YC-Backed Industrial Microbes Is Engineering Bacteria To Produce Chemicals From Natural Gases

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The trio of synthetic biologists behind Industrial Microbes, a new East Bay-based startup backed by Y Combinator, have had years of experience in working with biofuels.

They met at LS9, a biofuels startup that took more than $80 million of venture investment through the height of the cleantech wave and sought to create fuels from specially engineered bacteria. From a venture perspective, LS9 was a wash in the end and sold for up to $61.5 million last year.

But Derek Greenfield, Elizabeth Clarke and Noah Helman, who met at LS9 and have PhDs from Stanford, UC Berkeley and UCSF, are trying a new tack with their own company. Industrial Microbes is designing microorganisms that will convert natural gas into industrial chemicals.

The key difference here is that the bacteria will be consuming natural gas, not sugar. Sugar costs are a major part of why biofuels companies like LS9 couldn’t compete with current energy prices. The company says that the entire market of non-fuel chemicals is worth $17 billion, but its size is constrained by the high cost of sugar.

“Sugar is often the raw material, but it’s not a good raw material,” said Greenfield. “Natural gases are 75 percent cheaper than sugar. They’re cheaper than oil and there’s tons of it. It’s our big natural advantage that we have natural gas in the U.S. It’s super energy dense and there’s already infrastructure to pipe it around.”

Greenfield and his co-founders are taking genetic material from exotic micro-organisms discovered in the 1970s in places like peat bogs and swamps that could consume natural gas. They’re generally hard to grow, but if you take enzymes and genes out of these bacteria and insert them into commonly-used varieties, you could potentially create basic industrial chemicals out of this process.

Industrial Microbes’ first target chemical this year is malic acid. It’s a dicarboxylic acid made by all living organisms, that makes apples tart and is often used as a food additive. Produced at a cheap enough cost, it could be used to make biodegradable plastics. Eventually, they’re looking at making liquid fuels cheaply from natural gas, instead of sugar.

With the cost of reading and writing DNA dropping faster than Moore’s Law, Greenfield and his startup are hoping to build and run experiments at a fraction of the cost of what it would’ve taken a decade ago. There are plenty of bioinformatics and synthetic biology startups that have cropped up in recent years because of the changing cost structure of the space including Counsyl and 20n, another Y Combinator batch-mate.