Why Elaia invests in Industrial Biotechnologies
By Franck Lescure, with help from Marc Rougier & Saish Rane
Amidst current situations of market corrections and pandemics where everyone is wondering what is the next sector to invest in, at Elaia we’ve taken a stand to back solid, deep tech startups that create real value, enact real change and bring bleeding edge innovation to the world, especially in a time when there are resource scarcities around the world.
In this article, we will investigate how microbes, the otherwise vicious enemy of humankind & healthcare will actually play a leading role in the heralded biotechnology revolution which promises major solutions to the challenges of humankind.
Through our experience, it is natural for us to focus our efforts on this attractive sector through the unique position we have in this ecosystem as investors to support developments in industrial biotechnology, a sector considered as the future of industrial chemistry. We will address this world of microbiotechnologies through the Elaia MBT Fund.
As Franck Lescure, Partner, succinctly explains:
“Microbiotechnology represents both future economic growth through technological innovation and a chance for the survival of our planet.”
Looking at invisible matter 🔎
Before we start, a quick refresher from your high school lessons into what we are dealing with when we say microbes, microbiology and microbiotechnology.
Microbiology is the science of all living organisms that are invisible to our naked eye. This includes bacteria, archaea, viruses, fungi, prions, protozoa, algae, and all micro and nano-organisms that are collectively known as microbes.
Microbes play key roles in crucial processes for the living species, from humans and animals to plants, such as nutrient cycle, respiration, photosynthesis, biodegradation or biodeterioration, climate change, diseases, etc.
Two-faced microbes 🎭
These microbes bear an intrinsic duality in them as they represent at the same time, on one side, agents of infectious diseases & pandemics that account for at least a third of the worldwide healthcare burden, and on another, an unlimited source of disruptive developments in a sustainable manner which represents a bright future for the manufacturing industry.
Nevertheless, these two faces are extremely interconnected since the same living cells can operate on either side. For instance, the bacterium Xanthomonas citri that causes leaf-spotting and fruit rind-blemishing disease in citrus can also facilitate the production of bio-based products like ethanol and color dyes, helping to work on alternative processes to fight global warming. Another example is given by viruses of the HIV family, the deadly agent of AIDS, which have proven to be very efficient vectors for curing genetic disorders or cancers through gene and cell therapy.
Scaling micros on a macro level 📈
By using microbes, industrial biotechnology allows the production of complex or new molecules and supports the development of living microorganisms as tools in the same vein as software can be used “as-a-service”, for addressing issues that no molecule or molecular combination could be able to address. It is also a technological avenue to address environmental threats induced, in some cases by industrial chemistry.
Thanks to the versatility provided by microbes, industrial biotechnology can be applied to a great range of sectors, from agriculture to medicine, cosmetics, and beauty, from food and feed production to energy and materials, with an overall objective of reduction of environmental pollution.
The potential of using and developing microbes through industrial biotechnology is huge and is expected to represent a major part of the impact of the coming bio-revolution on the global economy (estimated impact of up to $ 2–4 trillion per year).
Given this potential impact, we must also consider the hurdles that this sector will have to overcome to be able to transform technology into practical use cases for society and businesses. Technology conservatism and unwillingness to accept innovation, complex regulatory pathways, difficult approval processes, scaling up solutions, market pricing and margin calculations are only some of them and we must be ready to brave the storms alongside the innovators.
But why do we care about Microbiotech at Elaia?
We care because it is an enormous investment opportunity and a chance to take part in this bio-revolution. We care because it is positive for financial performance but also because it responds to today’s global challenges: climate change, food shortage, reducing emissions, resource scarcity and population resilience.
As we care deeply about this sector, we organized & started to build out our Life Sciences practice in 2018. Since then, our team has managed a portfolio of tens of companies, gathered expertise, know-how and skill sets necessary to respond to these crucial challenges and hurdles.
Biology is a complex domain that interlinks every living being — plants, animals, humans, and microorganisms.
The complexity of the biological world creates a direct connection to the digital world for us to be able to decipher it and that’s where our expertise proves to be useful. We see yet another duality being formed in the form of microbiology and digital technology which requires knowledge of both aspects to pull back the curtain and understand it all.
Our entrepreneurs recognize this and appreciate our two-fold knowledge of the digital world and microbiology:
“Elaia understood that our company is made up of a digital component, including machine learning and artificial intelligence, and a microbiology and biochemistry component. That’s why it seems natural to work with Elaia!”
-Mouli Ramani, CEO of Aviwell
The market alchemy and the perfect timing for Elaia ⏰
Through industrial biotechnology, microbiology can meet current global challenges, such as environmental degradation and climate change. In parallel, the sector will also fuel a sustained development of innovation with the generation of new powerful ingredients that can only be produced in living systems. And this will concern a lot of industrial sectors as previously described, making this segment of life sciences very attractive as a target for venture capital investment.
“Almost every segment of the economy has been fueled by the powerful and century-old industrial chemistry, ‘’
says Franck Lescure, partner at Elaia.
“The intensity of chemical manufacturing activities has been historically driven by the huge worldwide needs for materials, ingredients, or active compounds. Unfortunately, it has reached unsustainable levels, with negative impacts on our planet and not only on the carbon footprint. With industrial biotechnology, and the use of the full power of life through microbes, we are witnessing the emergence of sustainable alternatives that are able to answer existing needs but also create innovations beyond existing technology borders.”
An example of a new material: spider silk can be produced at large scale by using industrial yeasts with less environmental impact than traditional textile manufacturing, and with the potential to biodegrade at the end of its useful life (example in picture: Bolt Threads)
When we talk about industrial-level projects, we measure their readiness through the “Technological Readiness Level” scale. On this scale, industrial projects can be differentiated into three phases: research, development, and deployment.
Startups are usually founded right after the research phase and at Elaia, we are especially interested in this middle ground that comes right after the research phase and approaching development, what we call the early development phase.
In this phase, both risk and value increase exponentially, and that is what excites us the most. Providing our financial support as well as domain knowledge to startups from their Seed to Series B stage is the sweet spot for early investors like us.
Elaia’s investments in Industrial Biotechnologies
When it comes to investing in early-stage deep tech companies in industrial biotechnologies, we at Elaia walk the talk and this is shown through the investments that we’ve been doing in this sector for several years. This has also come to reliably reflect the major trends that this industry has shown.
What’s next for Elaia?
Manage a dedicated Microbiotech fund to back these technological disruptors who will be key actors in the upcoming bio-revolution.
In order to achieve this, Elaia MBT Fund will address this fascinating universe in close partnership with TWB (Toulouse White Biotechnology), the leading European pre-industrial demonstrator for industrial biotechnology. TWB builds a bridge joining academic research and knowledge to industrial activities. They are hence an ideal partner with whom we can drive a consistent investment activity in industrial biotechnologies.
Stay tuned for the second part of this article that talks about the “dark side” of microbes and how we invest to counter infectious diseases.
