Precision Fermentation

‘Connecting the dots’ - building a business ecosystem for precision fermentation

Louise Krogh Johnson1*,       Dr. Andreas Worberg
*Corresponding author
1.Senior Innovation Manager, Food & Bio Cluster Denmark, Aarhus N, Denmark
2.Chief Commercial Officer, DTU Biosustain, Technical University of Denmark, Lyngby, Denmark  

KEYWORDS

Precision fermentation

Biosolutions

Business ecosystem

Sustainability

Future of food

Denmark

Metabolic

Joint

Immunity

Abstract

Precision fermentation is emerging as a pivotal technology for sustainable food production, reducing reliance on arable land and addressing environmental concerns. Denmark, leveraging its strengths in agrifood and life sciences, is developing a world-class ecosystem for precision fermentation through initiatives like the Business Lighthouse for Biosolutions. Key ecosystem components include collaborative industry partnerships, dynamic startup communities, and advanced research institutions. Shared facilities and pragmatic tech transfer systems enhance innovation and scalability. Despite strong public funding and early-stage support, the ecosystem faces challenges in securing venture capital. To sustain growth, Denmark aims to improve investor interest and policy support, fostering a robust ecosystem that connects resources, expertise, and infrastructure for global competitiveness in precision fermentation.

Precision fermentation is a technology with the potential to provide us with more food ingredients in the years to come. In a global food system under pressure there is a dire need to diversify our production methods and find new, smarter ways to make good and healthy products in a sustainable way. With precision fermentation we make microorganisms work for us to produce food ingredients, new and familiar ones, sourced from plants, animals, or petrochemicals today.

The potential of precision fermentation

Precision Fermentation is a term coined to allow a differentiation in the food manufacturing business, where traditional fermentation technologies (e.g., for brewing, baking, probiotics or biomass production) have been around for centuries. To “precisely” target a specific product through fermentation, a technology common within both industrial and life science biotechnology has now found a home in the food industry.

Let’s start with “the why”: With our global food production systems’ negative impact on the environment and human health through toxification, emissions, water consumption and biodiversity loss, we need new production methods to alleviate the strain on our arable lands. According to FAO, agriculture globally uses 38% of the available land and due to the increasing population, the cropland area per capita has halved over the last approx. 50 years (1). Consequently, we increasingly need to decouple food production from land use. This is one of the strengths of precision fermentation.

Large-scale production of e.g. recombinant dairy proteins is moving closer with multiple companies working to upscale and reach parity. Other potentials lie in precision fermented fatty acids or proteins like Omega-3, egg albumin, collagen, antioxidants, and sweeteners to mention a few. Many companies worldwide are growing with the promises that precision fermentation brings to a variety of market applications.

The potential is immense, but developing precision fermentation processes are time consuming, expensive, and require access to both capital and scale-up infrastructure. In recognition of the potential as well as the challenges, the Danish government has made it a priority to invest in establishing a world-class ecosystem for scaling up precision fermentation processes with the so-called Business Lighthouse for Biosolutions (2, ​​​​3) led by Food & Bio Cluster Denmark.

Building blocks of a world-class ecosystem

Denmark is among the most technologically advanced countries in the world when it comes to two sectors: Agrifood and life science. We have some of the most efficient farmers, leading food producers, and a highly successful pharmaceutical industry spearheaded by Novo Nordisk, Europe’s most valuable company.

At the core of the business ecosystem are the industry leaders, e.g. Novonesis and Arla Food Ingredients, now joined in cooperation on precision fermentation of recombinant milk proteins. Thomas Stenfeldt Batchelor, VP, Advanced Health & Proteins at Novonesis, says about the partnership:

”By joining forces to develop a precision fermentation solution within medical nutrition, we are uniting expertise, manufacturing skills, and market insights. Our utilization of precision fermentation opens doors to endless possibilities in protein composition and structure, and our partnership with Arla Foods Ingredients, a leader in medical nutrition, enables us to harness this potential to its fullest”.

Another key component in the ecosystem is a vibrant and dynamic entrepreneur community of startups and scaleups with a high degree of university spin-outs.

Let’s take the example of Chromologics. A spin-out of the Technical University of Denmark (DTU), Chromologics produces natural red colors without any harmful substances through precision fermentation. Compared to betanin extracted from red and yellow beet root, the need for arable land is reduced by a factor of more than 10 because the required substrate input to create the same amount of product is much less. This is not only more sustainable, but it also reduces the risk of supply chain problems and price fluctuations from crop loss. Reducing pressure on arable land is also EvodiaBio, a spin-out from the University of Copenhagen, working with yeast-based precision fermentation to create natural fruit, herb, and floral aromas, used for example in non-alcoholic beer, where flavor is a major concern.


Figure 1. Natu.Red food colourant produced by precision fermentation. Photo: Chromologics.

Gut-brain-axis

To be globally competitive, an ecosystem also needs world class research within the disciplines that are central to precision fermentation like bioengineering, microbiology, etc. Universities provide companies with important access to expertise, talent, and continued education of staff. Both researchers and graduates make up a highly skilled pool of professionals useful to companies as collaboration partners in R&D projects or for recruitment purposes.

A world-class ecosystem needs an engaged and specialized investment community with a range of different investors covering the different development stages and investment needs. Bringing a biosolution to market typically costs between 40 – 50 million euros over 6-10 years, necessitating a mix of both soft funding and risk-tolerant, patient and knowledgeable private capital. While there is usually adequate access to soft funding in Denmark, there is a shortfall in venture capital opportunities. Both in Denmark and in Europe in general. Therefore, enhancing access to diverse venture capital is essential to sustain the growth of the precision fermentation industry.

Finally, the ecosystem needs strong policy support from the government. Creating favorable framework conditions and removing legal barriers are essential to the acceleration and global competitiveness of the emerging biosolutions industry, especially in the EU. Updating the European approval system is a government job. It is therefore essential that there are stakeholders present to identify the instances where outdated regulation is hindering innovation and hopefully improve them while still protecting European consumers. The Danish government has committed to a long-term partnership with industry to address the needs of the sector.

The necessary building blocks are there to create a good business ecosystem for precision fermentation. But the work is not done. Connecting the components in the ecosystem and making all the resources available and accessible is what transforms a good ecosystem into a world class ecosystem.

So, how do we ‘connect the dots’?

Shared facilities and infrastructure

One of the most crucial elements in a good ecosystem for precision fermentation is access to shared facilities from lab scale to pilot, demo and eventually production scale. This is important for several reasons:

  1. Cost: Equipment is expensive and very few startups and scaleups can bear the cost of the equipment required for upstream and downstream processing in various phases of development. Given that a company does not necessarily know what infrastructure they will need, shared facilities can offer a range of options for testing and iterating their processes.
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  2. Collaboration: Shared facilities will usually foster a collaborative environment where companies and researchers can build and exchange knowledge together. This way knowledge is not accumulated and kept within individual organisations but shared and transferred between them, thereby accelerating innovation for the benefit of the ecosystem as a whole.

  3. Expertise: Shared facilities can provide technical experts needed in distinct phases of development that companies cannot afford to hire or are able to attract.

  4. Regulation and quality compliance: Shared facilities adhere to the normal standards of regulatory compliance and quality control helping companies ensure that their process meets industry standards.

  5. Proof-of-technology and proof-of-business: Proving that your technology works at various levels of the TRL/MRL scales (4) is essential to raise capital, and providing samples for potential customers at demo scale is equally essential to launch commercial production.

Figure 2. Shared facilities with specialised expertise available in the ecosystem are essential for scaling up biosolutions. Photo: Danish Technological Institute.

Gut-immune-axis

A recent study by Boston Consulting Group and Synonym about “Breaking the cost barrier in biomanufacturing” has stated: "for change to happen, costs must come down. Meeting the sustainability and emissions-reduction needs of global industry depends on achieving economically viable precision-fermentation biomanufacturing at commercial scale and bringing production costs into parity with existing methods. These in turn require construction and optimization of biofoundries - large-scale, standardized biomanufacturing facilities that can meet industrial-level demand - and continued improvements in strain engineering”(5).

In the Danish Business Lighthouse, co-funding was given to fermentation facilities of different scales; a mobile fermentation unit at DTU and pilot facilities of various sizes at FermHub Zealand, the Danish Technological Institute, and 21st.BIO (who also offers production strains and process development e.g. for milk proteins) to help close some of the gaps in the Danish shared facility infrastructure. The end goal is that companies can go from lab scale to large-scale production without ever having to leave the Danish biosolution ecosystem.

Pragmatic tech transfer

The precision fermentation ecosystem is fueled by university spin-outs and knowledge intensive start-ups. Hence, a well-oiled tech transfer system is pivotal. If universities claim ownership of IPR or equity in a way that reduces the attractiveness of a company for investors later, the spin-out likely won’t survive.

The same goes for IPR rights in R&D collaborations. It is essential for universities to have flexible, transparent IPR policies that balance protecting their interests with providing attractive conditions for industry partners.

Incubation

In a good business ecosystem for precision fermentation companies, there should be access to dedicated incubators. These can relate to shared facilities, universities, research institutes, or large companies, or they can be part of co-working spaces that offer some kind of industry specific support. Food & Bio Cluster Denmark runs three incubators in Denmark, there are science parks and incubators connected to most university campuses, and there are many office communities with incubation services – some specifically with biotech focus.

When working with biotech, the needed labs and facilities are costly so incubator and accelerator programs can make a major difference. The BioInnovation Institute (BII), a private non-profit incubator in Copenhagen, is a stellar example of how to help early-stage startups. BII has different programs that support spin-out companies and prepare them for raising capital.

Denmark has a large and diverse ecosystem (6) to provide early-stage companies investment and support, but growth incubators for the later stage development are still lacking.

Public funding

Early-stage startups face significant challenges in securing private investment. Developing precision fermentation processes is high-risk and requires patient investors. Public funding can help bridging the gap and providing the necessary resources to advance promising technologies to a stage where they become attractive to private investors.

The Danish InnoFounder programme is a 12-month full-time programme for entrepreneurs with a higher education. The idea is to give financial support to work full-time in their startup to bring the company from the early stages to a stage where the company becomes financially sustainable - either through sales or by raising additional public or private investment.

There are also multiple other public soft funding options – some through university accelerators, others with national funding and again others with EU regional funds. Under the Business Lighthouse for Biosolutions, there is project funding available for technological development of processes as well as scale-up vouchers to co-finance the use of shared facilities to try and alleviate some of the financial burdens of accessing relevant infrastructure.

Access to capital

Access to capital is crucial for startups due to the substantial financial demands for scaling up a biosolutions process. The presence of stakeholders in the ecosystem that can help companies find the right investor match is a game changer. In Denmark, we have some great accelerator programs that can provide pre-seed and seed funding for interesting startups, like the BII and Rockstart. The Danish Export and Investment Fund (EIFO) co-invests to help alleviate the investment scarcity.

That is a good beginning, but we need to drum up much more investor interest for the biosolutions field and attract foreign VC money to the Danish biosolutions scene – not least through targeted matchmaking. Food & Bio Cluster Denmark has made it a strategic priority to coach startups in their efforts to raise capital and has gathered a network of more than 350 investors from five continents active with agrifood and biosolutions who are screened and presented for relevant investment cases.

Conclusion

In this new industrial field of biosolutions, the importance of a well-functioning ecosystem where all these dots are connected cannot be overstated. Building up good precision fermentation ecosystems that supports commercialization of research and entrepreneurship is key to quicker access to the multitude of new, sustainable products and sustained economic growth.


Figure 3. Building world-class ecosystems for precision fermentation is one of the keys to a greener food system in the future. Photo: iStock.