Fixing the Fermentation Squeeze: Liberation Labs comes out of stealth with a Farm to Ferm mission

January 10, 2023 |

Liberation Labs comes out of stealth with a $20M funding round and a precision fermentation platform for the production of alternative proteins at scale 

News arrives from New York that Mark Warner and his Liberation Labs team have closed a $20 million seed round of funding, for its journey into deploying precision fermentation platform for the production of alternative proteins at scale. I think it was the New York Times that dubbed this Farm to Ferm. Let’s explore that in some depth today. First, some backstory on the investors, and the use of the proceeds.

The investors

The round was led by Agronomics and Siddhi Capital and includes CPT Capital, Thia Ventures, 8090 Industries and Echo. Funds will be used for, among other things, the purchase and development of a site on which to build its first commercial-scale Launch Facility, which will have a fermentation capacity of 600,000 liters with a fully dedicated downstream process.

The Liberation Labs backstory

Readers of The Digest will not be surprised to see Warner at the helm of this enterprise. In April 2021 in these pages, Mark (with Chris Guske) wrote: “ There are storm clouds on the horizon and those of us actively entrenched in scale-up and manufacturing for Industrial Biotech see the coming apocalypse…and it will likely not be pretty…Over the last couple of decades, VCs have been showering money on start-ups, which seem to be multiplying like rabbits…entrepreneurs can hold up flasks, proudly showcasing their products, declaring commercial readiness. But there is a problem. Over the same couple of decades, “capital light” has been the scale-up/commercialization mantra: why build when one can use someone else’s facility?”

The predictable result of a tsunami of new companies formed and no new manufacturing at scale built? The fermentation Squeeze.

Back then, Warner, ahem, warned: We are seeing more start-up companies “dressed up with nowhere to go.” How dire it this situation? It is definitely getting worse at the wrong time. North America contract research and manufacturing organization (CRO/CMO) capacity is tightening. In 2020, one CRO/CMO completely shut down its facility to all fermentation work and laid off staff. A second quit conducting outside work as internal demand filled capacity. A third was rumored to be considering shutting down or selling. The situation in Europe is less dire but even that market is tightening. Additionally, EU regulations (e.g., REACH) make things more challenging. Producing in the EU and then transporting back to the US can be challenging, driving a reluctance to use European facilities, where the bulk of available capacity currently exists.”

Yes there is unused capacity

As Warner wrote in the Digest, “Does un-utilized industrial biotechnology capacity in the US exist? Well, yes, sort of. Tate & Lyle’s Decatur, IL, refinery has large fermentation capacity, once used for producing xanthan gum and Amyris’ farnesene. But the facility has remained idle for several years with no evidence of interest to recommission it despite numerous inquiries. ADM’s Clinton, IA, facility (built to support the defunct ADM-Metabolix JV) operates at fractional capacity with the majority of commercial-scale fermentors still not commissioned. Fermic’s Hannibal, MO, facility remains idle. The issues in bringing sites back into operation are common stumbling blocks: (1) these fermentors are rather large for most early-stage companies, and (2) there needs to be a sustained commitment to bring these up to/back to operational status.”

In our view, it’s worse than that. The industrial capacity that CMOs use is old, and was built for different purposes. Is that a problem for fermenters? Can be, the age factor. But the big factor are those downstream processes, they are unique to each product, not cookie-cutter. So, yes, there is pharma capacity that could be used for contract manufacturing, but two caveats. First, the new product displaces and old one, pharma products aren’t sold for fuel prices. Second, you have to operate in an environment that’s built and maintained to high-grade pharma standards.  So, costs are likely to be sky-high. Making pharma, or $100 per kilo ingredients? That’s sounds fine. Making something for industrial or the food market? Not so hot.

So, why are things changing now, with Liberation Labs?

Times have changed

As Mark Warner tipped in The Digest a few years back, there has been “a rise in investors more interested in developing infrastructure and manufacturing capabilities, but these remain in the minority. Time is required for design, permitting, construction, and commissioning…and then the facility is not initially operated at full capacity as sales have to ramp up. This all requires deep pockets and patience.” Fermentum tried. Why different now?

First of all, investors are now seeing the logjam ahead. Most newcos are set up to do just enough fermentation runs to prove out and optimize their process, make some samples, then look for an exit or alternatively for contract manufacturing. That’s the First Commandment of “capital light” —  “thou shalt build no string of 150,000 liter fermenters on our money.” So, greenfields are generally out.

We’ve seen companies buy a brownfield plant. LS9 tried that, others too, Manus, Danimer, Corbion. The options are few, generally speaking, and you’re buying a site that was built for some other product and purpose and may have been idle for some time. As was said of old Fords in years gone by, Found on Road Dead, Fix Or Repair Daily. You get the idea.

Yet as Mark Warner advised a few years back, “startups are multiplying like rabbits” and nowhere so fast and furious as in food-grade proteins. Warner has cautioned, “Clearly not all will be successful and many will disappear. However, statistically, considering the diversity of the Industrial Biotech space, there will be more and more winners. But if there is no place to produce, many could “wither on the vine”…and be snapped up deep-pocket strategics for pennies on the dollar.”

So, looking back down the road, you could see Liberation Labs coming for a country mile. Of course, finding the right team and the investors who are going to back an infrastructure play, that’s taken some doing. It’s timely, because time is something that all these protein companies do not have  a lot of, the pressures are immense. It can take up to 12 months to negotiate the deal all the way to tech transfer and operation, using contract manufacturing. So you can see, the Squeeze is Now.

What is the solution, For Liberation, the focus is on proteins — all the foodies. That makes a lot of sense, plenty of ‘em, none of them have robust scaled-up operation sufficient for their prospects, they lack the team, the capital, the investor patience. 

So, Liberation will be here in operation in late 2024, at 600,000 liter scale, that’s four 150,000 liter fermenters (the largest you can have fabricated offsite, to save costs).  More to come, In fact,  Liberation Labs is commercializing precision fermentation, ultimately, a global network of purpose built, international manufacturing facilities that enable the next wave of biotechnology advancements to produce alternative protein at scale. Their thesis?  

Cutting-edge process combining modern technology and design brings reliable, fit-for-purpose approach and cost-effective solutions that meet consumer demand across the world. Liberation Labs fermentation facilities are engineered to deliver cost-effective, high-yield production of novel proteins via strategically designed purpose-built facilities, adaptable to fit 80% or more of the alternative protein market. 

Which is what anyone might say. What makes it so compelling is the team. Mark Warner, just to name the chief, headed up Solazyme’s scale-up, then Impossible Foods, and had identified this Fermentation Squeeze years ago, and has decided to do something about it. Well done.

Next steps in the journey

With the close of the seed round, the company’s focus is turned completely to finalizing the site selection process and the completion Front End Loading level 3 engineering (FEL-3), followed by placing orders for long-lead equipment and building out the operations team. Liberation Labs is projecting commissioning and commercial production of its first facility by the end of 2024.

Reaction from the stakeholders

“Liberation Labs aims to dramatically increase availability of precision fermentation capacity to meet the rising demand for alternative proteins, fueled by population growth and increasingly health-conscious, impact-driven consumers,” said Mark Warner, co-founder and CEO of Liberation Labs. “Our business model enables us to not only meet the demand from today’s traditional food companies but unlock innovation among the dozens of emerging food-tech companies.”

“Liberation Labs has the potential to dramatically accelerate adoption of novel proteins that are increasingly in demand by both existing and next-gen food companies responding to changing consumer preferences,” said Jim Mellon, co-founder and executive director at Agronomics. “We believe they will set a new standard in the industry and usher in a new era of innovation in healthy, sustainable and scalable foods.”

“We’re confident in the experience and talent of the senior executive team at Liberation Labs to deliver on a novel approach to precision fermentation,” said Steven Finn, co-founder and co-managing partner of Siddhi Capital. “We believe they can make a significant contribution to making the global food system more sustainable and scaleable.”

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