Why We Invested In Izote
What Does Izote Do
Izote facilitates oxygen-free industrial fermentation, which is remarkable because they have effectively developed “omnirobic” microbial strains capable of functioning with or without oxygen during fermentation. This scientific breakthrough was built on over 20 years of proprietary research. This innovation is groundbreaking in several respects:
- Significant COGs Reduction: Izote achieves over a 50% reduction in fully loaded COGs (including CAPEX costs) without the need for expensive, bulky oxygen. This enables new scalability in industrial fermentation.
- Identical Molecule Produced: The anaerobic fermentation process of Izote yields molecules identical to those from traditional aerobic fermentation. This similarity to already approved molecules allows rapid commercialization.
- Wide-Ranging Applications: Izote’s technology is versatile and applicable in multiple markets, from synthetic to naturally derived molecules.
The existing bottleneck in industrial fermentation does not stem from a lack of demand. Instead, it centers on suboptimal unit economics and the high costs of scaling up operations. Consequently, the gross margins for fermented products hover at approximately 20% (ex-Pharmaceuticals). The market clearly has an appetite for biomanufacturing, which will play a leading role in the $3.4T market value that will likely be added to the economy by 2035 due to synthetic biology developments. We are convinced Izote can be the key to this untapped economic potential by achieving cost competitiveness at scale when compared to incumbent and alternative production methods.
The root cause of the existing suboptimal unit economics in this context can be attributed to the presence of oxygen. Dealing with oxygen requires complex tank operations, which inherently constrain tank sizes and challenges such as ensuring homogeneous oxygen availability. However, by eliminating oxygen, there are substantial advantages:
- Removes the need for oxygen pumping in the tank.
- Lowers energy usage with a simpler tank design.
- Enables ongoing fermentation with lower contamination risks.
- Exceeds existing size constraints of tanks.
This means that Izote can be cost-competitive with the existing supply chain.
The Team
- Victor Manuel Reyes-Umaña (CTO, co-founder): A world leader in fermentation design with over a decade of experience at Greentech and Dupont. He completed his PhD at UC Berkeley.
- Sam Atwood (CEO, co-founder): Has a background in consulting as an Engagement Manager at McKinsey, partnering with blue-chip food/ag/chemicals organizations. Sam has an MBA from Berkeley Haas.
Where are They Now
Since spinning out of the UC Berkeley Coates Microbiology Lab, Izote has been busy building out its strain development technology and starting to prove its processes in smaller bioreactors while deciding the initial target markets for full development and executing various proof of concepts across different use cases. This is all exciting stuff. However, in the longer term, Izote is confident that they can move towards a demo scale 3 years from now and a production scale in 5 years.
Longer Term Vision
Should they successfully meet their manufacturing objectives, it would be a remarkable achievement. In this industry, companies often face extended timelines for scaling up due to the expertise required for bio-manufacturing processes.
In the future, Izote can be the defining fermentation platform, spanning various markets. These include plant-based foods, hydrocarbons, and vitamins/supplements, among many others. With amazing opportunities ahead for the company, it is an exhilarating moment to become a part of this journey.
We would also like to extend our sincere appreciation to Carlos Vial (Haas MBA ’24 and Associate at Courtyard Ventures), whose unwavering dedication was instrumental in both sourcing and executing this transaction.
Fun fact: Izote’s name comes from El Salvador’s national flower, where Victor’s family is originally from.
Courtyard Ventures Fund II is a Venture Capital Fund run by three current MBA students at the Haas School of Business, UC Berkeley: Xan Wood, Bruno Sanovicz, and Elias Mufarech. Our capital comes from current or past Berkeley students, and all our funds will be invested in world-changing ideas from entrepreneurs within the Berkeley ecosystem.
