Phase Biolabs: Converting CO2 into Renewable Chemicals

Written by Molly Steadman, edited by Natasha Barrow and Charlotte Pugsley.

The manufacture of every product we purchase results in the emission of environmentally damaging greenhouse gasses. The total greenhouse gas associated with a product is called its carbon footprint. Whilst we are most aware of the carbon footprint associated with our groceries, we may not have considered our toiletries, medicines or cleaning products. Surprisingly, many of the items we buy are also made with ingredients derived from petrochemicals, also known as fossil fuels, something most of us would much rather avoid.

Phase Biolabs is a seed startup that is striving to reduce both CO2 emissions and our petrochemical dependency, by generating sustainable ingredients for industrial and consumer products directly from CO2.  

Phase Biolabs is one of the five startups in this year's SEC Innovators Club. In this article I have spoken to the founder of Phase Biolabs, Dr. David Ortega, to learn more about the technology, business model and his entrepreneurial journey so far.

Phase Biolabs Tech & Business model

Phase Biolabs have just finished developing their proof-of-concept carbon capture technology that can convert waste CO2 into valuable chemicals. They utilise bacterial species that directly consume CO2 to make commercially important products via their metabolism. Using synthetic biology and metabolic engineering, David has modified the organisms’ natural metabolisms and enhanced their performance to improve the industrial process.

To source Phase Biolabs CO2, David is focusing on one of the largest industrial producers of CO2 - the brewing industry, where it is produced as a byproduct during yeast fermentation. CO2 produced from brewing is renewable and biogenic, as the carbon comes from the sugar consumed by the yeast. This is an attractive transaction for the brewers, as by capturing and recycling their CO2, they can produce carbon negative products. The sale of their CO2 also provides them with an additional revenue stream.

The first market that David is hoping to disrupt is that of ‘synthetic ethanol’. This is a purer type of ethanol than that made via yeast fermentation, and so is used within pharmaceuticals and cosmetics. Synthetic ethanol is chemically manufactured from ethylene - a petroleum resource, resulting in large-scale greenhouse gas emissions here in the UK. Generating high grade ethanol in Phase Biolabs’ process would therefore generate a more sustainable and carbon negative alternative.

David & Phase Biolabs’ Journey so Far

“We are a direct product of the amazing UK ecosystem for biotech startups. A large part of our success has been the government funding of programmes and initiatives to aid commercialisation. Hopefully, our story provides evidence for the continued investment into these systems.” - David

It was during his PhD that David developed his technical know-how. He finished his PhD at the University of Nottingham in 2019 at the Synthetic Biology Research Centre (SBRC) where he worked within the field of industrial biotechnology, engineering bacteria to turn waste into biochemicals. He knew he wanted to take what he had learnt in the academic lab and turn it into a real-world solution, so he pursued founding a company.

The transition from academia to industry is notoriously difficult as there are so many factors that determine whether a scientific technology can be successfully commercialised, many of which can be overlooked within academic research. To receive commercial training and develop a solid business model, David applied, and was accepted into, Entrepreneur First (EF) in the Autumn of 2019 and the QUEST programme at QTEC, shortly afterwards.

EF is a programme that looks for talented individuals with specific technical knowledge at the very early stages of founding startups in high growth global markets. Often, the candidate has yet to form an idea. Throughout the 6 months of the competition, EF funds their living costs, without the expectation for it to be paid back, to enable founders to work exclusively on developing their startup ideas and accelerate their progress.

“An amazing programme with amazing people. The atmosphere was so positive and energetic. EF was basically a start-up crash course.” - David

QUEST is a programme at the Quantum Technology Enterprise Centre (QTEC) at the University of Bristol. QUEST is a government funded accelerator that trains and supports academic STEM researchers to commercialise their tech and become the CEOs and CTOs of their own start-up. The core mission of the government funded accelerator is to help companies progress, without taking an equity stake (a percentage ownership of the company). Although the programme was initially intended for individuals from quantum physics backgrounds, the Bristol BioDesign Institute funded Innovation Fellowships, enabling David to participate.

After EF and QUEST, the next step was to acquire funding to generate proof-of-concept data to patent the tech. Government funded research grants are most commonly thought to be only for academics. However, to ensure the UK remains a front runner for tech innovation, the UK government also funds private organisations with bright ideas. The ability for start-ups to acquire grant money is a brilliant opportunity, as it allows them to retain their equity share and improve the company's value.

There is a particular formula to writing a successful grant, something which most PhD students have not had exposure to. With the help of The Knowledge Transfer Network’s (KTN) Industrial Biotechnology team, which works alongside industry, academia, and public organisations, David wrote a grant application for Innovate UK’s Sustainable Innovations fund, which specifically funds small and medium enterprises (SMEs) that are working on topics that will generate a greener and more sustainable future for the UK economy. His grant application was successful and Phase Biolabs was awarded £40,000.

Since acquiring funding, David has moved back to where it all started at The University of Nottingham (UoN). The UoN has a fantastic model where, rather than the typical ‘spin-out’, the UoN enables ‘spin-in’. When a startup company is aligned with the research goals at the university, the start-up can become an embedded partner, where they are able to rent lab space from the university.

Specialist science, such as that used by Phase Biolabs, requires specialised facilities and equipment. When starting-up, this would come at a huge, and often prohibitive, financial cost to set up from scratch. So, the ‘spin-in’ system removes one of the major barriers to commercialisation. A number of companies have formed in Nottingham using this system, such as Phenotypeca and Deep Branch. This system also provides a network of startups working in a similar space who have had to overcome the same hurdles, so they can help each other throughout the start-up journey.

Phase Biolabs: Where are they now?

David & Phase Biolabs have since developed their proof-of-concept and have demonstrated the novelty required for patenting. They are now seeking their first round of Venture Capital funding. With the huge positive impact that their business could generate for the environment, I for one would much rather buy products made using their sustainable technology.

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