Synthetic Biology -- Golden Land Of Startups?

Synthetic biology is the branch of biotech that is about creating new biological parts from scratch or from templates in nature. It is often about genes or proteins that can be used in research but increasingly in commercial spaces like agriculture, industry, medicine and even computing.  At Tau Ventures we are investors in digital health (besides enterprise and to a much smaller degree automation) but increasingly finding that synthetic biology is paving the way for biotech overall to be more software driven. It makes sense given that creating or repurposing new biological agents requires a high degree of modeling in silico, and its twin fuels are increasing amounts of data and increasing amounts of computational power. Case in point, two years ago In Mar 2019, we wrote The Garage Moment -- 3 Reasons Why Biotech Is Finally Ready For Startups. We did not imagine a global pandemic but if anything it has accelerated the secular trends around synthetic biology. This article is a high-level overview of three core trends aimed towards aspiring entrepreneurs.

1) The Academic Engine

Synthetic biology, like biotech, has been around for a long time, arguably since the dawn of agriculture when we were selecting plants with better outputs. But in the modern sense, the field arguably got started with Genentech making artificial insulin in the late 70s and took another 50 years to mature. It was similar to the AI winter that many computer scientists talk about. That our scientific knowledge has now been growing by leaps and bounds is expected, it’s the magnitude that is striking. The graph below shows how we have essentially 10xed between 2000 and 2018 and that’s actually an understatement, Meta-studies with more recent data are getting published as we speak but a search on keywords or citations on Google Scholar gives a glimpse of how the academic engine has accelerated.

2) The Commercial Flywheel: Synthetic Biology 2.0

Twist Biosciences manufactures DNA using proprietary microplates and liquid handling robots. It is in many ways synthetic biology 1.0 i.e., a company that provides the shovels for other use cases. Financial performance is an imperfect measure of success but still, Twist is emblematic of the incredible success that such companies have had. But it’s no longer about large, well-funded public companies. For instance, Culture Biosciences provides bioreactors on demand, showing that startups can now power other startups. And GRO Biosciences (a spinout of the prestigious George Church lab at Harvard) is building on this stack and making amino acids (beyond the 20 that occur naturally) that can become new use cases in bacteria. In fact at Tau Ventures we see the world moving to synthetic biology 2.0, which is much more applied. Instead of just producing structure we are now increasingly building function. Instead of just manufacturing genes we are now building proteins. Instead of just providing shovels, the tools are now becoming ubiquitous and we are building solutions. 

3) The Golden Land: Strong Performance In Public Markets

A robust market in an industry is a top-down metric of the excitement and thus capital available. Walking backwards, stocks performing well indicate the possibility of good exits, more private funding aka VC money, and more talent migrating towards the field. While there is no authoritative index around synthetic biology yet, data scientist Calvin Schmidt maintains one that illustrates what is happening overall. The natural question -- could it be a bubble? Absolutely. But at Tau Ventures we see a watershed, an inflection point in our level of scientific knowledge (“academic engine”) and applications (“commercial flywheel”). There are massive challenges ahead -- unintended consequences, clinical trials, privacy, ethics -- but a thing that is certain is there is no going back.

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Originally published on “Data Driven Investor," am happy to syndicate on other platforms. I am the Managing Partner and Cofounder of Tau Ventures with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr -- good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.