C16 Biosciences: Lab-Grown Palm Oil – Case Solution

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C16 Biosciences: Lab-Grown Palm Oil Case Answers

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Executive Summary – C16 Biosciences: Lab-Grown Palm Oil

C16 Biosciences is a synthetic biology start-up founded by Shara Ticku along with her two colleagues. The company works to tackle the environmental pollution and deforestation effects brought upon by the palm oil industry.

The palm oil industry is a very large and complex industry that provides livelihood to most small-hold farmers in many Asian countries such as Indonesia and Malaysia. These two countries provide almost 85% of palm oil to the world.

C16 Biosciences tries to provide an alternative by giving a bioengineered palm oil substitute that is traceable and environment-friendly.

The founders are in a dilemma of where to launch the company in the market. Whether in the food industry, which accounts for 70% use of the total palm oil, or the personal care industry, which accounts for just 2%. Both goals are tough to carry out as C16 Biosciences has time and capital constraints.

Analysis of both problems leads us to believe that going into the niche market of the personal care industry with their own manufactured products would be beneficial for C16 Biosciences to sustain longer and create a brand image in the market.

1. Situational Analysis – Introduction

The case is based in the year 2019 and carries the context of a synthetic biology startup called “C16 Biosciences”, based in California. C16 Biosciences is a startup that works with the motive of creating synthetic palm oil, which is the most used and popular choice of oil in almost every industry. (Refer to Exhibit 2 for oils by global consumption.)

This industry has also been a part of the major part of earning for small-hold farmers in Indonesia and surrounding Asian countries and is a high-return plantation.

But in turn, the practices have been proven to be very harmful to the environment and the natural habitat. This led Shara and her two colleagues to choose palm oil as their area of work. (Refer to Exhibits 3a and 3b for differences in the supply chain of the two.)

This idea of working on Palm oil was also fueled by Impossible Foods and Beyond Meat, capturing tons of funds for their meat products’ alternatives.

C16 Biosciences was started by Shara Ticku, who was an MBA; David Heller, a bioengineering undergraduate from MIT; and Harry McNamara, who has a Ph.D. in physics from Harvard with experience in synthetic biology. It was conceptualized during an entrepreneurship course called “Revolutionary Ventures” in the year 2017, where they collectively came to the idea of doing so.

This major issue of pollution and deforestation activities was experienced by Shara on her trip to Singapore in the year 2013. She saw the slash-and-burn practices that they were following, leading to the value of 400 on the pollution standard index (PSI). As a result, educational institutions and airports were being shut down.

After they decided to work on the Palm oil problem, they got their funding from Harvard, MIT, and the Dorm Room Fund, accounting for $70000. This led them to set up their first lab in Cambridge, Massachusetts, where Heller and McNamara started their initial manufacturing using yeast culture fermentation.

They used sugar to convert into oil, which posed a problem of the requirement of extensive capital. They devised a workaround of using algae for manufacturing sugar and that to oil, the final product.

But this, as well, was very time-consuming. They resorted to “food and industrial waste” as their source of sugar, solving their feedstock problems for the time being.

But they got caught up in the issue that these yeast cultures or cells may or may not work the same way in large quantities. Hence, they limited themselves to smaller quantities.

In April 2018, C16 Biosciences was made a finalist in the MIT 100K Launch business plan competition and gained recognition from Y Combinator, a start-up accelerator. The latter admitted C16 to its summer cohort.

This made Ticku understand the importance of building customer relations and developing a go-to-market strategy. She was certain of going to the personal care market at the start, with the bigger goal of moving to the food market. Ticku talked with many potential customers by directly meeting them or cold emailing them (Refer to Exhibit 8).

During a fundraising event by Y Combinator, Ticku went there carrying a bottle of their oil (Refer to Exhibit 7) and six LOIs (Refer to Exhibit 10).

She was convincing the investors that they were not just talking and were ready to deliver what they promised. This led them to raise $4 million, which was $1.5 million more than the fundraising goal.

2. Problem Statements and Decision Dilemma

The presence of Impossible Foods and Beyond Meat in the market and their doing exceptionally well made the investor even more excited for any technological breakthrough, which clearly C16 Biosciences was providing.

Hence, their ( investors) main focus was on…