Zymergen, a five-year-old company that manufacturers molecules for a wide array of uses and industries, has closed on $400 million in Series C funding led by one of its earlier investors, the SoftBank Vision Fund.
Even in a world where triple-digit million-dollar rounds have become de rigueur, the amount stands out, as does the company, which occupies a 301,000-square-foot campus in Emeryville, Calif. and has been growing like gangbusters. How? By engineering yeast and bacterial strains for outfits across the pharmaceutical, food and agricultural, specialty chemical and electronics industries.
Its objective is typically the same: to engineer tiny microbes with the aid of advanced computing to help increase the yields from these customers’ fermentation processes — and fatten their bottom lines in the process. Zymergen doesn’t care if it’s an antibiotic they want to make, an alternate feedstock or even flexible OLEDs — the kind that Apple uses to produce its screen technology.
In fact, Zymergen co-founder and CEO Joshua Hoffman says one of the biggest opportunities before his now 600-person company is to produce entirely new products that are untethered to traditional petroleum-based manufacturing, which currently underpins nearly everything we use and own, from gas to golf bags, from dishwasher parts to dresses.
As it relates to OLEDs, for example, Hoffman notes that “current petrochemical-derived films don’t work as well as they should. They’re too blue, or they scratch, or they de-laminate and the screen comes apart. The problems are rooted in their core chemistry. But biology gives you the whole palette with which to create films, adhesives and coatings.”
Zymergen never names its customers, except to say they are “Fortune 50” to “Fortune 500” companies. In an interview yesterday, Hoffman said he was not at liberty to disclose the specific products that Zymergen has helped to create either, offering only that its “partners have sold half a billion dollars worth of products made with our bugs in the last couple of years.”
Added Hoffman, “Roughly 70 percent of the things that we find are in parts of the genome that humans don’t understand.”
Indeed, Zymergen — whose number of customers is also a closely guarded secret — attributes most of those findings to robotics that help eliminate human error and to machine learning that helps find more advanced patterns. Hoffman even argues that it would be hard for another outfit to effectively compete with it at this point because it’s “too hard to replicate the data sets” that Zymergen has created.
Yet it does have competitors. Among them is nine-year-old Ginkgo Bioworks, which similarly designs, engineers, develops, tests and licenses organisms for use in sweeteners, cosmetic ingredients, crop treatments and pharmaceuticals, among other things. And Gingko has raised substantial funding of its own — roughly $430 million to date, including from Viking Global Investors, General Atlantic and Bill Gates.
Of course, both are longer-term bets on the future, even while their respective investors are betting that one will be the bigger breakout company over time. For his part, Rohit Sharma, a partner with the early-stage firm True Ventures, has his money on Zymergen. True was among the first institutional investors to invest in the company in 2014, and during a call yesterday, Sharma, who has sat on the board ever since, gushed about what it has managed to build since. “This is easily one of the most promising companies I’ve worked with,” he said. “This isn’t engineering eyeballs or daily active users or manipulating business models. This is innovation on the scale of the way the chemical industry came into existence and grew to a $3 trillion-plus industry. Zymergen will still be very relevant in 20 years.”
In the meantime, the company, which had closed its previous round with $130 million in 2016, is starting to see meaningful revenue, suggests Hoffman. Though Zymergen structures its deals differently depending on the customer, in all cases, it charges a subscription fee for its product and a share of the value that it creates.
Other investors in Zymergen’s newest round include Goldman Sachs and Hanwha Asset Management, as well as earlier investors DCVC, True, Two Sigma Ventures, DFJ and Innovation Endeavors. The capital, says Hoffman, will be used to reach more customers and invest more in its platform.
“It’s a boatload of money,” he volunteers. But he says the company was “able to raise it because we’re showing commercial traction and technology traction. This differentiated way of thinking about biology really works.”