: This is my personal opinion. Let's start telling the health story. Let's start get personal and get to people to understand what is that personal benefit that they can connect with. And I think we can actually. Start converting consumers and help them to make the right choice. And that consumer demand is gonna be ultimately what drives the demand for what the products are that we are producing and our startups are producing.

[00:21:44] Erum: All right, next question.

[00:21:45] Karl: I just want to kind of add before I add to what you said, uh, Veronica. I think one of the, one of the areas where people don't even realize biotech touches their lives actually has a huge impact on climate, and that's laundry detergent until enzymes were produced that allow you to effectively wash your clothes in cold water.

[00:22:04] Karl: The most expensive part of laundry was heating the water. And cold water enzymes have been a huge part of the laundry detergent industry that produced at the, you know, hundreds of millions of liter scale every year. And it has a humongous impact on our lives and on the climate as well. And so, um, I think it's one of those things that most people don't realize that those enzymes come from biotech and will continue to be improved based on what we do in protein design and enzyme design.

[00:22:33] Karl: So, um, Michael, this question is for you, kind of like a general question. Curious, what do you think a biology powered supply chain looks like and where do we see, uh, bio biology already displacing petrochemical inputs? And, and, and the third part of that question is, where's the substitution theoretical still?

[00:22:54] Speaker 4: Yeah. I, I think that, you know, when I am imagining this supply chain, really I'm looking at all the different things that we create. Out of petrochemicals and different derivatives from oil, which if you have never spent any time looking at, this is a huge amount of stuff, right? It's, it's the plastics in your water, bottles in your phones.

[00:23:14] Speaker 4: It's like, you know, the different sorts of, um, petroleum based gels or oils that are in personal care. It's the nylon and the elastic in our clothes, in our backpacks, in our shoes. Um, the plastics in our computers, even the chemicals that we use to like, make different sorts of, um, technology devices. And right now I think biotech has, um, great penetration in creating chemicals and specialty chemicals.

[00:23:45] Speaker 4: It has decent progress in creating like plastic alternatives where we now can create lots of different bioplastics that have tons of different properties to replace. Oil derived plastics. And it's more of a question of like, how do we actually incorporate those into supply chains, get manufacturers to switch, but the technology is there.

[00:24:09] Speaker 4: Um, and then I think that we're seeing in our early stage investment work, a bunch of interesting use cases where you have microbial based fertilizers that are replacing chemical fertilizers. Um, we have a company in our portfolio that's using enzymes to help process and extract rare earth elements and battery metals, both from like mine tailings and from, uh, recycled batteries.

[00:24:35] Speaker 4: And that is, uh, I think a great example to bring up in terms of innovation. If you follow the news, you know that America in general is worried about rare earth elements and battery metals. And we've realized recently that China makes all of them. And if China wants to stop shipping them to us, we have a big problem, um, where we can use.

[00:24:57] Speaker 4: These novel bio technologies that have recently kind of reached cost parity or are even cheaper than traditional ways of doing things to solve a problem. Like how do we extract rare earth elements in a way that's relatively environmentally friendly, uh, that we couldn't solve five years ago? And that opens up lots of potential and is is a pocket where there's, you know, these demand forces that are really driving adoption.

[00:25:23] Speaker 4: Um, so I'll cut myself off there.

[00:25:27] Erum: No, those are great examples. The microbial fertilizers and the rare earth recovery. I think, um, a lot of people don't understand how biology is, could be central to that versus business as usual, which is still very toxic. And I mean, I won't go into it, um, but you guys are all investors and working to help support founders that are building the bioeconomy.

[00:25:50] Erum: And my next question is for Jillian, what is the gap between what founders are building and what capital is willing to fund?

[00:25:59] Speaker 3: Yeah. Um, I think, so my bias is a climate bias, right? Uh, so we're focused on big swings at decarbonizing industries, gigaton scale swings, and I think what I see most often is the connection to climate, um, without the poll or desire from the market.

[00:26:21] Speaker 3: And so I think, uh, you know, what founders could do better on that front is really understand what the market wants. It's great that we can make bioplastics, but at our, in our experience with the companies we've looked at, making them at a scale and cost that is enticing for customers is a separate thing.

[00:26:42] Speaker 3: And you know, you mentioned before that we don't have an infrastructure problem. Um. Yeah, if you go after high margin markets, sure you can make money. You are not decarbonizing that much though, right? Your volumes are much lower. And so when you wanna take big swings at a fragmented landscape emissions landscape, I think you really need to understand what customers want, what they're willing to provide, and lead with that, not only with the climate angle.

[00:27:16] Karl: Veronica, this question's for you. Um, you, we mentioned earlier that you wrote this report, the graveyard report, which really looked at how companies in the space have struggled. Um, and, uh, you know, there's been a lot of failures along the way and a lot of lessons learned. What patterns did you guys see when you learned that and what kills biotech companies that had great technology or promise that didn't end up making it?

[00:27:38] Speaker 2: Yeah, so, um, I love it that we have a panel that has different perspective. That's always good. So I would say, uh, the one thing is. It depends on whether you wanna, how you wanna get to the objective. So the ob uh, the best way, at least, you know, we all know like the way to kill a frog is to boil the water slowly, right?

[00:28:01] Speaker 2: Um, and, and I do think, um, I agree the technology, um, that we, if we focus out the profit pools we talked about, that may not initially create a lot of climate impact. However, the beauty of biotechnology is if we were to adopt everything, transform how we manufacture, like when McKinsey says 60%, the results will actually match.

[00:28:29] Speaker 2: But how do you get this technology to get there? And to me, to get there profitably is how you get to leverage. Best way to leverage private capital to get there. Not to try to force capital to try to go after the biggest challenges. But I, on the other hand, I do agree with you. In fact, we did write a lot about manufacturability.

[00:28:50] Speaker 2: 'cause I am an industrial engineer and one of the things when I first came into this, uh, sector is realize how many of them founders, brilliant scientists, have not worked a single day on the manufacturing floor. Have no idea what sub chain means. Have no idea what manufacturability means, what equipment that means downstream processing.

[00:29:12] Speaker 2: Another one that's really, really important. Your cost of downstream. In fact, you know, we were just talking about onic. Listen recently, a conference at 10 where onic showed some of the lessons learned. One of the things they said they could improve fermentation. They could get titers higher over time. So in fact, the CapEx they put in fermentation, they don't even have to put new CapEx that can get more yield.

[00:29:36] Speaker 2: What they needed to add is downstream because you have now have more stuff and they needed more throughput. So if you didn't think through your downstream, your downstream is difficult or difficult to kind of scale or expensive to implement, guess what? You just lost all that economic gain that you gained from the fermentation titer.

[00:29:54] Speaker 2: So you have to think about the whole manufacturing process and the cost of that manufacturing process as well. The feedstock where you're gonna come get the feedstock, how, how difficult is collection, the whole supply chain needs to be thought through and that that's what I call manufacturability. And a lot of that was also missed in the early sort of excitement about the technology.

[00:30:17] Speaker 2: Um, and also I would say earlier on also a lot of the excitement came from pharma. They really didn't need a lot of volume. Harmony is even less volume and even higher margin, right? So they really didn't care about manufacturing efficiency nowadays, you know, like to inoculate like the world population on COVID, you only need maybe like we did the calculation, like 3000 tons of, you know, production maybe.

[00:30:45] Speaker 2: Um, so it's really, really tiny, um, productions for pharmaceuticals because they're so small. So I think the, all of those things had caused an issue in the sense of the founders or the companies weren't focused on total costs of manufacturing or total cost to the end product and delivery. So the economics never worked and when the economics doesn't work.

[00:31:09] Speaker 2: But I guess my only reservation is I think for any new technology to make the economics work. Is going to be hard and you need to create new manufacturing technology, which means it needs to take time. And I, I, my dissertation was optimization with semiconductor manufacturing. Right. Scheduling, correction, scheduling.

[00:31:28] Speaker 2: So I understand like for instance, how many, even semiconductor had to take time. We, we, we were at, we started at, you know, uh, milli, uh, actually centimeters of circuits and, and you know, wafers that were like three inch, then we went to five inch and we went to 12 inch and we went to nanometers and we went to, you know, millimeters and then went to nanometers.

[00:31:49] Speaker 2: So technology does take time to get the cost down and which, which is what happened with, you know, that's why we can have a phone that, that size now at the same cost, whereas, uh, 20 years ago that wasn't possible. Uh, so you have to give technology time and you can't go after the biggest market initially.

[00:32:09] Speaker 2: Um, because I think that's a huge.

[00:32:12] Karl: Just for, uh, for the folks who don't know what downstream processing is, um, it's actually the purification steps that happen after you grow a vessel or a vat or you think about a brewer, a brewery. They've got these vats, they're making brew beer in downstream processing is actually purifying the product out of that.

[00:32:30] Karl: And it is one of the most expensive steps in this manufacturing process. And then also, just to put things into perspective, I think the number, the amount of, uh, pharmaceutical produced in the world is less than the size of a swimming pool. So if you can imagine how valuable the bio the biopharma industry is, and just imagine an Olympic swimming pool pool filled with.

[00:32:51] Karl: All those medicines that serves the whole world and it's worth trillions of dollars. So this idea of being able to increase the efficiency is something that Biopharma does really well. But Bioindustrial is a, is a different game, which we're gonna talk about. Um, one of the things that makes Biomanufacturing very challenging is it doesn't fit most, uh, investors mental models.

[00:33:11] Karl: It's not pharmaceuticals, it's not biopharma, it's not software, uh, it's not SaaS. And uh, the playbooks that people use, particularly investors don't really apply to biomanufacturing. So biotech has longer timelines and needs more money and it actually needs a different regulatory surface. Uh, Veronica, I'm gonna come back to you.

[00:33:33] Karl: How do you explain to LPs who keep reaching for the wrong analogy, you know, how do you help them understand and what framing do you find useful? And I'd love to hear Jillian and Michael add to this as well.

[00:33:47] Speaker 2: I think we've talked a lot about it and, and, and this is definitely, I think maybe what, even for startups, they should go, they could probably figure out who, uh, is a better investor for them, for their strategy.

[00:33:58] Speaker 2: Um, but the companies that I've been focused on or picked are specifically companies that, to your point, actually don't have to go through that path of huge CapEx. They don't have to build their, uh, manufacturing and they have, uh, technology that is, that they thought through that the manufacturing process and capacity is there.

[00:34:23] Speaker 2: There's um, I've been focused on picking companies that provide drop-in replacement rather than novel molecules because then downstream knows how to take those molecules and put into products. Um. Kind of minimize that whole go to market timeline so we can launch this, right. In my on one portfolio, we have four companies that already have commercial products and commercial revenue, which like, people are always like, well, you can't make companies, um, uh, you know, that quickly, you can't, to your point, and I can't get to product that quickly, but you can if you focus on the right markets and depends on what you're optimizing, right?

[00:34:59] Speaker 2: Uh, I'm an industrial engineer always optimizing stuff. Um, so, um, so I, I think it's not impossible, but it really depends on your investor lens and what you're trying to accomplish. For me, buildings, profitable companies is the first foundation to actually, um, grow that technology. Um, the other thing is, I, I do like, you know what, like what, uh, Michael said is we do a lot of work to help them leverage non capital.

[00:35:28] Speaker 2: So, you know, my fund one portfolio again to say like. We deployed only seven and a half million, less than 8 million. These seven companies have raised total over 80 million of grant money from federal government. So we focus, we do a lot of work to help them to leverage non capital. We, we love it, right? I think as investors, that type of capital helps to de-risk us.

[00:35:54] Speaker 2: So why not if there's o opportunity to leverage those. So, um, I think as investors, um, you know, we're all fiduciary. So maximizing return for investors is always important. So, um, yeah, it is a different playbook, which, like I said, that's why it's a, you know, you don't go after Tim 'cause for SaaS. Everything is high margin.

[00:36:16] Speaker 2: So the bigger the tam, the bigger the profit pool. This is a different industry. That's why I said focus on the profit pool, not the tam. Because that's why it's, it's a different, it is a different model and there isn't an info. You don't have the cloud to go, you know, so let's try not to build, um, as much.

[00:36:32] Speaker 2: And then that's been sort of philosophy you've been under in terms of what we wanna invest in, how we take these companies to market.

[00:36:43] Speaker 3: Yeah. A couple of things. Um, so I've been on both sides of the coin, right? I've worked in pharma doing InVivo product development for asthma and COPD drugs where there's tons of resources. I've invested in startups where there's far less resources. Um. I think the type of capital that you need for these solutions, number one is patient and flexible.

[00:37:05] Speaker 3: Um, so at Isola we deploy blended flavor of capital, both catalytic and charitable capital alongside of traditional venture dollars. We also work on timelines that are different from other funds. Um, so our fund life cycle's a 15 year life cycle, not a, you know, 10 year life cycle, less than 10 years, like most funds are because when you're going after problems at the gigaton scale, uh, you need time to solve them.

[00:37:34] Speaker 3: Um, we're also very strategic in allocating follow on capital because we want to be able to support these companies as they scale and grow and when they run into challenging points. Um, and I think you need an ecosystem that understands, uh, that this isn't going to happen overnight. Um, and who's going to be a thoughtful partner alongside of these companies?

[00:37:58] Speaker 3: And then additionally, love your point about non-dilutive. Um, we have a company right now that is doing extremely well leveraging non-dilutive funding, particularly from the DOD, some from the USDA via their 9,300 program for low interest loans for manufacturing infrastructure. They've got about $180 million, um, that they're waiting to hear on, and that will be a massive driver of their growth if they're able to secure that.

[00:38:27] Speaker 3: They're also operating in two areas that I find quite interesting, one of which is net zero sugar production, which has implications for all fermentations, both on the climate angle, um, and the scaling angle. And then they're also focusing on SaaS, which is a high margin, but high impact potential area that overlaps as well.

[00:38:46] Speaker 3: And so I think if you can play the non-dilutive game, if you can attract the right and patient investors, um, then you're set up for success.

[00:38:58] Erum: Do you have anything to add?

[00:39:01] Speaker 4: Um, yeah, I, I, I think I agree with Veronica in wanting to maybe push back against saying, you know, I don't think all industrial biotech companies have to have longer timelines or higher capital intensity.

[00:39:14] Speaker 4: Right. I think that you actually can have, um, if you're outside of human health, certainly compared to pharmaceuticals, much lower capital intensity and much lower timelines. You don't have to go through, you know, multi-year FDA approval to sell a specialty chemical or a fertilizer or, you know, a bio-based nylon or elastic.

[00:39:36] Speaker 4: Um, you can just start selling that. And we invest at the pre-seed and seed stage, so the earliest stages that you can get, and over half of our companies are also, you know, revenue generating. And so they have the ability to, um, you know, go out and. Make money. And that gives them the ability to be a little bit more robust and they're not beholden to capital cycles in the same way.

[00:40:03] Speaker 4: Um, and so I do think that, you know, if you can help LPs understand that there's a quicker time to market and that there is then, then they might think of when they're thinking of pharmaceuticals, uh, as well as really that the technology that undergirds this whole thing, right? Which is how do we engineer biology?

[00:40:25] Speaker 4: Uh, how do we read, write, and edit? DNA is coming down in cost at, you know, an a kind of Moore's law esque rate, an exponential decline. Uh, I have found that that's the best analogy to get people excited where they can understand what happened to computers. As Moore's law made compute more cost effective at orders of magnitude greater power, they can say, oh man, if we can make engineering biology more effective.

[00:40:53] Speaker 4: At orders of magnitude, lower cost, like I'm starting to see where, you know, that can have effects on larger and larger parts of the market. And so I have found, invest the, the right analogy is almost like investing in computers and semiconductors. Um, rather than getting caught up in thinking about it like pharmaceutical investing or software as a service investing.

[00:41:17] Erum: Yeah. I, I love that. Um, is there a name for the new name for the bio part of Moore's Law or Bio Moore's Law?

[00:41:26] Speaker 4: I mean, I've seen people talk about Carlson Curves. He was someone, you know, where at least you're thinking about. I think the Carlson Curve describes the decrease in cost for sequencing, uh, DNA or synthesis.

[00:41:40] Speaker 4: Yeah, sequencing and synthesis together. When we are explaining to LPs these cost curves, we'll talk about. Read, write, and edit. We wanna make it sound like a code base, and that helps people to bucket, uh, what's happening in their mind. And then we'll also talk about automation, which we have seen huge amounts of progress.

[00:42:02] Speaker 4: And then we'll also talk about compute, right? I mean, I think with something like alpha fold, you can see examples of scientists saying, man, there's this thing I was doing and it would've taken me months. It would've taken me maybe a year, and I did it in a weekend because I could model it on my computer with alpha fold.

[00:42:20] Speaker 4: And those are the types of inflection points that I think LPs can pattern match on and get excited and say like, oh, I wanna back Michael's fund. I wanna back, I wanna back these companies. Um, and I, you know, the AI narrative is relatively new, um, that I think all of our funds predate that becoming a thing.

[00:42:38] Speaker 4: And so we, it's a great accelerant that we've seen and, and we'll continue to see.

[00:42:43] Speaker 2: Yeah, I would definitely concur with that because, um, also they think the bioeconomy or biomanufacturing in general, um, this is where we really have an advantage when we talk about China, right. Um, AI and robotics are the two things, tailwinds that this industry will have in terms of accelerating the cost, competitiveness of this industry as we manufacture.

[00:43:06] Speaker 2: And those are things we're leading actually China, China's making a lot of robust, but the actual robot robotics and, and ai, I think the actual intelligence we are actually leading. And then the other thing is interesting when you think about the bio economy, China actually has higher feedstock costs 'cause China is an agriculture import country.

[00:43:27] Speaker 2: We're an export country, so we have a lot of excess biomass that we can leverage. So when we talk about onshoring, our supply chain, the bio economy is one of the best ways and the cleanest waste to actually onshore the, all the strategic chemicals that we use, uh, for this country. So there's quite a few advantages that actually positions as well to compete against China.

[00:43:53] Erum: Yeah. And then there's the biomass that's grown. So I mean, biofuels 1.0 was corn, but then there's also this wonderful space of waste agriculture to be used as biomass, which we can dig into later. But I think right now it might pass off, handed off to you to answer next questions because I think we talked enough about patient capital.

[00:44:11] Karl: I just, uh, one more thing about capital is, and again, uh, not to, I guess this, this is my last China related question, sorry. Um, there is this challenge, we've talked a lot about capital challenges and how state-based capital in China, you know, can take this kind of decades long view. And here LPs are, tend to be focused on a quarterly basis or, um, you know, they wanna see returns a lot faster.

[00:44:35] Karl: Is that structural gap something we can close and how can we do it now? I'm asking all of you this one,

[00:44:45] Speaker 4: I mean, I, I don't know that we have to close it, right? I, I think that we have these, at least with venture capital, we have these fun life cycles that are 10 years or 15 years where, you know, I, I really do subscribe to the point that Veronica made, like, if there are more than enough opportunities for bio manufactured companies.

[00:45:08] Speaker 4: To, you know, show real profitability and get a favorable exit for investors in a 10 to 15 year timeline. It doesn't encompass like every single possible bio manufactured, um, tam, but that is how we drive more and more capital is by showing those initial examples. Having those, uh, outcomes be positive, creates these self-reinforcing loops that, you know, I think Amer, the American private capital system is famous for where all of a sudden you're like, oh, AI that's working.

[00:45:45] Speaker 4: Like, let's dump more money in. And it's like everyone's dumping money and we should dump money in. Um, and I think that, you know, to some degree, like there is always risk with these boom bust cycles, but they allow in the boom moments for a great deal of infrastructure investment, um, and. When we are in those boom moments, we go much faster than any other country.

[00:46:09] Speaker 4: And we also are, I think, quite efficient, um, in the bust moments, in kind of reallocating, uh, where talent is and where resources are going. And so, you know, I, I am a believer that over the next year, over the next five to 10 years, we will see these biotech booms, uh, reappear and that we will be, you know, not able to bite the entire apple, but we'll be able to, you know, take the first bite of the apple in a really meaningful way.

[00:46:42] Speaker 4: Uh, and it, that makes me very hopeful. Um,

[00:46:47] Speaker 2: I, I agree with that. I mean, it's not, it's just like selling a product. You can't make, sell a product a, a customer doesn't want. And it's fortunate you have long term capital, but that, that's such a small part of the capital. Market market that's available for investment.

[00:47:02] Speaker 2: So, um, like for firms like my firm and Juniper, we're trying to create a product that the larger amount of the cap private capital is at least willing to listen. 'cause they wanna see short, shorter term, lower CapEx kind of wins. And we're trying to deliver that to educate and bring that 'cause that's the product they want.

[00:47:24] Speaker 2: And then we're trying to pitch that product and show examples and over time you can bring them in. It's like, I think I, I'm pretty sure, you know, 10 years ago everybody thought Sam Waltman when they started OpenAI, that was like, don't understand, right? But obviously he made enough money he could do it, but with his own capital it wasn't like even a lot of, you know, outside capital.

[00:47:46] Speaker 2: But once they show success, then there's a lot of following. So I think, um, I do, I agree. I think the. Actually, I think there's a really interesting moment. We are at a very interesting moment right now because biotech has gone through, I call it the internet bubble bursting moment. Um, so that everybody remembers probably distinctly the 2000.

[00:48:09] Speaker 2: So we have a moment where this biotech has, we just had some big busts, right? Multi billing co companies, public went public and just evaporated. Um, this is very similar to the internet moment in, you know, early two thousands. It's creating an incredible value, I think value for this. So I'm seeing an interesting moment where we can step in on technologies or companies that actually have raised in the first kind of bubble of biotech, raise a lot of money.

[00:48:51] Speaker 2: Finally got the technology mature, ready to commercialize, but now they can't raise money because of this bubble, this burst. So I actually see a incredible value creation opportunity right now 'cause we can step into that gap and step in on cents on the dollar on these innovation and innovative technology and get to market a lot faster with them because the technology is much more de-risked now.

[00:49:19] Speaker 2: So I really believe in the next three to five years, we will see a resurgence of, uh, biotech and hopefully bring another boom in which it's gonna great create both incredible results, but um, but also create more boon for biotech.

[00:49:36] Speaker 4: Yeah. And, and just one to your point, uh, that you were making before the show.

[00:49:40] Speaker 4: Like you were talking about how at some point, you know, the growth in AI will. Either slow down or it will, you know, take off enough to really make SaaS and software companies feel like shakier investments. Um, but in either case, it, it necessitates drawing attention and dollars to the physical world and the physical economy.

[00:50:07] Speaker 4: And we've recently seen some people come out of the woodwork and say, Hey, like, do you wanna sell some secondary shares in these companies that you own in the biotech space? And we've been like, maybe like, uh, curious what prompted you to come and ask me this? Um, and the response has been, you know, we have LPs, we're thinking about ai, we're thinking about, you know, our software as a service portfolio being less secure and less safe than we thought.

[00:50:35] Speaker 4: We wanna diversify into more real assets, but real assets in a. Part of the industry that still benefits from AI that will accelerate but not be disrupted when we are adding this kind of intelligence layer. And I think that really describes all of the bioindustrial space, and it's one of the reasons I get very excited about what we do in the moment and in time that we are in.

[00:51:01] Speaker 3: I'd also argue that biology is one of the last areas to be touched by ai. Um, it's super underutilized currently. Uh, and I think there's a lot of opportunity to leverage that to drive this rapid growth as well.

[00:51:16] Erum: Yeah, it's very exciting. I'm very happy that we started speaking about AI towards the middle end.

[00:51:22] Erum: Usually, you know, everything's ai, but this is great that we're talking about it. Um, I would say it is prime for biology. There's a lot of data behind biology, especially when you're talking about DNA and the omics layers. It's, it's like vast and it's perfect for AI to interrogate that data and. Guide us in solutions.

[00:51:41] Erum: Um, but let's talk about how we can accelerate volume manufacturing and what type of intervention would you say one intervention you would say that would accelerate us by manufacturing? Is it a funding mechanism? Is it policy? Public, private partnership? If you can pick one thing that could just unlock bio manufacturing United States, what would it be?

[00:52:03] Erum: And this is for each of you.

[00:52:06] Speaker 2: I want deregulation.

[00:52:08] Erum: Snap. You're here in DC you're gonna say that. Okay.

[00:52:12] Speaker 2: Yes. I want deregulation. I want the government to get out of it. And, um, let's not make it so hard to build. Let's not make it so hard to, um, to introduce new products, especially. Whether it's, you know, pharmaceutical or chemicals even.

[00:52:26] Speaker 2: I mean there's all these permitting and stuff like that. We're doing biomanufacturing as cleaner by definition. And um, there are just so much benefits, but they're using all these old standards to, um, we should make manufacturing profitable. We should make investing in American manufacturing profitable, then we will actually solve the whole problem.

[00:52:49] Speaker 3: Before I answer quickly, um, you mentioned with AI and biology tons of data, that's actually one of the recommendations in the NSCD report is to nationalize a biology based database and also file that under national security, which would protect it and give us an advantage, um, from the manufacturing side.

[00:53:09] Speaker 3: So I wanted to share that. And then I agree that regulations is the area that would make the most difference. Um, I wouldn't say deregulate, I would say streamline regulations. I think they are important, however, um, whether it's FDA or USDA, depending on your go to market approach for agricultural inputs, it's one of the most costly and time consuming and complex parts of building.

[00:53:36] Erum: Maybe we could, we can say reregulate. You heard to hear folks?

[00:53:40] Speaker 3: Yeah.

[00:53:41] Erum: First

[00:53:41] Speaker 3: deregulate,

[00:53:42] Erum: reregulate. Okay. Totally. This is what we do. Comms. Here we go. Michael.

[00:53:47] Speaker 4: Yeah. I think one of the things I do worry about on the regulation side is that you get a patchwork of regulations too with every different state doing something different.

[00:53:55] Speaker 4: Like I know random states are now deciding to ban lab grown meat, and we don't really have lab grown meat. So it's kind of a preemptive ban. And when you start to think about how the market matures, having every company need to try to understand different regulations in 50 different states makes it quite difficult.

[00:54:16] Speaker 4: Um, this has obviously been a big conversation with AI too, and, and there's been a, I think federal preemption, right? Where we're saying AI is gonna be regulated at a federal level, not a state level, biotech and biomanufacturing. Um, having the same treatment, I think would be one of the low hanging reregulate deregulate routes that we could pick that would be meaningful.

[00:54:39] Erum: And then we're actually deep diving into a specific application that this would be perfect for. And we're talking about food dye. We actually have a BioD series that's underway. Um, we will have this, um, episode, uh, play next week, but it's in the midst of our BioD D series because of everything that's happening with the phase out of synthetics.

[00:54:59] Erum: But then we start peeling back the layers because there's this whole inter international Color Manufacturers Association that wants to advocate for synthetics. And they start, um, they start, they're starting to have, um, a lot of, um, I don't wanna say propaganda that's really harsh, but, um, their own studies.

[00:55:16] Erum: Um, and they're saying that, uh, bio, um, bio made, uh, dyes are, um, not natural. And so there, there's the, a lot of, um, battle between the world of synthetics and biology that, you know, it's, it's gonna be very interesting to see how it all plays out. Um, but I just wanna mention that and definitely take a listen to our Bio die series.

[00:55:37] Karl: So, um, we're gonna start winding down a little bit. Here's my last question. We ask a version of this, uh, on almost every, every episode. Um, and we really wanna know kinda what you're paying attention to. Um, the idea is what your answer is really gonna tell us a lot and tell the audience what is really important.

[00:55:56] Karl: You know, what's one thing you're watching over the next 12 months, whether it's a company, we talk about regulation, a deal structure, um, a regulatory development, a scientific advancement that will tell you, yeah, we are making progress to grow the bioeconomy. Julie, why don't you start, we'll go,

[00:56:14] Speaker 3: yeah, I'll take this from the technology side of things.

[00:56:17] Speaker 3: Um, I think RNA is the next under-explored, uh, avenue and we saw the DNA boom and how that is. Fundamentally transformed our approach to biology based solutions. I think we're going to start seeing that with RNA and that is very exciting. Um, and I think creates a new horizon for the future.

[00:56:41] Speaker 4: Yeah, I, I, my first thought when you asked the question, we, we could talk a lot internally at Juniper about category creation, and we kind of follow the, you know, semiconductor, um, model and mental model and saying like, great, like when these primitive become cheap, you can create whole new categories. Like what are those new categories gonna be?

[00:57:02] Speaker 4: Um, and so, you know, when we think about what we're looking for over the next six months, it's, or 12 months, we're always looking for things that surprise us that we haven't thought of yet that, that are new categories, right? Um, so for people working on things very weird, like that's, that's generally, uh, what we want to see or something that we're always interested to take a deeper look in.

[00:57:24] Speaker 4: Then on the things that I can predict that I'm looking at, um, the peptide market, I think that peptides are this nascent consumer trend. We are seeing efforts from the US government speaking of regulation, to try to figure out how to regulate peptides in a way that still gives people access to them and allows that market to grow.

[00:57:45] Speaker 4: I know there's a lot of internal work being done there, and I would like to see that come to fruition and see that market start to, um, really come into existence. And it's certainly an opportunity for a lot of companies in the bioindustrial space to have, you know, new customers and new, new customer demand in a way that I think will be really positive if it can take shape.

[00:58:09] Speaker 2: Um, I'm actually looking for. Profitable companies. So, sorry, I'm like, I'm, I'm, I'm greedy. We all are. Yeah. Uh, I'm about investment, all of that. So I, I, I am hopeful actually, even in our portfolio in the next 12 to 18 months, we'll have companies that are profitable finally, and, and can stand alone without having to raise more money that we'll have to.

[00:58:33] Speaker 2: I think that will finally sh 'cause I think proof of the pudding, we keep talking about it without having to show something to investors. We're never gonna get investors over the line to say, oh, I believe you. I mean, theoretically it works, but without proof of the pudding, just like without chat GPT, nobody actually will bet on a open ai.

[00:58:52] Speaker 2: So let's bring some companies who are actually profitable, um, in the, um, bioindustrial space. I think people will naturally get it.

[00:59:03] Karl: I just wanna also just add some context to these questions for our listeners or people in the audience who don't know. So, mRNA or RNA, um, is a super interesting category.

[00:59:13] Karl: It's being used in the plant space, in the ag space. Costs have gone down. Um, being able to use. mRNA or RNAs allows you to really, uh, manipulate plants in a very positive way without having to spray them with fertilizers. We see a number of companies working on that. The peptide space is also super interesting because you can't go into any cosmetic store like a Sephora and be bombarded with products that say they contain peptides.

[00:59:38] Karl: Most people don't know what that is. Um, there's short chains of amino acids, not the size of a protein, which I think there's a number that makes it very specific. But, um, one of the most successful exits in uh, biotech was a peptide company, a haircare company called Kate in hair that did a nearly billion dollar exit, um, to Unilever after a very short three year.

[01:00:01] Karl: Um, you know, they started in during the pandemic and they sold Unilever within three years. Peptide based products for hair care that actually work. They have a tremendous reputation and we were very lucky to work with them. So, uh, with that, I'll kick it on. Rum will kick off the next segment.

[01:00:17] Erum: Yes. All right.

[01:00:18] Erum: I know you guys have burning questions, but before we end, we have our segment where we call our quickfire questions, and we're only gonna do three, so keep them short. Okay. So if the US loses this race to China, this to China, what's the one thing we'll wish we had done differently? And I kind of feel like I know Veronica's answer, but go ahead Veronica.

[01:00:38] Erum: You can start with up and down.

[01:00:39] Speaker 2: Um, what's the one thing someone else start

[01:00:44] Speaker 3: acted faster and with more conviction?

[01:00:50] Speaker 4: Yeah, I think, um, being proactive. I think we, when we, we have talked earlier about, you know, losing the EV race or the, um, you know, solar panel race, the manufacturing races to China. It's. We've been too slow to have meaningful interventions. Speed.

[01:01:15] Speaker 2: Um, I guess for me it's really, we need to make people understand how they benefit.

[01:01:25] Speaker 2: Uh, tell the story differently. Alright.

[01:01:28] Karl: Uh, what's the most important thing a founder in this space can do today to make their company fundable?

[01:01:38] Speaker 4: I think it's show me profitable unit economics

[01:01:43] Speaker 3: and the reasonable path to profitable unit economics.

[01:01:50] Speaker 2: I would say build your business skills, not just your science skills.

[01:01:54] Erum: Oh, good one. Good one. Okay. Finally, one word for the state of us by manufacturing policy right now.

[01:02:03] Speaker 4: Whoa.

[01:02:05] Speaker 3: Eating up.

[01:02:07] Erum: Oh.

[01:02:08] Speaker 4: I think, I think we're awake.

[01:02:10] Erum: Awake.

[01:02:11] Speaker 4: I think we were asleep. I think we're awake. I don't think we've really gotten out of bed yet, but like at least we're awake.

[01:02:16] Erum: Are we snoozing?

[01:02:16] Speaker 4: Yeah. No. I don't know if we're snoozing.

[01:02:18] Erum: We're making coffee getting ready by manufacturing coffee. Exactly. Here we go. Okay.

[01:02:26] Karl: Um, well, so we want to open it up to questions.

[01:02:30] Karl: We have time to have a few questions before we actually close things up, so I don't know if anybody in the audience wants to ask anything. What I'll do is I'll just bring the microphone over. I think that will work best for the podcast.

[01:02:46] Shannon: Hi, I'm Shannon Baker Branstetter. I'm with the Center for American Progress and I work on climate and clean energy issues. So I heard some very exciting things, um, from you all on biotech front fertilizers, placing the petrochem biofuels. We haven't really focused as much, I think, on the bio solutions in the federal policy space, and I'm curious if.

[01:03:07] Shannon: There's a reason that fossil fuels in the fossil industry hasn't come after biotech, given the potential for replacement. And is that just due to cost or because it hasn't really taken any market share, I

[01:03:19] Speaker 2: would think

[01:03:22] Shannon: because it's a threat to their, um, market share.

[01:03:25] Speaker 2: I, I'll tell you the story. So I was at Motorola and mobile devices, and I was the person who let the team to, 'cause this is what Motorola said.

[01:03:38] Speaker 2: We think the future is not gonna be voice centric device. We want to build more applications. You go look for technology, found this technology at Sanford Research Institute, um, that was a client, server based voice technology, great interface. We did a prototype. Motorola had no operating system. So beautiful prototype.

[01:04:00] Speaker 2: And, and, and everybody loved it and said, well, we couldn't put it on our phone. It would have to be. Windows mobile phone or Noian phone, so we're not gonna do it. The product manager I worked with took that technology, went raised money, and three years later it was bought by Apple. It's Siri today. So they have no capability.

[01:04:23] Speaker 2: Don't think the big guys have the capability. Their organization is not set up, they don't have the capability, they don't have the talent. And even if they have the talent, they don't, they don't have the process to execute on any of that. All they're doing is, yes, we want, but no action because they simply are incapable.

[01:04:45] Speaker 2: That's that, that is my, that's my personal experience. I think large companies are not capable of those kind of transformational change. Expecting them to change is like expecting to the same, same thing, and different outcome. That's, that's the way I look at.

[01:05:09] Speaker 2: They're protecting their own. Well, there's a lot of people you have to get through to like change, right? Processors basically Powers have, like if software becomes like back then I'm using Motorola example again. Software organizations has to be, that's just not how they process, right? It was a product manage product managers who own the product, who had all the power.

[01:05:30] Speaker 2: And there's a lot of people process and tra you know, things that these companies, how these companies used to work that you need to change if you want a new business. And that is a very difficult process. So that's why startups, this is why, you know, Tesla can do what Tesla can do because, and the old, uh, auto industry technically has all the talent and capability.

[01:05:54] Speaker 2: Couldn't do right. It's because new products, new technology, bring a new paradigm, fundamentally different paradigm, and those companies simply don't have the processes and the capabilities to pursue those opportunities.

[01:06:12] Speaker 4: Yeah, I mean, I think that as this continues to mature, there will be people fighting it.

[01:06:17] Speaker 4: I mean, you use the example with the colorants industry where as bio colorants have become bigger, you all of a sudden have lobbying for synthetic colorants. Okay. Um, I also think that for the kind of petrochemical majors, the oil majors, what's interesting about Biomanufacturing is that they're more acquisitive in manufacturing.

[01:06:38] Speaker 4: Most of them own, you know, some sorts of Biomanufacturing departments or companies that they've bought. And so in this, I think for something like solar, it was more purely adversarial, whereas there's slightly more overlap, which I think makes it. Makes them less to attack when they're like, oh. But we also kind of do that a little bit, um, because there's overlap in the CapEx we talked about like they, a lot of the same types of engineering facilities can be used.

[01:07:07] Speaker 4: And so it's not, it's not as diametrically opposed for most of the companies.

[01:07:14] Speaker 3: And just very quick follow up to that, there are also large oil and gas players that are actively deploying capital into this space, uh, and a lot of capital. Um, and so there are groups who are trying to shift those interests or diversify, um, their investment portfolio, if you will.

[01:07:35] Speaker 3: Um, and then I think also, like, not to go back to geopolitical nonsense, but um. Every time we have a major geopolitical event, I think our fragile reliance on fossil fuels becomes more and more apparent. Uh, we're seeing those ramifications in ag currently. We saw this back in 2022 with Russia's invasion of Ukraine and what that did to the agricultural markets.

[01:08:01] Speaker 3: And so I think there has been less fighting, um, because people understand what the future looks like and they are looking to move towards that future and diversify their exposure.

[01:08:17] Jenna: Hi, my name is Jenna Jones. I'm a designer, um, an architectural designer outside of New York City, and I'm a member at Gin Space, the Community Bio Lab up there. Um, yay. Um, all this talk about how the narrative has to be different, the story has to be different. A lot of these companies that are, um, in biomanufacturing are looking for engineers, material scientists, but where can designers plug in either in these companies or found in the companies?

[01:08:42] Jenna: But I wanna get more involved, but I don't have a chemical engineering background. I just wanna know where you all see how storytelling and narrative can come into at the ground floor of these startups.

[01:08:56] Speaker 4: For someone like you, I think that you could do a couple of different things. The first that comes to mind would be to find people like us who are investing at the early stage in companies like this. I mean, in New York, someone like SOSV and their indie bio program does a lot of. Uh, touches a lot of different companies and see if you can, you know, get in touch with members of that cohort, whether it's on an individual company basis or like through the, um, accelerator.

[01:09:28] Speaker 4: And then I, I think plausibly what happens is that you, you find a company that inspires you and that you like the founders and you see, you know, if you can pitch them and say, you should work with me. Um, and I, I think there are definitely companies out there who would love that. And I, I've seen companies in our portfolio who have brought on, you know, not only someone who can do kind of like business and operations, but also someone who can do design and marketing and narrative and brand and have that be really, really impactful.

[01:10:04] Speaker 3: Yeah. We also focus quite a bit on climate justice, um, which is important. And so I think there are more and more. Stories that need to be told within these startup companies and relationships that need to be built within communities. Um, so I think there is a lot of opportunity and a couple of other groups to mention.

[01:10:23] Speaker 3: The Activate program also has some really strong startup cohorts, um, and that would be a good group to speak with as well.

[01:10:36] Speaker 2: So, um, I think there's a lot of groups like Ate and Engine. There's lots of places you can plug in to learn about startups and what they do. Um, the other thing, it's kind of interesting. I've came up with this idea and it's up to you whether you wanna do it. I, I want someone to do it. So, um, which is why I'm saying.

[01:10:58] Speaker 2: If there's a way, 'cause I feel like there's a lot of education that consumer needs grew and if you know the app called Yuka, uh, which a lot of the now the younger kids do, is you can scan, they do it for food, they can scan the food, and it'll tell you whether that food is good for you and you can, and it's because they, they've database all the ingredients and how it's manufacturing and what, uh, and, and all of that.

[01:11:24] Speaker 2: I think if there is a similar app for like, I, I don't know if they do for cosmetic, uh, and like personal care stuff.

[01:11:33] Karl: There

[01:11:33] Speaker 2: is.

[01:11:34] Karl: Yeah.

[01:11:34] Speaker 2: Yeah. Uh, and so, um, and maybe for materials, so things like that, I think to educate consumers on how these things are made. Right. And because there's so much. Labels and people don't understand what it is, but truly, are they bio-based?

[01:11:49] Speaker 2: And do you understand, you know, what percentage of bio content, because you have a lot of big brands who say, oh, this is bio-based. If it's maybe like 10% bio, and then they could call it bio-based and it's like, you know, it's bullshit. So, um, so that would be helpful. Building something credible that people, consumers can use to say, oh, this is truly what it is.

[01:12:11] Speaker 2: And then, um, that will guide demand, right? Consumer will make that choice. Like I said, I think if we educate enough consumers, people will pick. And once people make your choice, the brands, the con, the manufacturers, the whole industry will shift. Because I guess when, when I was at Motorola, nobody, Motorola literally didn't believe a touch phone interface.

[01:12:39] Speaker 2: We didn't build when we pitched internally quite a few times. Um, and. When Apple made it successful, the whole industry fought. Right? So we, that's because consumer wanted it. So if we can create stuff where consumers saying, showing, 'cause one of the, the other thing that, um, I think a lot of in this industry that is not moving or the inertia is there, it's because they just, like, I don't see consumer demand.

[01:13:09] Speaker 2: But if we can demonstrate true consumer demand, the industry will shift.

[01:13:14] Karl: Alright, we've got time for two more questions.

[01:13:17] Holly: Thank you. Really very compelling conversation. I'm Holly Janssen Schmidt. I work for Jacobs. We are a large global engineering firm and we work across the manufacturing space and, and all markets and capacities.

[01:13:30] Holly: In my role at Jacobs, I run a consulting and advisory practice, and I also focus on sustainability, resilience and climate and how do we push that into the Jacobs engine and, and reach out to all of our clients. So we're doing some work in the biomanufacturing space. Defense Contracting, DOD, life Sciences, specialized manufacturing.

[01:13:49] Holly: And we work with a lot of startups, and I work with a lot of startups. And your comment about how to be a better business person versus a scientist, we see that all the time. They're in the r and d phase of their product. They are trying to scale up and go to market, but they have no idea how, how to make their product, how to scale it up, how to go to industry.

[01:14:10] Holly: And they have zero knowledge of the time it takes to build a large scale manufacturing facility. So I feel your pain there. My question is, how do I take this biomanufacturing initiative or market? And I've been, you know, messaging my, my folks back at the home, home ship. How do, how do I, as somebody in Jacobs take this demand, this customer demand, but also this financial push like you all are wanting to invest in this industry.

[01:14:40] Holly: How do I bridge that gap? As a technical services provider between the customers, the market, and the financing.

[01:14:54] Speaker 4: I mean, it sounds like you already are in a great place to help, right? Where you're able to look work with founders who are in the early stages, who hopefully have a great product and they have done the r and d and they are trying to figure out how to scale up. And it sounds like, you know, they should be coming to you as a potential partner and saying, man, we just raised some money.

[01:15:18] Speaker 4: Like we need to figure out how to scale up. We'd like to, you know, work with you to do that. And perhaps, you know, the most effective way to be in contact with more of these startups in the bioindustrial space is through, you know, Juniper and Isola and First Bite and some of the other. Organizations that we mentioned earlier that are investing in bio manufacturing bioindustrial companies, um, you know, to the degree that you could do what, um, even like what Foley did, right?

[01:15:51] Speaker 4: And like sponsor an event and, and try to get, uh, your name in front of companies that I think you're right to recognize might be really great customers for you. Um, I think that could be really quite fruitful.

[01:16:06] Speaker 3: And I'll add, um, you know, we talk to startups all the time who are looking for services like this.

[01:16:11] Speaker 3: So building a relationship with the financing side of things as well, such that when people are looking, um, we know where to send them. Uh, that's also I think a helpful strategy.

[01:16:24] Speaker 2: Yeah. And I know one of my companies is actually working with Jacobs. Um, the other thing I would say, it's kind of a. Another thought.

[01:16:34] Speaker 2: Here's another thought I've been thinking and someone else can take the lead. That'd be great, uh, because I just don't have enough time. Um, one of the things, uh, that is really challenging for scaling true industrial stuff is first, financing first of a client. And this is where I do believe a government kind of a program, um, to help with startups and build a program around how to help and who are the parties that involves, like, you shouldn't have a startup designing a plant, right?

[01:17:14] Speaker 2: Um, and so someone like Jacobs and, you know, there's a lot of other EPCs I know, but. Having incredible EPCs who have experience that they can partner with, help them to design and, and build that. Get to FEL three, get to construction. Those are, um, to de-risk that capital for, uh, for investors in term of person of a kind.

[01:17:41] Speaker 2: Um, maybe come with this is like where the defense budget could come in with a part of the demand, like offtake from one of the military coordinating that. 'cause you guys, I don't know, are you guys are prime you or you're a subprime?

[01:17:58] Speaker 2: Correct. So, um, if you are one of the defense primes, right, so that you're already in that system, right? So there is ways to maybe work with other, um, primes like, you know, lock hard or whatever to create that with a program. Give that sort of de-risk element for a first of a kind with these startups, um, leveraging that defense budget.

[01:18:27] Speaker 2: That would be something that I think would be super helpful because investors don't wanna take on that CapEx risk. But if you have all of the right people involved, not just the startup, but they're just providing the technology, the right designers and right people to construct it, and there's off take that they will take from the materials that they're gonna produce now, that has de-risk a lot, that you're much more likely to get.

[01:18:54] Speaker 2: Some matching or things from, uh, uh, an investor 'cause they see that as more de-risked. Um, that would be an interesting program that you guys could help to, you know, given your larger organization, you know, that you guys to help influence with the policies, to, uh, to get a program in place that, um, programmatically addresses a lot of these first of a kind because once a first of a kind is built that the economics is understood, then it's very easy to find project finance money and other stuff.

[01:19:26] Speaker 2: But the first of kind is really, really hard and that's a, a key to unlock some of these.

[01:19:32] Karl: Right. Uh, last question.

[01:19:36] Noah: Thank you. And, and thank you all so much, uh, for a great, uh, set of questions and, and discussion. My name's Noel Gerwig. Uh, I have a small independent consulting business. I call it climate Land 2030.

[01:19:47] Noah: I'm also a research scientist at the University of Maryland. I have a question about, uh, the intersection of bioeconomy and food tech. And, and Michael alluded to this, you know, in your comment about regulation and lab cultured meat. This is an area we know that ag in the food system contributes about a third of greenhouse gas emissions.

[01:20:05] Noah: We're not gonna come anywhere close to meeting our climate targets if we don't get a big handle on this. And, you know, food tech could play a big role in this, but this is a place where we saw a lot of venture capital come into the system and then it kind of fell away. So I'm wondering where that leaves us, you know, is this one where we say, well, you know, the foundational r and d just isn't there, so we give it to China, or we wait for a new administration in the US government and hope that the funding comes from there, you know, or is there a role and what could that role be for, you know, uh, emerging fund managers, limited partners, smaller scale investors, the kinds of things we're talking about to support a, what is it?

[01:20:51] Noah: It's, it's evident that this is a kind of innovation that we have the technology we can solve it. We just haven't gotten there yet. And it need, and it's not likely to be, you know, this is not gonna fall into, into your basket of 12 to 18 months. It's gonna be profitable already.

[01:21:11] Speaker 3: I'm happy to start, um, 'cause this scenario I'm quite passionate about. So you're right. Agricultural emissions are 20 to 25% of global greenhouse gas emissions. We need to grow 50% more food by 2050 to continue feeding our growing population, and we need to do that at lower emissions. And yeah, there was a ton of capital that was deployed into this area five, 10 years ago and there's far less capital going in, uh, currently.

[01:21:40] Speaker 3: That said, um, areas that remain interesting, cultivated meat, as you mentioned. Yeah, there's Florida, but maybe I shouldn't call them out specifically, but Yeah. Um, one of the biggest factors there are the, the techno economics, right? The inputs were just simply too costly. And our thesis has been, if you can start to drive those inputs down, you can make products, um, at economics.

[01:22:06] Speaker 3: That make sense? So we are investing in a company that's aiming to do just that from the media perspective, from the cell perspective and from the infrastructure perspective. We've also been investing in companies, um, that are using biotechnology to improve crop yields, um, via enhanced genetic expression.

[01:22:25] Speaker 3: So non GMO, no regulatory pathway. Um, we're focused on enteric methane, uh, emissions where that's an area that a lot of capital went and, you know, it didn't actually move the needle. And if you start to dive into which companies that capital went to, there were a few darlings, um, that didn't actually perform.

[01:22:46] Speaker 3: And so you can learn, take some of those lessons. Learn some of those failure modes and more strategically deploy capital to, to get at this. Um, but it helps that food security is an area of national security prioritization and another area of current focus. And I think public private partnerships as demonstrated in places like New Zealand can be really, really transformative in helping to ensure that the capital is leveraged effectively.

[01:23:15] Speaker 4: Yeah, it's, it's interesting having had the conversation earlier about regulation. You know, when I think about food tech right now, I think about Singapore. Singapore has made these very streamlined regulatory pathways for people to take lab grown, protein to market. Um, and as such are they're emerging as a leader where, you know, more companies are being formed in Singapore, in food tech and more companies internationally are going there to launch their first products.

[01:23:43] Speaker 4: And you know, I think that there is a. Stark difference between, you know, states in the US saying, oh, we're gonna ban it. Versus, um, countries that are saying, Hey, this is a strategic priority. We're gonna make this easier, that we will see what level of impact it has. But it's certainly a drag here on that innovation happening in the states and being commercialized.

[01:24:06] Speaker 4: I mean, my dream as a fund manager is, I hope someday, um, in the next 10 years, we will get pitched on lab grown meat companies where the unit economics do make sense. And to me, I see this as, you know, the costs, the underlying costs continue to decline. I expect that that will happen in the next five to 10 years.

[01:24:29] Speaker 4: Uh, and it's just a matter of time as kind of the economics continue to mature and the underlying technologies continue to fall in cost. Um, so I, I hope that that will happen. I think it's, it's. Still just kind of waiting for it to bake in terms of maturity. Um, more so than lack of capital. Um, I, I is where I would peg it.

[01:24:55] Speaker 2: I think two things. One is, again, consumer demand, who is demanding that they want, like, I don't know. I, I, I really literally don't know there's a demand for a lot of this stuff. But, um, the second is economics. Like you mentioned. Certainly at the price they are, they're not demonstrating any demand. So, um, at the end of the day, and you show attractive business case, which means there is market and there is profits to be made, money is not gonna flow until we prove that.

[01:25:34] Speaker 4: Fun, fun, fun. DC fact, I think Jose Andreas, um, has invested in some of these companies and he has restaurants in the city and, and serves lab grown chicken at one of his restaurants. And so like, you can go be the demand if you want, you can go order some lab grown chicken at a Jose Andreas restaurant.

[01:25:51] Erum: And I'll say it's really good to look at nugs like chicken nuggets because there's meat chicken nuggets that taste like they are like made through like, like plant-based.

[01:26:01] Erum: But then there are plant-based chicken nuggets that taste like their meat. So if the lab grown meat can taste like, you know, actual chicken with a texture and everything, it wins. No one, you know, no one reads the labels in the end. It, it, it's all about taste. It's all about the nugs. So I think we should just pay close attention to that market.

[01:26:18] Erum: And on that frozen Nile.

[01:26:21] Karl: Yeah. I, for one, can't wait for, uh, the new form factors that cultivated meat is gonna offer us. Um, but anyway, I want to say thank you to the audience for participating in this episode of the Grow Everything Podcast. Let's give our, uh, panelists a warm, uh, hand of applause.

[01:26:43] Karl: Thank you. And thank you very much to our host here at Foley Hoho. Really appreciate you guys making the space available to us. Please do listen to the grow.

[01:26:55] Karl: Please do listen to the Grow Everything Podcast. You can find us on all streaming channels. I have to say, like, subscribe, comment. We do respond to every comment you send to us. Thank you so.