Arterial network vcbeat|In the first half of 2019, 65 synthetic biotech companies raised a total of 1.9 billion dollars.
Editor’s note: This article is from WeChat public account “Arterial Network” (ID: vcbeat), the author Zhang Xian.
Recently, according to the report of Crunchbase, the synbiobeta website produced a 2019 Q2 investment and financing analysis of synthetic biology, which was translated by the arterial network.
Crunchbase’s report shows that the total start-up capital of all industries remained stable in the second quarter of 2019, while the performance of the synthetic biology industry was unique.
After the first quarter, the sector is expected to record a total number of investment transactions, although the total investment is not expected to exceed the staggering $3.8 billion in 2018. But the situation in the second quarter of this year is the best in history, even better than the first quarter, indicating that investors have a strong interest in the field and continue to grow.
In the first half of 2019, 65 synthetic biotech companies raised a total of $1.9 billion in funding. Both figures exceeded any previous year except for the year, which shows how fast the synthetic biology industry is growing. If the investment maintains this speed, it will increase the number of investment by 33% in 2019, and the total amount is the same as the previous year’s 3.8 billion.
Figure:Total Investment in Synthetic Biology Industry 2016-2019
2019 Financing companies are rethinking the pharmaceutical industry
Of the 37 companies that received investment this quarter, 7 were in the first round of financing, and 7 of them were related to therapeutic applications except one. This may indicate that synthetic biology tools and technologies are enabling small, innovative, fast-growing companies to rethink the pharmaceutical industry and seek market opportunities that were previously unavailable.
More importantly, small and large companies benefit from financing, patients with rare diseases and unmet medical needs.
More companies have a slice of synthetic biology
At the 2018 Synbiobeta Investor Symposium, Alicia Jackson of Genoa Ventures said that the world’s capital is now unlimited, but great entrepreneurs are limited. Despite this, 2019 is expected to have about one-third more financing rounds than last year, indicating that investor support for synthetic biotech and its technology remains high.
Overall, the factors that determine the amount of money raised in a year are huge financing events, not the number of corporate financing rounds. A large increase in the amount of financing occurred in 2018, such as Moder and Zymergen totaling $1 billion, which contributed to this change. This year, like Impossible Foods, although it has received $300 million in financing, it still needs several rounds of financing at the same level to continue to create financing records.
Figure:After 2016-2019 Investment Rounds in Synthetic Biology Industry
Investment Directions in Synthetic Biology
Opentrons author Will Canine recently wrote an article on the concept of “synbio stack” on Synbiobeta, which we will call “synthetic bio-stacks (or synthetic bio-ecological chains more in line with domestic readers).Understanding, Translator’s Note), this is a way to abstract the synthesis of biological products by analyzing the position of products in the ecosystem of synthetic biology.
At the bottom of this eco-chain are materials and tools that help design a fast, easy, and accurate custom biological system. Going one level further, we began to see some products based on synthetic biology but applied in other fields. These products may be further improved after entering other fields, such as industrial chemicals, or goods that can be sold directly to consumers.
Financing support for all companies in the ecosystem from top to bottom is critical, as all of this is critical to building sound and healthy ecosystems. Synthetic biology must have applications that can have a positive impact on people’s lives to achieve our commitment to the public and to alleviate fear of genetic engineering. On the other hand, tool and reagent companies can help application companies bring their products to market.
By categorizing the financing of different companies in the second quarter, we can see that all the parts have attracted the attention of investors.
The following is a description of several important levels of the entire ecosystem.
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Bioreagents
In order to build and customize a product with a genetically engineered biological system, we need tools that can shape the genome.
This is where the reagent company works, making bio-building faster, easier, and cheaper by providing new systems. Twist Bioscience provides most of the DNA used by synthetic biology companies and is an extremely important contributor to the library of biological reagents. They went public in 2018 and recently completed $84 million in fundraising for further research and development.
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Process execution class
The advancement of automation and optimization of biological processes is one of the important factors driving the revolution in synthetic biology today. These advances have allowed high-throughputs to build and test thousands of biodesigns.
Inscripta is developing an unprecedented tool for synthetic biology researchers, adding another $20 million to their C.Inscripta series in April, and is developing the world’s first desktop digital genome project. Scalable platform. Inscripta recently published a single experimental library of 200,000 edits consisting of multiple editing types of the E. coli biosynthetic pathway, revealing new biology in the lysine metabolic pathway.
One that works with biologyThe main advantage is that it is quite easy to generate a large amount of diversity, but until recently the development of the process execution field, this diversity is still largely unexplored. Kytopen, a new company in the field, raised $3.6 million in the seed round to commercialize its Flowfect technology. Their achievements will make the development and manufacture of cell therapies very simple and open the door to new indication therapies.
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Biology Computer-Aided Manufacturing Software Bio-CAD/CAM
In order to design and track all the experiments that have progressed in process execution, bio-software is becoming more and more important. However, this is an area where investment has decreased significantly this year. Less than 3% of the companies that raised funds this year belonged to this category, the lowest in recent years. Whether this is due to an investor’s appetite for such companies or the lack of new companies established in this area, we need to continue to focus on this area to ensure that this part of the business is maintained.
One company is doing well in this area, and that is Riffyn. The company authorizes researchers to capture the data they produce in their experiments and turn that data into knowledge that can be used as a reference for the next round of design. To support this important work, Riffyn completed a $15 million Series B financing in May. Hopefully this will inspire more interest in Bio-CAD/CAM software and bring more software solutions to the field.
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App class
Finally, the ultimate goal of forming a complete “synthetic bio-tower stack” is to create bio-devices that provide value to consumers outside of other synthetic biotech companies. These applications, although still in their early stages, showcase different areas that can benefit from synthetic biology. This was also demonstrated by companies that received financial support in the second quarter of 2019, and their applications ranged from health to chemicals to fashion.
Figure:Type of Synthetic Biology Company Funded since 2016-2019m>
Codexis is an open protein engineering company that raised $50 million through non-public offerings. Codexis’ proteins are widely used in various industries, but recently they have done some great work on the development of proteins as therapeutic drugs, and have established partnerships with GSK and Merck.
Another young company is Checkerspot that uses microalgae to produce functional materials. The company recently raised $13 million to achieve this goal. Checkerspot’s technology explains why every company needs a biological strategy: because biology can do things that no other field can do, microbes in the company’s products can produce fatty acids with unique chemical properties.
Checkerspot’s materials will soon be available in the form of new clothing, but they are not the only companies that are committed to using the power of biology to update the fashion industry.
Pili is developing bio-based dyes to replace the petroleum-based dyes currently used by textile companies. This change is beneficial to both the environment and the consumer, as biobased dyes may be less toxic. In order to fund this work, they announced the end of a round of financing worth $4 million. One of the investors in this round of financing, SOSV, sees the huge potential of synthetic biology and often invests in it.
Who is the investor coming from?
The number of new investors in the field of synthetic biology broke out in 2019. This is partly due to the fact that Impossible Foods’ E-round financing has brought a large number of celebrity investors, from Katy Perry to Kirk Cousins.
Investors are jumping into the field from all over the world: Many traditional venture capital investors have entered the field of synthetic biology from information technology and have seen the potential to combine computing and biology. Other investors, such as charities or family offices, value the environmental and human impacts that Synthetic’s products can bring to market.
Figure:Number of new investors in synthetic biotechnology in 2016-2019
Financing Enterprise Area Analysis
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The East Coast and West Coast have long been the beneficiaries of new investments in synthetic biology, and the strong biotechnologies of San Francisco/Silicon Valley and Cambridge/Boston occupy a large share of synthetic biology financing.
In the last quarter, Boston led the investment of $295 million. The Midwest is actually second with $162 million, and San Francisco is third with $64 million.
This quarter, San Francisco regained its first place, bringing in $570 million. Boston ranked second and the company raised $230 million. The third place actually landed on the sunny coast of San Diego, and the large C-round financing brought by Posieda Therapeutics raised the total funding of the region to $150 million.
Figure:Investment in synthetic biology by region. This quarter, the San Francisco Bay Area’s synthetic bio-investment was $542 million, followed by the Boston area of $230 million. The rest of the United States totaled $297 million, with the rest of the world totaling $147 million.
Dr. K. Vig, Senior Assistant to Digital Health at Silicon Valley Bank, and other analysts pointed out that investment capital and transactions in the life sciences and healthcare industry in the central region have begun to increase. Growth outside the mature technology center along the coast. In fact, in the first quarter, funds in the central United States did increase, and some companies in the Midwest received very large investments.
This quarter’s trend is still quite typical. The San Francisco Bay Area’s regional funds topped the list this quarter, thanks in large part to the $300 million investment in Impossible Foods in Emeryville, California. These investments reflect the extent to which synthetic biology tools and technologies will affect biotechnology companies to attract new and emerging biotechnology centers in the United States and around the world.
Corporate Financing Round Analysis
One trend that has emerged in the general entrepreneurial market is that companies in the later stages will have a greater share of investment. These financings are usually much larger, which leads to an increase in the total amount of funds raised, while the total number of companies receiving funding is reduced.
Because of the lack of new innovations, the large increase in funding from startups masks some of the unsustainable developments in the market. Funds for synthetic biology have been increasing for years, and is this phenomenon beginning to happen in this area?
Figure:Source of funding for different company stages. The funds of Synthetic Biology are consistent in the early, middle or late stages. The portfolio shows that the new company continues to enter the industry at a healthy rate.
In the past few years, the distribution of early, mid, and late investments has not changed significantly. Later, the company continued to account for only about 10% of all investment. The increase in total funding for this sector is more likely due to the overall increase in the amount of funds raised by the company, indicating that synthetic biology continues to have a positive influx of new companies.
Summary
The Crunchbase report shows that there are many data metrics pointing in different directions in the broader North American investment market. The IPO is very strong, the transaction volume has increased, but the total investment is flat. Overall, the financing environment for the synthetics industry seems to remain strong.
In the second quarter of 2019, the synthetic biology industry set a new record, and investors are still optimistic about the ability to use biology to solve important problems, create better products, and promote new markets. The results after the listing were also very stable, and the valuations of companies such as Twist and Beyond Meat were much higher than their initial offering price.
The broader market has kept the synthetic biology industry growing, and social and political factors such as the Green New Deal may influence and establish a new roadmap for strategic investment in the industry, or increase industry engagement with the public and win public interest in the industry. The trust of engineering products. Time will give us the answer. But for now, the investment community seems to have followed the pace of development and is moving at full speed.