Closing the applications gap: Checkerspot closes $5M seed financing in pursuit of high-performance biomaterials

June 25, 2018 |

From California comes the news that Checkerspot closed its Seed Round financing for over $5 million. The round was led by KdT Ventures, and included Viking Global Investors, Refactor Capital, Sahsen Ventures, and Godfrey Capital. DIC Corporation also invested as part of its recently announced Joint Development Agreement with Checkerspot. 

Dr. Andrew Cain McClary, general partner of KdT Ventures, will be joining the Board of Directors along with David Greenwood, who also participated in the financing and has worked with company as an Advisor since 2016. 

If you’ve heard of the Tom Wolfe’s The Right Stuff, which is all about people having ‘the right stuff to excel’, consider this venture about Making the Right Stuff — that is, how you translate an entire generation of innovation in digital biology, biobased chemical engineering and advanced fabrication into actual stuff. Or, how you get ASAP to high-value, high-performance applications.

The backstory

Checkerspot recently emerged from the Illumina Accelerator Program in the Bay Area, and in many ways its a leading example of a technology platform fundamentally built atop the radical transformation of the speed at which we read DNA, a revolution that Illumina has been at the heart of.

That fundamental set of breakthroughs spawned a generation of innovators— some of which built toolkits such as CRISPR (for gene editing), and we’ve seen companies come along such as Twist Biosciences, which sells DNA (including genes and fragments thereof). We’ve seen Inscripta aiming to be the Illumina of writing DNA.  

And we’ve seen a generation of companies that originally aimed at fuels and commodity chemicals — Amyris, Gevo, Solazyme — that rose up in the 2000s. 

A new generation of companies developing molecules of interest has arisen — built upon the foundation (some would say the ruin) of that first generation of companies. Zymergen and Ginkgo BioWorks building and optimizing production organisms, Bolt Threads building advanced fabrics, Arzeda building innovative cell factories that can transform or supplement current chemical production methods.  Think Visolis, and Kiverdi, too.

Checkerspot is built in many ways out of the ashes of Solazyme, and its not coincidental that the two founders are from the Solazyme universe, and that Checkerspot’s initial materials focus has been on materials derived from novel triglycerides from microalgae. That’s Solazyme territory. 

As Checkerspot CEO Charlie Dimmler told The Digest, “There are three things that are very different this time around. Our customer engagement is higher, there’s more understanding and demand now in the market, and we have better tools now. We only scratched the surface of the potential at Solazyme.”

“And, we have more visibility to scale, we know now what it takes to bring a novel molecule to large commercial industrial scale.

The search for higher-value opportunity

Indeed, the story of Solazyme was generally understood through the commodities it targeted (ultimately, at prices that were too high for the markets they were serving), rather than the the fundamental potential of its technology. It’s a common problem with the first-gen companies – everyone was impatient for the fuels and the innovation under the chassis was to some extent sidelined into the background noise.

Most of the problem of those companies has been the inability to find sufficiently high-value materials to make to generate cash-flow, at high enough volumes to pay back the massive initial investments required to build the company. It’s all very good to have a million dollars in cash flow so long as you didn’t raise a billion in equity to get there. 

It was the cost of the platforms that in many ways dictated a very early focus on commodities, that alone could provide the volume to support the investment levels. And in most cases, the costs did not come down as fast as hoped — tumbling oil prices and lack of attention to incentivizing advanced, high-risk commodities (vs first-gen) didn’t help.

The solution then is two-fold. Find a higher-value class of materials to work on, and take advantage of the proliferation of fundamental technology to reduce the cost and timelines to reach cash positive.

Product push or consumer pull?

What’s driving the new interest in higher-value materials? 

“It’s both push and pull,” Dimmler told us. “There are more sustainable ingredients everywhere, and more

awareness. Look at companies like Patagonia that highlight their supply chain via the website. Not everyone looks into it, but there are groups and consumers now that do the homework.”

Is it sustainability as the driver, or performance?

“There’s a real desire to improve performance and build better applications, here with us and with our customers.” Dimmler said. “I like to use a boxing analogy. The performance is the jab-jab-jab, always important, always there. The uppercut is the sustainability, the knockout punch. They’re not expecting that we can make better materials, and deliver on sustainability goals too.”

But, engagement itself has changed, and that is a big part of it.

“Solazyme was much more insular, and one of the reasons that there wasn’t enough real appreciation of the power of the toolkit was because in the four walls of the company. And I remember the experience of Gerond — the company put in place hundreds of transfer agreements and that really served two functions. It increased awareness and built the literature base. So, fast forward to when companies like Pfizer and Genentech were bringing early drug candidates, they could go and look at the literature and really understand more of what was possible with a technology platform. Transparency enables the impact we talk about wanting to make, not closed up and shut off where there isn’t the broad-baed understanding of the technology toolset.

The broader toolset: looking at lead investor KdT Ventures

As Cain McClary, of KdT Ventures observed in briefing The Digest, part of the appeal of Checkerspot is that experience of the past. “You don’t find these teams every day,” said McClary, “A lot of what you get in ventures is post docs and grad students,. The experience of the founding team and their integrated approach to partnerships and products across their disciplines is unique and a driving force at the company. The first gen had understated outcomes, and now you have folks who been through the lifecycle, and have learned what’s right and what’s wrong.”

But it’s also about the timing, the convergence of technology.

“This is the right time,” McClary told The Digest. “The novel tool sets and data sets, all colliding with computation. The tools create the data sets, and the computation allows you to move at the speed that’s right. And these are new business plans and models, and now we have entries into the high value materials space. 

So, the companies that have been founded in recent years are driving the value into newer entries like Checkerspot, which in turn drive value in to the community by engaging successfully to develop new materials that drive value into the space.

“You start with sequencing and understanding the source code,” McClary explains, “with CRISPR as a subset of sequencing, and we’re using the new tools to read and understand in a high-throughout way. And then, you need biosynthesis, so you have companies like Twist that have miniaturized and massively parallelized that step.”

But there’s more that can be done at the foundational level, McClary notes. “It would be great to have novel long-range synthesis, thousands instead of 100 base pairs at a time, with more fidelity, fewer errors, and there are going to b e even more robust computational platforms and programs. And then, you have to put all this together, an d fabrication becomes very important. It doesn’t matter how many novel ways you have to write DNA unless your methods lead you to performance by physical materials. Checkerspot’s eventual expansion into a myriad of verticals will reveal the true power of the platform as their customers and the company itself forge new ground,” said McClary.

Which brings us back to microalgae.

“We see triglycerides as molecular scaffolds” said Scott Franklin, CSO and co-founder of Checkerspot. “Our technology platform leverages an understanding of biology, chemistry, materials science and fabrication, and through it we believe we can imbue these molecules with properties that dramatically enhance the performance of Checkerspot’s materials. As we grow, we’ll continue to innovate around this platform, further developing its precision to allow us to penetrate into more and more applications areas,” 

The Bottom Line

In this space, you think different to survive.

“At Checkerspot we’ve sought out partners, including investors, that think differently, share our passion for innovation and share our mission,” Dimmler told us. The mission? “To create new-to-the-world high performance materials and unique products that also take the environment into account. Existing, converging technologies are unlocking a whole new world of development, allowing us to design with intention and enable better ways of doing things.”

Where do we see Checkerspot. In many ways, as the tip of the spear. Product and application developers companies will take advantage of the revolution in the underlying biological technology, so long as it leads to actual stuff, stuff that works better and is worth a premium to the early adopters. Stuff that delivers on sustainability and delivers the knockout punch within customer companies that move them from observers and admirers to actors and deployers of advanced materials.

We’ll be watching.

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