Looking to upend the $60bn palm oil business

There are several startups looking to disrupt fats & oils – and here’s news of C16 Biosciences, an American venture that has an audacious vision to bio-manufacture a palm oil alternative and radically change the food and personal care industries.

Sodium laureth sulphate, sodium lauryl sulphates, glyceryl stearate, cetyl palmitate, palm kernel oil. If you take even a few minutes to read the labels on the products in your pantry and bathroom — from peanut butter to sunscreen — you’ll see these ingredients (and many other similar-sounding ones) over and over again.

As the Rainforest Action Network (RAN) observed way back in 2011, they’re all palm oil.

“It’s in half of all consumer goods,” says Emma Rae Lierley, a RAN spokesperson. “It’s one of the most widely-used vegetable oils on the planet.”

In the food and beauty industries, palm oil is an essential ingredient that makes everything around it better. The costs of that functionality, though, are that companies burn down tropical rainforests to create palm oil plantations, and palm oil production often relies upon child labour and modern slavery to operate. Palm-oil free is also becoming a labelling asset.

So it’s a mesmerizing experience to stand in a biotech laboratory located about as far west in Manhattan as you can be without walking into the Hudson River and watch four glass cylinders oscillate with a liquid the colour of ripe papaya and the viscosity of a smoothie.

This miniature reactor is bio-manufacturing a palm oil alternative, the first product from the startup C16 Biosciences. A particular strain of yeast that produces oil from eating a sugar or another feedstock does in seven days what a mature palm tree needs seven years to achieve.

Shara Ticku

The potential for this biotech breakthrough is profound

“Palm oil has the biggest breadth of application, because it’s not really one product. It can span the spectrum of oil and fat needs,” says Shara Ticku, C16’s cofounder and CEO.

“It has really good performance properties,” from ensuring that Tide detergent is shelf stable to giving Nutella its perfect spreadability. It’s just really good at what it does.”

Ticku, who founded C16 with David Heller and Harry McNamara after the three of them took the Revolutionary Ventures class at MIT Media Lab, is not a scientist. (Her cofounders are.) But that only makes her path to seeking to disrupt the $60-billion global palm oil industry that much more inspiring.

“We need a radical shift in the way things are made,” says Ticku, “and the responsibility and accountability that companies have in making them. We’re not there yet. Part of why is that we haven’t had viable alternatives, and without those, no one is going to switch. That’s been the excuse for palm oil these last few years.”

Ticku, Heller, and McNamara explored the idea that became C16 — the name comes from the 16-carbon fatty acid that is a significant palm oil component — for about a year and a half before making the commitment in 2018 to incorporate and go for it.

“We had done enough of the science,” she says, “to believe that there’s a there there.”

Taking on Big Palm

The audacity of C16’s pursuit has inspired a litany of armchair commentary from its earliest days.

“A lot of people told us that we were fools or much worse,” Ticku says, “and that we had no shot at solving this problem, but good luck to you.”

Even if people did believe in the idea, they questioned Ticku’s strategic decisions, namely she was making a mistake by pursuing the personal care market first rather than food.

“Every decision [we make] is fundamentally rooted in, what is our best shot at solving this problem at scale?” Ticku says. ‘Well, if you want solve this problem at scale, go after the largest market, right? Obviously. Not obviously.”

As Ticku notes, she is going up against an entrenched industry with a lot of advantages, including both economies of scale and significant momentum.

Palm oil production has grown from two million tons in 1970 to more than 70 million five decades later. The FDA’s 2015 ruling against the use of artificial trans fats in foods further spiked demand for palm oil because of its versatility.

“There are always going to be folks that second guess,” says Peter Turner, a partner at Breakthrough Energy Ventures which invested in C16’s Series A in 2020 when the company was eight people operating in an office about the size of a conference room.

“But Shara absolutely has chosen the right path by pursuing personal care first.” He marvels at C16 being able to have a commercial product in its Palmless oil before raising a Series B.

They recently introduced their first Palmless-branded product, a face, hair, and body oil cheekily but passionately named Save the F—ing Rainforest, and which is being made in a 50,000 litre tank in an unspecified location somewhere in North America.

For Ticku, the way to achieve the company’s goals has always been about “getting a product in market fast, proving that you can be profitable — fast — and using all of that to funnel back into the company to invest in further scale and lowering cost over time, which go hand in hand,” she says.

“That is going to tee us up for success, so much more than trying to chase the very big market, which is funnily again, fundamentally a game of large scale, low cost.”

Environmental groups are intrigued by how lab-produced palm oil alternatives bring more attention to the problems in the palm industry but remain circumspect that they’re the answer.

“These innovations are interesting but we shouldn’t be distracted by the prospect of a ‘technical fix’ to solve the urgent problem of the current environmental and social impacts of palm oil production,” says Grant Rosoman, a Greenpeace International Senior Advisor.

“For the next few years at least, these products are likely to remain niche due to the complicated nature of the processes involved. They will struggle to compete on price with natural palm oil and so are not expected to supply a substantial proportion of global consumption.”…

FastCompany.com: Read the full story here

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