Bay Area Biotech Startup Zymergen Just Nabbed $130 Million, and the Company Has a Robot Workforce

This article was originally published here
October 11, 2016
By Mark Terry, Breaking News Staff

Zymergen, based in Emeryville, California, announced today that it completed a Series B financing round worth $130 million. The round was led by SoftBank Group, and includes previous lead investor Data Collective (DCVC), and return investors True Ventures, AME Cloud Ventures, DFJ, Innovation Endeavors, Obvious Ventures, and Two Sigma Ventures. New investors were Iconiq Capital, Prelude Ventures, and Tao Capital Partners.

Zymergen uses robots and its proprietary algorithms to engineer bacteria to manufacture various industrial chemicals. Although the concept has been around for some time, what puts the spotlight on Zymergen is its automation. As Fortune magazine writes, “The company has a robot workforce to do things like stir liquid around in a petri dish while human scientists supervise thousands of robot-controlled trials in a given week. Zymergen then takes the data from these microbe experiments and uses a proprietary algorithm to sort through millions of different genetic combinations to guide the experiments and develop the best chemical.”

“Companies don’t need to put in as much power into these processes and they end up saving money,” Joshua Hoffman, Zymergen’s chief executive officer, told Fortune.

Apparently a handful of Fortune 500 companies are clients of Zymergen, although the company is staying mum on exactly who they are for competitive reasons.

In addition to the funding, Zymergen also brought on former U.S. Secretary of Energy and Nobel laureate Steven Chu and SoftBank Group International’s managing director, Deep Nishar, who was previously a senior executive at Google and LinkedIn. Both will be on the company’s board of directors.

“Once you have something that’s radically new and you can train those microbes to make high volumes of the stuff then you really are in a different world,” Chu told Bloomberg Technology. He emphasizes that Zymergen’s robotics elevate the company because the results can be reliably reproduced and mass produced. “We are just beginning to scratch the surface on all of this.”

The company intends to use the funds to invest in more robots and boost its sales force. Zymergen works with companies that already have microorganisms they use in manufacturing and chemical production. They test the customer’s microbe and evaluate how efficiently it converts raw materials, typically some type of growth media and sugars, to the desired substance, whether a polymer, pesticide or enzyme. The company’s algorithms then churn out potentially 1,000 changes to the bacteria’s genome to increase yield and save costs. Then the robots do the actual genetic work, testing and collecting data.

Zymergen charges subscription fees and what essentially amounts to a royalty on the improved margins over a set time period. The company’s focus is on improving existing microbes, and also on creating new microorganisms.

George Church, a professor of genetics at Harvard Medical School, told BloombergTechnology that Zymergen’s techniques are “nearly perfect.” He went on to say, “Most of these processes now in biotech and manufacturing are now very artisanal. The price for reading and writing DNA have come down more than a million fold over the past few years—way more than electronics during the same period.”

“Biology is inherently complex,” said Chu in a statement, “and in the past, this complexity was used to explain inconsistent results. Zymergen approaches biology with an engineering and mathematical mindset. This enables them to put all the pieces together in a repeatable and trustworthy way. Zymergen has created a complete solution. As a result, they have achieved a level of scale and quality control previously unseen in industrial biology.”

To date, the company’s total equity funding is over $170 million. The company is generating revenue—somewhat unusual for biotech startups—although the company doesn’t indicate how much other than to say it is “substantial.” According to Equidate, a stock market for private companies, investors value Zymergen at about $430 million.

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