As the world’s population continues to balloon, demand for seafood is going with it. Aquaculture is the primary method to meet demand, but relies on feeding billions of small fish to larger fish. A process that is inherently unsustainable and is only getting worse as ocean fish supply dwindles. NovoNutrients is looking to solve this problem with a radically different approach, growing high-quality bacterial protein from waste Carbon Dioxide.
I chatted with David Tze, Co-Founder and CEO of NovoNutrients about his origins, problems in the aquaculture industry, and how they plan on disrupting the feed market.
How did you first become interested in aquaculture?
I first became interested in aquaculture by reading an article in Wired magazine. It was the May 2004 issue and there was a story about the blue revolution, which was the first time I saw the pioneering work being done in offshore aquaculture. More importantly, it was the first time I really saw the supply and demand trends in global seafood. An exploding middle class was demanding a huge increase in seafood supply and aquaculture was the only way to meet it.
So you got interested in aquaculture, but how did you transition to NovoNutrients?
It was a quite a long journey for me in that the introduction to aquaculture was in 2004 and I didn’t meet NovoNutrients’ inventor until 2017. So, during those thirteen years, the first company I started in aquaculture was actually an investment management company. I had been working in the early days of the commercial internet and it wasn’t clear how I was going to get into the aquaculture business. It wasn’t until a colleague came to talk to me about another entrepreneurial opportunity and we unexpectedly realized we had independently developed an identical interest in aquaculture. He’s a very successful serial entrepreneur named Jared Polis, now the Democratic nominee for governor of Colorado.
I started as the aquaculture investing arm of his family office. About a year later we formalized it into a venture fund, brought in outside limited partners, and rolled some of the investments we’d already made into the fund. For about twelve years, I built up this small portfolio in the aquaculture value chain that included feed ingredients. This put me on the path that led me to encounter NovoNutrients in January of 2017.
When you met NovoNutrients, what really stood out and what was the hook for this company?
There are really three important things about the company, two of which were things that I was looking for and the third which really surprised me in in a positive way. It was a company that was focused on producing protein for aquaculture and also taking the microbial approach. Knowing that the smaller simpler organisms are generally better at growth and at using inexpensive feedstocks, that was clearly the right approach. The pleasant surprise, which I later discovered, was that NovNutrients was making their protein for aquafeed largely from untreated industrial emissions of CO2.
CO2? That blew my mind. Partially because of the sustainability angle and the part it could play in creating carbon negative feeds to help address climate change, but also because, in my previous experience with a portfolio company doing a feed ingredient, one of the main challenges is inconsistency in the supply of feedstocks. That previous company used beer brewing wastewater as feedstock. It was surprisingly variable in quantity, quality, and contaminants. On the flip side, these carbon dioxide streams were going to be much more voluminous, consistent, and cheaper. It very compelling, and I got on the phone immediately, launching into the first real conversation in what would be a long series of calls and visits leading up to me coming on board as CEO. We announced my role in early October of 2017, at the SynBioBeta conference.
You touched on bacteria and untreated carbon dioxide. Could you give us a quick walkthrough of what is it that NovoNutrients does on the technology side?
The big picture is that what we do is a lot like making wine. In winemaking, it’s yeast taking up the sugar in grape juice, as the source of carbon and chemical energy, and using that to reproduce and grow. In our case, it’s a little bit different, in that we use bacteria. Our carbon source is untreated industrial emissions of CO2. Our energy source is hydrogen.
For NovoNutrients, the product is not a waste stream of the microbe, which is the case for alcohol from yeast, but rather the bacteria themselves are the product. These are bacteria that are naturally high in protein and other nutrients, so if you dry them out, they become a protein meal with ideal characteristics for feeding to fish and other animals. Our technology encompasses this entire chain of activity, but the part we’re especially proud of, and that we think is ultimately going to be the most valuable, is the consortium intellectual property that we have developed. This design sits at the middle of our process and is the interface between these inexpensive feedstocks and this valuable mix of microbial protein.
What’s the efficiency of this process? Can you really produce the huge amount of protein needed at scale for aquaculture to feed so many people?
The first thing to know about scale is that to make one ton of protein meal, we need two tons of carbon dioxide.
The second thing to know is the scale of carbon dioxide availability. A large cement plant can produce 4 million tons a year of carbon dioxide, potentially to be used by us to produce 2 million tons of protein meal. This would be just more than a third of the current global supply of high-quality protein meal that we’re looking to replace, called fishmeal. Fish meal is made when you catch small bony, oily fish and grind them up then press them out into a protein component and a fat component. That’s your fishmeal and fish oil. Fishmeal is an extremely valuable ingredient that goes in not just fish feeds, but also feeds for pigs and chickens. It is currently valued at more than $1,500 a ton.
Our technology is extremely scalable, not just within the needs of aquaculture, but in a world where several billion tons of meat are raised every year, there’s a huge opportunity for high-quality proteins.
You’re talking about meat, not just fish, is this a protein that can expand beyond aquaculture?
Absolutely. Fish are the pickiest eaters because they’ve evolved for hundreds of millions of years in the ocean to eat other things that are in the ocean. The big fish that people like to eat are eating small fish, so they require this very high protein diet with a dramatic range of amino acids. So their nutritional needs are really a superset of the nutritional needs of terrestrial agricultural animals, like chickens and pigs, or for that matter, a person.
We think there will be a significant customer base among today’s food tech companies who are currently buying proteins from the pea or lentil industry but are really interested in having the highest quality proteins at the most reasonable cost. Once we’ve started satisfying the animal nutrition market, we’ll talk to some of the movers and shakers in the world of human food.
How was your transition from aquaculture investor to CEO of a biotech aquaculture feed company?
Even as a hyper-focused investor one is still ultimately something of a dilettante, in that you have to be familiar with the full gamut of companies and technologies. It’s quite different to wake up in the morning with all my focus on one company. As a non-scientist, I had to learn a significant amount of science to keep up, even fractionally, with my fantastic technical co-founders who are in the lab every day. Besides the difference in focus, it is very different to be involved in the management of a company instead of being on a board. At the board level, you’re essentially coaching executives and advising them on strategic decisions. When you’re an executive, it’s a whole different slate of activities and I found it extremely rewarding to actually be in the mix instead of just commenting from afar.
There’s a much greater sense of teamwork and inter-reliance on your team. It’s also nice to be in a position to go out and communicate the opportunity and our progress, as well as get advice on challenges, as opposed to always being in the position of evaluator and advisor, which is not fundamentally how I see myself. I think that my new life as an entrepreneur is a better match for who I’ve always been.
How do you think NovoNutrients can transform the agriculture industry or at a greater scale the, the food production industry?
I close our investor pitch with the line “make a billion tons of food from 2 billion tons of CO2.” That’s really the kind of scale this technology has the potential to develop into. It can be a gigaton solution for our oceans, climate, and food production systems. That’s because we’ve intentionally chosen to work with some of the largest resources on the planet in terms of gaseous carbon waste. That’s billions of tons every year. As for hydrogen, that can be made from renewable power.
We’re talking about building a new pillar of the food system that’s decoupled from both agriculture and fossil fuels. If the industry is producing CO2 and there is a source of clean power, then producing electricity for the electrolysis of water to make hydrogen allows us to scale up to an extremely large facility while we replicate that facility many times on each continent.
We’d aim to be in a position where we can fundamentally bring down the cost of food and increase its availability worldwide.
What big milestones are you and you and the company aiming to hit in the near future?
Our next big milestone is to scale to 500-liter bioreactors, to address early adopter specialty markets. Our other milestone is developing our synthetic biology platform. One of the incredible things about our workhorse bacteria is that they’re genetically tractable and culturable. And so these bacterial models have tremendous potential to produce biochemicals with between five and 100 carbon atoms in the molecule. The first place to go with that will be that same aquaculture feed market that we’re working on with our NovoMeal protein. This allows us to go beyond protein and address many of the other needs in the animal nutrition space.