Many regular readers of our blogs may recall the slew of mega deals in the Industrial Biotech sector around the 2006 time frame. Fast forward to 10 years later, such hype has certainly ceased, as evidenced by the withdrawal of many institutional investors in this space, as well as the write-offs of multiple companies that were once poised to disrupt the petroleum industry. When global oil prices dropped below $40/barrel, compounding the challenging task of scaling up a technology within a commodity-based industry, many companies resorted to developing higher-valued chemical products as a way to sustain their operations.
Given the limited market potential, it is no surprise to see the industry consolidate through mergers & acquisitions (M&A). Over the past half year, we have seen a number of M&A activities that combined forces of complementary companies for another push towards successful commercialization of their respective technologies. A few illustrative examples are listed below:
- Global Bioenergies in December 2016 purchased all shares of a young startup, Syngip, to diversify its feedstock sources beyond glucose, which Syngip’s carbon gas-to-chemical platform is able to achieve.
- Avantium in January 2017 acquired the assets of Liquid Light to supplement its technology platform.
- In January 2017, Ginkgo Bioworks acquired Gen9 to further advance its genetic engineering technology.
A shifting investment scene
Despite an industry consolidation, we have started to see a new wave of venture activities in industrial biotech. No longer do we see multi-million steel plants written in business plans, but instead, we see companies evolving toward platform technologies in areas such as bioinformatics and gene editing. Such change makes sense, especially to venture investors, as it shields them from any scale-up risk associated with the development of production plants. A few illustrative examples of such shift are shown below:
- Synthego, a developer of genome engineering solution, raised a $41 million Series B round from multiple venture investors in January 2017.
- Zymergen in 4Q 2016 raised a mega $130 million Series B round as the company scales up its microbial strain development platform.
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Join us at our upcoming 2017 Cleantech Forum Europe (May 16-18) in Helsinki, as we will be hosting a session centered on industrial biotech.