Jacob Nathan: “In 2050, half of all consumer packaged goods will be made sustainably with biology"
Jacob Nathan is the co-founder and CEO of Epoch Biodesign – a London-based startup engineering enzymes to break down plastic into “low-carbon, circular chemicals.” After raising a $11m seed round, last summer, the company now boasts the likes of
, Amadeus Capital Partners and Chris Sacca's Lowercarbon Capital as investors.Last week, Jacob and I chatted about the benefits of making products with biology (as Epoch is helping to do) and how we can enable more companies to do it at scale.
Below is a round up of our conversation, edited for brevity and clarity.
Jacob, you predict that, “in 2050, half of all consumer packaged goods will be made sustainably with biology.” How are products typically produced today?
A lot of the consumer packaged goods that we purchase today are already made with biology [living organisms]. Food, for instance. But they’re not always produced in a sustainable way. I wouldn’t consider intensive factory farming or deforestation to grow palm oil plantations to be sustainable…
At the same time, a huge quantity of products and ingredients aren’t derived from biology at all, and instead come from crude oil. We extract dead dinosaurs from underneath the Earth’s surface, refine it, and crack it into smaller chemical building blocks. We then turn those building blocks into things we interact with on a day-to-day basis, like skin cream and cleaning products.
Why is that a problem?
Making chemicals from crude oil requires high energy, high pressure processes. Those processes have to occur in very large, expensive, centralised facilities. It’s the only real way to get the economics to work. But there are two big drawbacks:
Some of these processes use a lot of natural gas but we can’t necessarily rely on foreign sources of it like we were once able to, especially in Europe.
Centralisation of production can lead to supply chain shocks and price hikes when supply chains don’t go perfectly well.
Do you think biology can help to improve supply chain resilience?
I do. Biology tends to operate at the temperature of life; in nice, temperate conditions. In the human body, it’s 37℃.
If we can enable all of our chemical manufacturing to happen at these sorts of temperatures, we don’t have to build giant, centralised facilities. We can decentralise chemical production and build more sustainable, resilient supply chains as a result.
If we use synthetic biology, fermentation and all of the other cutting edge technologies out there, we can move towards producing consumer packaged goods in a more sustainable way.
Right now is the first time since the Industrial Revolution where we’ve had the opportunity to reinvent the way that every single thing that we interact with is made.
That’s incredibly exciting. How are you helping to drive this transition at Epoch?
At Epoch, we design enzymes: little biological machines that enable lots of complex chemical reactions to happen. We design them specifically to break down plastic waste into chemical building blocks. We do it using a new kind of high-yield fermentation called cell-free fermentation.
We can then take those building blocks and formulate them into all sorts of different products, both ourselves and with our customers. Everything from new plastics to cleaning products, fertilisers, paints and coatings.
You founded the company in 2019. Has it become easier to design the enzymes you do, over the past four years?
What we’re able to do now versus what we were able to do even three years ago is really night and day. Three years ago, if I wanted to solve a protein structure, I had to outsource it to an academic lab. It could take years to achieve and it didn’t really make sense for us as an early stage company worried about burn. We now have a publicly available structural data set of over 200 million proteins that didn’t exist before. The things we can now do in the lab with our own machine learning models, using that data, are pretty drastically different.
The availability of high powered graphics processing units (GPUs) at low prices and, increasingly, cheap DNA sequencing and synthesis, also enable us to do things that previously would not have been possible.
The rate of upstream invention is pretty mind boggling and we can make pretty much anything with biology today. The question is doing it at scales and economics that make sense.
How do you think we can do that?
Right now, what we don’t have is the scale up infrastructure or the financing options available to bridge the scaling gap.
If you want to fund a first of a kind facility: venture capital is highly dilutive and not every venture capitalist is going to see it as an efficient use of capital. If you want to get project finance, “good luck!” is probably the response you’ll get from most people. Maybe you can look at certain debt financing or customer debt financing. But it takes smart bankers and smart customers to get comfortable with that type of risk.
We need financiers capable of diligencing first of a kind facilities and providing capital to the companies building them. We also need customers willing to take on a certain amount of risk, potentially even paying for scale up infrastructure because it’s helpful for them to have a variety of different supply chain partners already at scale.
In the absence of a significant movement in the availability of financing, we’re going to see a massive bottleneck in the scaling and ultimately deployment of biology.
Is the availability of talent also an issue?
One of the companies that I look up to most is Solugen [a unicorn that’s also engineering enzymes]. They were able to rapidly scale their first process in a venture compatible timeframe. I think they’re one of the very few companies that have really been able to do that. Interestingly, they’re based in Houston, TX which has the highest density of chemical engineers anywhere in the world so it makes perfect sense.
What we don’t have in the UK is the same sort of talent cluster. Talent of that ilk [chemical engineers] is harder to find and quite risk averse. People don’t necessarily want to jump away from well paid, very comfortable jobs to join a startup and potentially have nothing to show for it at the end.
The US also has a pretty massive chemicals production industry, as well as upstream oil and gas. In the UK, we have the upstream in the North Sea and some industrial clusters up in the North East. But, we have less of the downstream. That’s been offshored to Europe and elsewhere for a long time, partially because these things explode and aren’t safe places to work. Persistent offshoring has meant that talent hasn’t been cultivated in the same way and isn’t necessarily as experienced as in the US.
What about the availability of lab space?
It’s definitely a challenge; acutely in London, Oxford and Cambridge but also in the UK more widely. There’s a chronic shortage of lab space that means that companies can’t grow. They’re building a lab complex in Canary Wharf, in London, but that’s going to take a while to become available and, even then, it’s probably not going to be enough.
At Epoch, we had to take an old office coworking space and convert half of it into a lab. It took the best part of a million pounds that I would rather have spent on product development, R&D, hiring more people and getting to certain milestones quicker.
You mentioned R&D. Of course, in last year’s Autumn Statement, Jeremy Hunt announced plans to overhaul R&D tax credits. What happened there?
Historically, for every £1 of R&D money we spent, we got 33.3p back from the government. In other words, our money went an extra third. Originally, the government said they would cut the R&D tax claim in half for SMEs, which was painful.
We were quite involved in some of the open letters and thought groups around how we could engage with the government to go back on their plan. The number that was eventually landed on was 27p.
What are your thoughts on that?
Is 27p as painful of a reduction? No. But it’s still meaningful when you’re spending millions of pounds a year on R&D. I think the scheme is one of the things that makes the UK a particularly attractive place to do difficult, risky, R&D intensive work and build a biotech company. The fact it’s been taken back a notch is disappointing.
I do think we need to look quite closely at reallocating the pounds spent on the scheme to the most impactful places and the companies that need it most. I don’t think that companies building a new website or reinventing the turntable on a microwave should really benefit from these types of tax credits.
The government could say: “if over 50% of your total expenditure is R&D eligible, we’re going to give you 50p back on that £1,” or “if it’s 80%, we’ll give you 80p back.” For an R&D intensive company like Epoch, it would mean our money would go much further.
I love that idea! Final question from me: how confident are you, right now, that we’ll achieve your prediction by 2050?
I think, right now, we’re super early across the board. But we’re already beginning to see a lot happening and that biology is just better.
In food, we’re seeing a real shift away from intensively farmed animal proteins towards plant based things and a big move into the cultivated meat and fat space. More than 50% of all pharma revenues are now coming from biologics [pharmaceutical drugs manufactured in, extracted from, or semisynthesised from biological sources]. We’re also seeing a lot of push in the packaging space, with companies moving to biodegradable or bio-based plastics.
While it remains incredibly early, I’m pretty confident.
Readers – it’s now over to you. How can we ensure half of all consumer packaged goods are made sustainably with biology in 2050? I’d love to hear your thoughts in the comments below.
In order to deliver the fundamental climate change we need it is vital that we look at the entirety of the food chain, not only because it is one of the key drivers of climate change but arguably because it the one driver every single one of us has the potential to change. Totally agree with Jacob that it requires a complete rewire and that biology plays a key part. However we do not yet as climate leaders have the economic changes needed to make this a reality. Over my 24 years of Web Science research which I used to found the Empathy Economy in 2016 it is supply chains plus us as citizens who hold the key. Governments have been unable to make the impact needed fast enough. All businesses need to become climate champions, not just those of us working directly on the problem.