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Ginkgo Bioworks Pulls In $275M as Synthetic Biology Funding Soars

Xconomy Boston — 

Companies sometimes raise big venture capital rounds to invest in equipment, people, and other tools for growth. Other times they do it to provide the business a cash cushion. And sometimes it’s about giving potential customers and partners more confidence in the fledgling company.

For Ginkgo Bioworks, its latest venture funding round is about all of the above, says CEO and co-founder Jason Kelly. The Boston-based synthetic biology company today announced a $275 million Series D funding round, which the nine-year-old firm says brings its total venture capital haul to $429 million. Ginkgo is now valued at more than $1 billion by its investors, according to a source with knowledge of the deal. (The person declined to speak about the valuation on the record because it’s private.)

The investment is one of the biggest venture funding rounds of the year in Boston, and it makes Ginkgo perhaps the most heavily funded synthetic bio company ever. Others on the list include biofuels companies Sapphire Energy, Solazyme/TerraVia, and Joule Unlimited—though the biofuels market is very different from what Ginkgo is going after.

The $275 million for Ginkgo comes from a mix of earlier investors, including Viking Global Investors, Y Combinator’s Continuity fund, and Cascade Investment, the private investment vehicle of Bill Gates; as well as new backers such as growth equity firm General Atlantic.

They’re all betting on Ginkgo’s vision that synthetic biology will play an increasingly large role in manufacturing products spanning sectors such as food, cosmetics, agriculture, and pharmaceuticals. The company is trying to help cultivate an industry around designing organisms—the idea being that companies would outsource the development of custom-made yeast and other microbes to businesses like Ginkgo.

In labs in Boston’s Seaport neighborhood, Ginkgo employees use robotic systems and software to design and test microorganisms engineered to secrete products such as rose-scented oil that goes into perfumes; sweeteners for beverages; and industrial enzymes used in laundry detergent. Some of the company’s other projects are still unproven, such as a $100 million joint venture with Bayer in agricultural microbes, and a new partnership with biotech startup Synlogic to develop engineered probiotics intended to treat neurological and liver disorders.

“Ginkgo is essentially this automated platform for designing and printing DNA and using that to edit the genes of microbes to make them do new things,” Kelly says.

The synthetic biology industry has gone through major ups and downs, including some huge bets made on biofuels in the past decade that didn’t pan out. But investment in the sector is rising again. In 2016, private funding for synthetic bio startups eclipsed $1 billion for the first time—marking the fourth consecutive year of growth, according to research from CB Insights. This year, as of early August, companies in the sector had raised more than $500 million in venture capital, public funding, and grants, according to data from industry group SynBioBeta.

Other notable synthetic bio companies include Bolt Threads, which is engineering yeast that produces spider silk-like fibers for fabric and garments, and Impossible Foods, which genetically engineers yeast to make a crucial ingredient in its meatless burger. Bolt has raised at least $129.3 million in venture funding, according to SEC filings, while investors have pumped more than $250 million into Impossible, Reuters reported in August.

James Collins, an MIT professor and synthetic biology pioneer, thinks the industry he helped create about two decades ago might be turning a corner.

“Synthetic biology is maturing as a translational field and attracting
considerable interest from top-tier investors,” Collins says in an e-mail to Xconomy.

He says the activity driving that momentum includes the “creation of high-throughput platforms for designing and creating engineered organisms” that might have commercial applications. Collins considers Ginkgo a leader in that area; Zymergen is another example. Another growing trend is companies, such as Synlogic and Cell Design Labs, that are developing engineered cells intended to serve as “living medicines.” (Collins says he has no direct ties to Ginkgo, although he co-founded its new business partner, Synlogic, and chairs that company’s scientific advisory board.)

Kelly declined to say how much revenue Ginkgo is generating, but he says the company is currently working on about 50 microbe design projects, and it has around 25 customers. They include French fragrance and flavor company Robertet and Minnesota-based Cargill, a maker of food and agricultural products, among other things.

The new funding is being used, in part, to invest in robotics and other equipment, and to expand Ginkgo’s physical footprint. This week, the company announced the opening of its third lab at its headquarters, bringing its total square footage to 70,000, Kelly says. Ginkgo could expand to about 125,000 square feet of space in the next few years, he adds.

Ginkgo says the additional space will help it move into new kinds of products, including textiles. Kelly wouldn’t speculate on what other areas the company might explore, but “there’s a lot of directions you could take the technology,” he says.

“We really see designed microbes as this tremendously flexible platform,” he says. “It’s getting a lot cheaper to do the work, year over year.”

The company is also hiring, with plans to grow its team from 160 people to around 210, Kelly says.

But the other reason Ginkgo decided to raise so much capital is to strengthen its pitch to customers and partners, most of whom are large corporations, he says.

“They want to know that Ginkgo’s going to be around when they’re engaging us around a multi-year contract,” Kelly says. “A bunch of the [Series D] money is not going to run out of the bank. It’s there to say, ‘Look, you can trust to make a long-term bet with us.’”

Of course, raising so much venture capital can also make it more difficult for a company to deliver a strong return for investors. When asked about exit plans, Kelly says he envisions Ginkgo going public at some point, but he doesn’t have a specific IPO timeline in mind. (Who knows whether the company will follow through on those plans—plenty of companies say they plan to go public, and most never do.)

“An acquisition doesn’t make a lot of sense for us because it would only value the platform in one” industry, whereas Ginkgo’s leaders think the company’s technology could be useful for multiple sectors, Kelly says. “Because of that, we think it makes sense for the company to stand alone. An IPO is a much likelier outcome than an acquisition.”