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Trends Watch: VC Investing in Synthetic Bio

Apr 11, 2024

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.

This week, Elana talks with Kulika Weizman, General Partner, Creative Ventures. 

What is your outlook for VC investing in synthetic bio?

 It’s such an exciting time in the world of biology and scientific advancement. We live in a time where the ability to read and write genetic code for multiple species has become even more precise with the development of tools like CRISPR — not to mention a slew of other recent breakthroughs that Elliot Hershberg, a scientist and investor, has addressed.

As exciting as these developments are, however, I truly remain grounded by reminding myself and those around me that synthetic biology is the same as any other technology; that is, it’s ultimately a tool and, as investors, we should not be entering the picture until that tool has a clear purpose for solving specific problems that people are willing to pay for.

There’s no debate that synbio has progressed by leaps and bounds but finding product-market fit — especially for deep tech companies — is crucial and remains an age-old challenge. Still, the most prolific applications have come from the most basic sciences. If you know the right timing for the right opportunity, you’re going to see success.

Where do you see the greatest opportunities and why?

 There is so much hype around artificial intelligence (“AI”) for drug discovery and the intersection of AI and traditional wet-lab-based synthetic biology. The greatest and most overlooked opportunities remain in the technology, solutions, and infrastructure required to develop (not just discover) these solutions. Take all the drug candidates that AI has predicted, for example. These candidates ultimately will have to be synthesized and tested through a battery of steps — laborious, time-consuming, and expensive cycles where it may be discovered that certain candidates are not found naturally or easily synthesized at all. This is where true synbio opportunities lay in wait; if we can address the gap both directly (e.g., synthesizing hard-to-synthesize molecules) or holistically (e.g., the next generation of directed evolution approach -- engineer the system to biologically select the best candidates for the specific conditions and environment).

Additionally, we're at a point where much of the efficacy of advanced therapy is quite far along, but the way they’re manufactured has not changed much in decades. Biomanufacturing for these therapies is another area where I anticipate strong growth, especially given our global population's health status.

What are the greatest challenges you face and why?

In terms of the synthetic biology space, the past six-to-twelve months have been a tough time for companies looking to fundraise at both the early and late stages. Frankly, it’s a truly opportunistic time for investors like us to deploy selectively. But with various relevant industries (like biopharma) under a lot of pressure right now, partnerships are taking longer than expected, and many of these companies are tightening their belts, so to speak.

In a way, this helps screen startups that truly have the most essential solutions to real problems. They’re the ones who will stand out and ultimately survive.

 As a female investor, I believe I have a unique opportunity to contribute to fostering equality among minority groups in startup ecosystems. In fact, 43% and 33% of our investments have gone to underrepresented and female founders, respectively. Recognizing that diverse backgrounds can shape different perceptions of the same underlying facts, I am committed to ensuring that all voices are heard and valued in our investment decisions. As a scientist, I adhere to the philosophy that understanding the methodology behind data is crucial to uncovering the ground truth. By prioritizing transparency and rigor in our analysis, we can make informed decisions that promote equality and drive positive change in the startup landscape.

What keeps you up at night?

With last year’s biotool exit being as dire as it was in the tech space, the exit market for the tech space overall definitely keeps me up at night. For synthetic biology specifically, there is a growing need to show success cases to investors when it comes to realized returns. If that cannot be achieved, capital will inevitably flow elsewhere.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.

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Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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