Zymergen: A Cautionary Tale

As we continue to digest the news from Zymergen and its reverberations across the Synthetic Biology ecosystem, we wanted to take a moment to reflect in writing.

Let’s start with a statement: We steadfastly believe we are in the golden age of biology. Our conviction is driven by the unparalleled information gain spawned by the genomic revolution. We still have the tools and data to understand biology and chemistry in ways that were previously inaccessible.

That being said, developing science into commercial applications is still difficult. Just because we have the “code” or find a “bug” (like a genetic mutation in a disease), biology is still not computer science. The community has made significant advances towards the dream of biology becoming an engineering discipline, but the complexity of the system at hand continues to reveal itself the more we learn. We still need to marry scientific advances with commercial applications.

Zymergen was founded on the promise that nature could guide and empower our design and engineering efforts to animate new products — it still can and it undoubtedly will. That being said, you cannot lose sight of your customer. Blindly making a product on the back of equity dollars hoping for a theoretical market intersection is not the way to build an enduring business. Knowing your customer, their supply chain, specs, idiosyncrasies, and downstream uses is a prerequisite for commercial success.

Many synthetic biology companies are able to raise capital on the premise of more green, sustainable manufacturing processes and products. Those companies would be wise to take notice that such capabilities — in the absence of product-market fit — will not be given significant value in the broader market. Zymergen was punished, in large part, because they were unable to point to near-term product revenue where investors were underwriting near-term revenue. Synthetic Biology companies should expect to be held to similar standards prior to receiving significant capital.

On the investor call following the 8-K filing, Zymergen lamented that they had not performed sufficient diligence in tailoring their products to the needs of their customers. Filling this gap will differentiate success and failure among Synthetic Biology companies. Internally, this gap will ultimately be filled by product managers, business development leaders, and customer satisfaction leaders. There will be room for non-scientists to leave indelible fingerprints on the success of Synthetic Biology companies for the foreseeable future.

At KdT, we will continue to urge our companies, at the earliest stages of their business, to define strategic product-market fit in lockstep with customers while balancing realistic supply-chain and operational constraints. Transparency and honesty are key pillars of business and what KdT stands for. Biology will win.

KdT is the standard for early-stage science venture investing. We help founders and their companies re-architect the world at a molecular level.