Alice Bentinck: [00:00:00] Hello, and welcome to The Entrepreneur First Podcast, where we uncover the stories and ambitions of some of the world’s most inspiring entrepreneurs. My name is Alice Bentinck. I’m the co-founder of Entrepreneur First, and I’ll be your host for this episode. Today, we’re going to be talking about manufacturing, and if you’re interested in sustainability, stay tuned to find out what the future of biomanufacturing looks like.
Biomanufacturing companies use microorganisms and cell systems to produce materials which are used in skincare products, medicines, and food processing. Our two guests for this episode are Grant Aarons, CEO, and co-founder of FabricNano, and Peyman Salehian, who holds the same role at Allozymes. FabricNano aims to replace plastics with its cell-free technology as an alternative to fossil fuels, and Allozymes is unlocking the power of enzymes to enable sustainable manufacturing of natural products.
If you’re eager to uncover how manufacturing could become more sustainable in the very near future, sit back, relax, and enjoy.
As one of the co-founders of Entrepreneur First, I’m always excited to find out what drives an individual to start their own company. I asked Grant to tell us about the beginning of his entrepreneurial journey.
Grant Aarons: It goes back to the motivation for why to start a company in the first place. I always knew I wanted to start a company when I chose to do my PhD in Economics in London, which I subsequently dropped out of. Just a brief background on my career, I was a mechanical engineer at a place called Cooper Union, which is a really interesting institution in the US.
I then went to work at the New York Federal Reserve for two years doing macroeconomic policy, cool statistical stuff, and machine learning. Then, I took that knowledge and [00:02:00] I started a PhD in Economics, and with no training, just jumped on the bandwagon and started working with someone called Lucrezia Reichlin. She was the ECB Research Director for about eight years.
She started a really nice lifestyle business, and I wanted to do something similar with some of the background in the technology stack that I had learned over the first few years of my career. That was really a part of why I chose to go to that program. When I found EF, I’d realized that academia was a bit too slow-moving for me. I realized that what my advisor had done, and becoming a really prominent professor and having a lifestyle business on the side, selling data to big financial institutions, that was not a normal person’s path, so that’s the point at which I decided to drop out of my PhD, and really go after entrepreneurship full force, and that’s where I found EF in London.
Entrepreneur First created that opportunity for me to jump in 100%, and still have an institutional framework where I could approach entrepreneurship with the comforts and with the backing and community that I would expect out of any other career.
Alice: For Allozymes’ founder, Peyman, becoming an entrepreneur was ingrained in his DNA.
Peyman Salehian: If I want to say, actually, when I found I could be an entrepreneur, I don’t know, maybe I was 10 or 12, because my father was an entrepreneur. He used to take a lot of risks, always doing new things, so it’s kind of in my blood. I’m a repeat entrepreneur actually. Allozymes, I think it’s my third company. I started my first company when I was 22-years old during my master’s, I transferred technology from the lab to the market all the way to the 50 people company. Then, I sold out my share to the other funders and came to Singapore to do my PhD. It was 2013.
From that moment, when I left my first company, I felt emptiness. I always wanted to start a second, but my wife always told me that, “You need to just do a PhD, and [00:04:00] enhance your study, and then you deserve better.” Then, I did it, but at the end of the PhD, my supervisor asked me to stay, I said, “No,” and I started my second company at the same time that I’m doing as a head of business development of another company.
That one failed, and then after that, I started Allozymes. The reason I started Allozymes is because I always wanted to start a company. I learned a lot of things from the second failure. I learned a lot of things from the first success, and I was ready to go for something much bigger.
Alice: One of the things that surprises individuals when they join EF is how much ideas change and develop, often what you think you’ll end up working on, and what you actually end up producing can be very different. I asked Grant to tell us a bit about how he ended up working on the idea for FabricNano, even though he doesn’t have a background in biotech.
Grant: It was all about starting a financial technology company. That’s where my skillset was. I thought about big data problems, statistical problems, and I said, “I’m probably going to be able to start a financial technology company.” When I pitched those different concepts to people in EF, I was surprised that a lot of people had no interest in that field. I think something that went against the grain for me is that not everyone in that program is interested in what I’m interested in.
Then, what I learned through the program was, you don’t have to build a company in the exact domain set that you’ve already worked in. I, actually, on the third day of the program just decided to stop pitching myself as a technology chief of a company, and actually started asking other people, “What is your domain of expertise?” That’s where I started interviewing every single PhD that was still unpaired in the EF program.
I talked to a really great woman in cryptocurrency. I talked to someone who’s working in cyber security. Then, I started talking to my co-founder, Ferdinando, about his PhD in biophysical simulation of DNA. It took a full hour long conversation, but at the end of it, I started to think, “Wow, biotech is really powerful, and there’s a lot of interesting problems here, and a lot of interesting [00:06:00] mathematical setup that could benefit from some of my knowledge, but it’s not something that I would have naturally come to on my own.”
For me, I think what was really important about EF, and what’s contrarian to me is that, you don’t have to have worked in the past in the exact area that you found a company. I think it’ll be a little bit different for payment, but for me, at least, I think there’s a lot of people with a lot of technical talent who can do and work in a lot of interesting companies, and you shouldn’t try to pigeonhole yourself into what you’ve done over the last four years of your life.
There’s a lot of opportunity to learn things and to build things from scratch that no one ever thought you had built before. For me, that’s a career in engineering, switching to financial technology, switching now to biotech, and I feel like I’m very well positioned to lead this company. My company, FabricNano, with Ferdi, is all about assembling enzyme blocks into systems. We are very atypical companies in the biotech revolution that’s happening now.
We’re companies that are focused on using these enzyme components, which is the fundamental unit of how all of this biotech actually operates, instead of looking at this typical yeast cell or this genetic version of biomanufacturing and biotechnology. I think that, that was a really interesting and cool realization for me, because it fit an engineering model, as opposed to fitting this kind of irrational, “Let’s just throw more data at it,” but we still don’t actually know how these algorithms work, how our machine learning works.
We’re hoping for some singularity in that understanding. That sounds interesting and it sounds like you might want to invest in that kind of space, where you’re just throwing data and machine learning at the problem, and I think that’s the exciting part is that it is within our control. It is a system that is understandable. For me, as an engineer, that is the primary thing that I was taken by when I first heard about it.
How is my domain expertise in big data and econometric techniques overlaid on top of what FabricNano is doing? FabricNano is trying to reconstruct cell metabolism in an in vitro system, so we’re trying to completely replicate what [00:08:00] a cell is capable of doing, but eliminating the need for something that is cell-based or alive. That sounds like it has no overlap with mathematical techniques, but actually, what we do as a company is, we try to build modular components.
We tried to build small subsets of those cell metabolism systems, and then we tried to arrange them, and synergistically add them together. That process looks like generating recipes and generating optimizations of certain recipes that you then match with optimizations of other recipes. As a company, we’re constantly building these modular components that we can then stitch together with other modular components.
In my background and my expertise, that’s a huge mathematical problem trying to optimize each modular component of a cell’s metabolism. I think we’re getting a lot into a bit too much detail here.
Alice: Peyman, meanwhile, believes grabbing opportunities at the right time was the key to finding the idea for Allozymes.
Peyman: I believe it’s not about Allozymes because both Allozymes and FabricNano are about biotechnology. We are at the very beginning of the next industrial revolution. It is very important that you can act or grab this opportunity, so I look at it in this way. Definitely, both of us attack this wave from different angles, but both of us are opportunistic people.
I’m quite sure, if you put me and Grant back in 2000, we both would have initiated an IT company. Look at it in this way. Now, everything is about biotech, so whoever has a sense of getting what is going on around, will be interested in this area. I mean, if you have some related knowledge then, wow, it would be the best. When Akbar talked about the Allozymes with me, I personally didn’t do any enzyme engineering before, but I knew what it is.
I knew how to grow bacteria. [00:10:00] I knew how to make a biofilm, but I’d never done it on enzymes. I never went into that detail, but when (Akbar) opened up the cell for me, and said, “Hey, this is an enzyme. This is the key part of the cell. If it doesn’t work, which like the engine of the car doesn’t work, the cell is going to be dead.”
Then, before that, I was just only heard about fermentation, bacteria cell, cell, cell, cell, and then suddenly, my eyes popped up, it opened. There is something like a battery of a car inside a cell which is more important, but less work has been done on this. It could be the most important piece of the puzzle on biotechnology on the next wave of industrial revolution.
The reason that we started Allozymes, because we believe we can take a big piece of the next opportunity in the world, and we can impact the adoption of industrial biotechnology. This is the reason that we started.
Grant: Peyman brings up something that I think was a major shock for me, which was when I first started talking to Ferdi, he didn’t describe how yeast or other microbes function to manufacture chemicals, he was talking about enzymes and the proteins inside of that yeast and that microbe. For me, I always thought that the fundamental unit of biomanufacturing was the yeast.
I thought that was the lowest level that you could be operating on, and you can work with the genetics of that microbe. That sounded very technical and almost outside of my capability to grasp how you would work with that system. Then, Ferdi described to me that, “No, you know what happens inside of yeast, or any other microbe is, there are many enzymes, the proteins that can do biochemistry, that can do reactions.”
Many enzymes that are conducting all of the interesting transformations of one molecule to another, and that these enzymes are actually the fundamental or base unit of all of this biomanufacturing and this biological revolution that we’re going through. [00:12:00] For me, that was a massive realization because I said, “That sounds like a problem that can give way to engineering.” That sounds like a problem that is almost as rational as it can be.
There are these little blobs that we call enzymes, they’re these little building blocks, and it’s those things that you need to manipulate. For Peyman’s company, they’re trying to make these blobs, these little enzyme blocks more efficient, so that they can last longer, or they can have special properties. My company, FabricNano, with Ferdi, is all about assembling these enzyme blocks into systems.
We are very atypical companies in the biotech revolution that’s happening now. We’re companies that are focused on using these enzyme components, which is the fundamental unit of how all of this biotech actually operates, instead of looking at this typical yeast cell or this genetic version of biomanufacturing and biotechnology. I think that, that was a really interesting and cool realization for me because it fit an engineering model, as opposed to fitting this irrational, “Let’s just throw more data at it,” and still you ask some of these companies that work with genetics, and I think it’s really telling to hear some of these things.
The ex-CEO of Zymergen just said a few months ago in a podcast, “We’re building up all of this data on how the genetic changes we make to microbes affect their functionality, but we still don’t actually know how these algorithms work, how our machine learning works. We’re hoping for some singularity in that understanding.” That sounds interesting, and it sounds like you might want to invest in that kind of space, where you’re just throwing data and throwing machine learning at the problem, but if you actually take a moment to just deconstruct this living entity, this yeast or this microbe, you actually see that these building blocks are very rational.
They make a lot of sense when you try to use them without this carrier, without this host organism. Peyman and I are both working in that space, and I think that’s the exciting part is that, it is within our control. It is a system that is understandable. For me as an engineer, that is the primary thing that I was taken by when I first heard about it.
Alice: [00:14:00] Recently, the biomanufacturing sector has witnessed exponential growth due to an increase in demand for biopharmaceuticals. Companies are also keen to manufacture products in a sustainable manner, making biomanufacturing the eco-friendly option. I wanted to find out if new biomanufacturing techniques attract investors, and as Peyman says, how companies in the sector access capital.
Peyman: I actually always say ideas are cheap, making them commercial, oh, wow, it is ridiculously difficult, and it doesn’t matter if it is a biotech or any other things. I don’t actually see that it was easy to raise money. It looks like any other startup. The capital is there, but we have different problems. We were raising in Singapore, and I can tell you maybe less than 10 investors know what biotech really is, and why we are raising money, why we need that equipment, why we need this equipment. It was not easy at all, but we ended up being super over-prepared.
Only one month after starting the fundraising, we received our first term sheet, and at the end, we ended up having four term sheets and had the luxury to choose. I can say we were prepared. Maybe nowadays, if you are in the US and you say biotech because of the Zymergen and Gingko IPO, everyone looks into this sector, but at that time, we were raising when the COVID was around. Everyone said, “You even cannot raise one million,” but we ended up raising five million. It is not about the timing. It’s not about the sector. I think it is more about the technology and about the power of the team, how they can execute it. I think we were in a good position when we started fundraising. In general, I enjoyed it.
Alice: Grant’s company, FabricNano, also attracted [00:16:00] notable investors, including the actress, Emma Watson. You may remember her from the Harry Potter films. I asked him to tell us how he convinced her to invest in biotech.
Grant: Peyman has a very specific experience because their technology was a spin-out from the university, so there’s a lot of execution to commercialize it. I think the fundamental R&D was there. It was a slightly different experience for us in London. We went through the Entrepreneur First program in early 2019. I don’t think biotech was as easy to fund, or as widely accepted as it is today in 2021.
It’s gotten a lot easier, but I’ll give an anecdotal story of how easy it was for us or how difficult. When we went through EF and we did the investor month, which is a time where EF brings in all the investors that are interested in EF companies, we had a month worth of meetings where I took about 100 investor calls. I still have the Excel sheet today. These were investor calls and meetings that were sometimes the first call when people said, “No, we’re not interested in biotech.”
Sometimes it was the second meeting or third meeting where investors would then say, “We’re not interested,” but at the end of that 100 investor month, when we spoke to 100 investors, we ended up with about six term sheets, and we had the luxury of choosing between different investors. How did we end up with six term sheets because we started with 100 investors. If you start out with only 10 or 20 investors, you’re not going to get one term sheet.
I think it really is a numbers game and you have to operate fundraising like a funnel, like a customer development funnel. We were fortunate enough that some people could see that investing in this space, investing in core R&D would lead to significant advantages over competition in the two-year term. I would say that, when we went out to raise from EF, we were raising to do R&D.
We were raising to put together things that were done in academia, but that hadn’t been done commercially, or didn’t make sense commercially just yet. Our seed round, there was about $3 million was spent trying to really figure out all the R&D that was necessary to take our technology stack, and actually go and commercialize it. To Peyman’s point, what makes that [00:18:00] possible, what makes it possible to raise money from investors, where you’re still going to be working a little bit on R&D, is making sure that you’re sequencing your company properly, you’re being honest with yourself.
You’re telling investors, “We need money to figure out this problem and make this problem commercial, and then we’ll work on engineering solutions for various customers.” More recently, two years down the road, after having raised that $3 million and working with an incredible team of 10 people, we were able to prove that we could manufacture DNA at a very low cost.
We could make a single strand of DNA that Twist puts together for genetic purposes. We could make many copies of this program, and so we can make one copy that is about a nanogram into something that looks like kilograms of DNA, at a cost that was a thousand times less than anyone else in the world. That’s really what we focused our first round of funding on.
Then, once all that R&D was really in place for the commercial acceleration that we’re experiencing now, we were able to raise a Series A with really great investors. We raised with Atomico. The round was great because we got a lot of interesting and unique people involved. To your point, Alice, how did we get Emma Watson involved? I think when you’re honest about the stage of your company, and you’re honest about the development cycle and the problems you’re interested in, and you focus on very, very big problems, there’s a lot of people that want to support that journey.
In particular, we reached out to various investors, but this was just taken by the impact and the vision of the technology to really change and shape the world in the next 10 years. The same with Emma, we said, “All of our investors are White and male. We’re very interested in anyone that’s non-White and non-male in London or the world that works in biotech impact or sustainability.” We were able to send out that message to everyone in our network, confident that someone would be interested. Then, Emma Watson and her collection of investors that she sometimes invests with, were able to come to us, and basically say, “Yes, we’re interested.” It starts from a place of just making sure that you’re telling your investors the truth about where the technology stack is, and you’re also being very [00:20:00] particular about the vision you have for the company in the future, and the steps that it will take to get there.
Alice: Both Grant and Peyman’s businesses are tackling big problems that could have a significant impact on sustainability. I asked Peyman how this impact fits into the vision of his company.
Peyman: I think, actually, sustainability is not an option anymore, it is a choice, and we need to pick that if we want to continue living in the world. When we move to the sustainability discussion actually, everyone thinks, “Okay, so we need to go to nature. There are no oil derivatives anymore, and there’s no choice rather than biomanufacturing.”
We are actually moving a little one step further.
In Allozymes, we are trying to biomanufacture the natural product, which is currently coming from the extraction. What we believe is, the extraction is the next step of coming from the oil derivatives in a lot of sectors like food, pharma, or cosmetic. Itself, the extraction, is not a sustainable way to make the ingredients and extract around things. I will just give you an example and you can see how it’s not sustainable.
We are working on a project where a customer told us that he used to buy 10 tons of tomato skin to extract three kg of an ingredient for cosmetics manufacturing, so tell me, how sustainable is it? How much water, land, and resources are going to be used to manufacture 10 tons of tomato skin? It actually needs the whole of Singapore to be covered by tomatoes. What we see is, we need to propose something which could be used to prevent sustainable manufacturing from going in that way. This is by manufacturing the natural ingredient.
At the moment, as an example for this one, instead of [00:22:00] doing the cultivation of tomato, we look at the tomato skin, we find it out there’s 10 enzymes working together to produce that, we use the technology and then engineer those enzymes, manufacture that ingredient in the bioreactor without using a single tomato. How does the earth have a capacity to deal with if anyone wants to move to the natural product?
If anyone wants to move to the extraction, how many tomatoes, cucumbers or any other flowers need to be grown for all the people? There are 100 billion, something like that. It’s a lot of people. At the moment, everyone is talking about the problem with the meat, then we will move from the problem to the meat, to the problem of the natural ingredient, from a natural product because of the extraction. We are trying to be active in that sector, and then start by manufacturing the natural ingredient which is currently extracted to prevent such a problem actually.
Alice: Meanwhile, Grant told me about his ability to forecast future demands for biotechnology, and how that feeds into what he’s developing at FabricNano.
Grant: I think it’s about trying to forecast the future need for these technologies, and not just sitting in today’s thinking, “Here’s what we need to do in the next year,” and thinking what we need to do in the next five years, and how can we set the groundwork for that. Something that we’re working on as a company, one of our first products is similar to Peyman, taking all of the enzymes that are necessary and converting something like glycerin and monomer dial that can be used in cosmetic creams, or can be used to make bio-PTT plastic, so a more biodegradable and bio-sourced plastic.
We need these products, because today, of course, we use petroleum-based plastic, and we use petroleum-based PEG in a lot of different cosmetic creams. You’re just putting a petroleum-based derivative on your face if you’re using cosmetic creams, and that’s not great, both because of the impact of having to mine that petroleum, and then also the fact that you have to use something that is not [00:24:00] natural on your face. There are a lot of interesting transitions away from those things.
Let me talk for a minute about the feedstock, the glycerin. Today, we use a lot of biodiesel in the world. There’s particular predominance of biodiesel in Brazil. We’re talking to a Brazilian manufacturer of biodiesel that has 10% of the volume of biodiesel, that is waste glycerin, so 10% of that volume, which is a very, very large volume, is glycerin supplied to manufacture monomers for plastic and face cream.
Today, that waste glycerin is being incinerated because it’s too cheap, and they don’t know where to send it. A lot of Brazilian manufacturers have an actual hair-on-fire problem when it comes to biodiesel production and that they don’t know what to do with this waste stream. We are taking a feedstock, which would otherwise be burned in trying to manufacture something that would also offset the use of petroleum in its downstream application.
We think it’s about life cycle. It’s about, how can we take what we already have, but we are wasting, and try to supplant some of those existing products in the market that are based on petroleum. There’s a lot of opportunity for that. We need to be able to work with biology in a way that is fully amenable to engineering, and that there is not that technology stack out there today.
Alice: As technology advances, the biomanufacturing sector is also constantly evolving. I asked Grant how changes in his line of work challenged him as a founder.
Grant: I think that the biggest shock for me is that, being a founder is about setting your vision, setting your course, and sticking to it. It’s really difficult when you see the environment around you pushing you in one direction or another, to say, “No, that’s not what our company does. Our company does this.” As an example, FabricNano makes a lot of DNA. We make of course amplified copies.
We don’t write unique code of DNA, but we take one copy of DNA. We can make many copies of it. People have said, “Why don’t you make DNA for pharmaceutical applications? Why don’t you do that? That’s a very big market.” We said, [00:26:00] “Well, that’s not what our company has designed this technology to do. It’s not our vision for the company.” As a founder, I found it really interesting to think about how you set a course, and then how you’d have to stick to that course.
Of course, strong beliefs are weakly held, if things aren’t going the right way, you have to break those beliefs. You have to stick to the vision of what the company is trying to achieve. I think, as a founder, that was one of the most important things for me to realize is that, it’s not even about the technical capability of the founder. It’s about the execution of the company.
The company has to be directed at the right thing, it has to keep that clarity of direction. That was something that I didn’t really fully appreciate. You read about a lot of companies where the founder is a genius, who puts together some technical solution to a problem. These are all stories of highly technical people just spitting out a genius solution to a problem and then being able to run and build the company with it.
I think there’s a lot of scope for companies where it’s not a technical solution, it’s not a genius implementation. It’s a hard slog. It’s an execution. It’s a journey, and you need to stay in your path. You need to stay very focused on your vision, and not let the world corrupt that vision of what you’re trying to do as a company. That’s the hardest part of being a founder. I didn’t really fully appreciate that until I was going down this road.
Alice: For Peyman, being mentally prepared to handle criticism and failure is an important part of being an entrepreneur.
Peyman: If you are not a product company, and you are building a platform, it is becoming more and more difficult. We are facing the same issues and all the comments that Grant received have been saying, “Why not pharmaceutical? Why not cosmetics? Why not food? Why not focus on Asia? Why not focus on the US?” Yes, I agree. I think the execution is really difficult, and you need to have a plan and you break it down.
I think something shocked me is, I’m not saying I was shocked actually, I’m saying that it put extra pressure on me is, [00:28:00] our company really grew faster than I expected. We are really growing faster than I planned. That’s why I can always say, I’m behind actually. The company moved faster than I prepared for. We incorporated in December, 2019. The money received from the EF, and this was in January 2020, we raised a seed round in January, 2021.
Then, we probably raised the next round actually in the six months from now. Everything is really moving fast, and you have a lot to do. When I say, I have a lot to do, even if I have entrepreneurship experience, if you don’t prepare for it mentally, physically, you cannot handle it. If you don’t prepare for it mentally, it is very difficult to go away side-by-side with your company. This is something that I remind myself almost every minute actually.
Alice: The future of biomanufacturing looks promising with entrepreneurs like Grant and Peyman working hard to make our world more sustainable. If they weren’t founders of biomanufacturing firm, what would they be doing now? I asked them to share their ideas with us.
Grant: I think there’s not a world where I wouldn’t be a founder at this point. I think taking that plunge out of academia and into starting a FabricNano, joining Entrepreneur First, that was a career-defining moment for me. I would probably start a second company, a third company 30 years from now, because FabricNano is going to be a success. If in any world it wasn’t FabricNano, it wasn’t biotech, I think there’s a lot of really great activity in alternative banking, and some of the financial technology sector.
I’m quite jealous of products that are so obvious that you just have to roll them out and execute well. It’s very difficult in biotech where there’s a lot of R&D risk. I’d really love to work on a company at some point in the future where the R&D risk is not as heavy, [00:30:00] and there was just an executional risk. You can really put your full thrust behind it, and just know that that’s all it takes to make it succeed, because there are a lot of companies that follow that trajectory and that’s something I’m jealous of every day. As opposed to the journey we’re on at FabricNano, I think that all founders have some real strong pull toward venture capital at some point.
I know that there’s a founder network that we’re trying to build in London around biotechnology, of course, us founders, we don’t have that much cash on hand, but I think all founders want to continue to give back to the community and try to be a part of that change, be a part of the next wave of technology that’s coming out. I think inside all of us founders, there’s definitely a pull toward VC at some point.
Peyman: If I wasn’t the founder of Allozymes, I would definitely be a founder of another company. I have an interesting story to say. I remember after graduation, I received a postdoc offer from Imperial College from a number one professor in our field, and then he asked me in the interview that he wanted to select me, “What is your vision? What do you want in the next five years.” I said, “I want to become rich,” and he said to me that there is no money in academia. He told me that, “If you find a way, please tell me as well.” [laughs] I would definitely start another company.
Alice: That brings us to the end of this episode of The Entrepreneur First Podcast. I hope you enjoyed listening to Grant and Peyman’s visions about the future of biomanufacturing. Tune in next time, where I’ll be interviewing Hana from Juno Bio, and Alexandra from ImVitro, where we talk about the future of reproductive health.
If you enjoyed this podcast, please subscribe on Apple Podcast, Spotify, or wherever you listen, and for more information about Entrepreneur First, go to joinef.com. Thanks to Cofruition for consulting on and producing the podcast, and thank you for listening. See you next time.