Fermenting Change: Where Biology Wins and Biomanufacturing Scales Next

Fermenting Change: Where Biology Wins and Biomanufacturing Scales Next

Brewing beer, building drugs, and making fuels have defined biomanufacturing’s past and present; new tools, new systems, and new business models will vastly expand biomanufacturing’s future.

Byline: Walter Dauksher

July 2026

For thousands of years, biomanufacturing meant one thing: food. Yeast turned barley into alcoholic beverages and leavened bread; lactic acid bacteria converted milk into cheese. Our ancestors might be forgiven for thinking ​“it doesn’t get any better than this.” But the 20^th century expanded biomanufacturing’s reach into two more commercial categories: pharmaceuticals, such as insulin and antibiotics; and biofuels, like corn ethanol. Today, this short list accounts for nearly all the value created by biomanufacturing operating at industrial scale.

That list will grow. We’re just beginning to leverage biology’s potential to make a range of products, from cosmetics, food ingredients, pigments, and home and personal care products, to biomaterials and precursor chemicals. Biomanufacturing represents a $200 billion – 300 billion annual market opportunity outside of pharmaceuticals, and substantially more if it could replace the many petroleum-based inputs to the global economy (e.g., plastics, fuels).^1,2  This capability has largely not been commercially realized.

To understand why, we need to examine the strength of biology as a manufacturing system, the current state of the art, the different ways of getting to market, and biomanufacturing’s underlying economics. Doing so led to our first biomanufacturing investment, in the Denmark-based aroma and flavor maker EvodiaBio.

Where biology wins (and where it loses)

Biology excels at building large, complex molecules with stereochemistry, the precise 3D arrangement of atoms that can make a flavor taste just right or a drug bind precisely and exclusively to its target protein. Living systems have spent billions of years optimizing for this, evolving enzymes that chain together reactions that synthetic chemistry would otherwise require many tedious steps and expensive reagents to replicate. 

However, it has proven difficult and expensive to industrialize biology. Fermentation infrastructure can run into the hundreds of millions of dollars per facility and existing facilities are already booked out for months-to-years. The inputs for fermentation, such as sugar and growth media, can cost significantly more per unit of output than the petroleum used for chemical synthesis. Microbes also must consume some of the feedstock to live and reproduce, which puts an upper limit on production efficiencies and rates. Once the bioprocess is complete, extracting the molecule of interest through downstream processing often adds significant additional cost. Stacked together, the capital and operating expenses for biomanufacturing can make the production of even high-value materials uneconomical.

The expanding toolkit

Modern biomanufacturing still depends on the same fundamentals it did millennia ago. All bioprocesses require an energy source (e.g., sugar), carbon (again, often sugar), and an organism. But new tools and methods have emerged.

Liquid fermentation, the most familiar form of biomanufacturing, is being enhanced with engineered industrial organisms like E. coli, novel wild organisms like extremophiles, and next-generation production infrastructure like continuous systems that replace older batch-production systems. 

New alternatives to liquid fermentation have also emerged. These include solid state fermentation, molecular farming, and cell-free systems.

Solid-state fermentation cultivates organisms like mycelium on dilute, often agricultural feedstocks rather than liquid broth, producing mats of biomass that can be used to produce proteins, biomaterials, or other compounds of interest. 

Molecular farming uses genetically modified crops as living factories: rather than building bioreactors, it leverages existing farmland to produce molecules of interest from sunlight, and ambient air, which are then harvested and extracted. 

Cell-free systems bypass the cell entirely, stabilizing enzymes alongside an energy source like ATP and the necessary cofactors to drive reactions directly.

Playing as picks and shovels, or owning the whole thing

A complete bioprocess has two halves: the organism (also known as the strain) and manufacturing infrastructure (the bioreactor, downstream processing, and other hardware). Picks and shovels companies focus on one of those halves, specializing in either organisms or improved infrastructure. They typically use licensing or Contract Development and Manufacturing Organization (CDMO) models and benefit from their focused approach. Full-stack companies own both the engineered strain and production capacity, selling the output of the biomanufacturing process directly to a target market. This full-stack approach captures more of the value chain and gives greater control over R&D, market entry, and timelines, but demands higher capital intensity.

Tipping the scales

Scale is a critical variable that can make or break the economics of a biomanufacturing business. Markets like fuels, plastics, and precursor molecules require large facilities, greater than one million liters, to achieve viable unit economics. Achieving scale is extremely challenging, however. New facilities are expensive and difficult to build. Bioprocess conditions, such as aeration, nutrient exchange, shear forces, and heat transfer, often change non-linearly with increased scale. Operating conditions must therefore be re-optimized with each new scale of production. The time and expense of scale-up makes it extraordinarily difficult to bring new processes for high-volume production to market. The better option for innovators is to target products that are economic at smaller scales, and thereby reduce both infrastructure costs and time-to-market.

Planetary health’s bubbly bet

These learnings, and others, bring us to our 2025 investment in EvodiaBio. The Danish company uses engineered yeast to produce high-value terpenes, the flavor and fragrance molecules behind beer, citrus, and pine. Evodia is full stack, owning both the biology and the production, and is economically viable at a small scale.

In a full-circle return to biomanufacturing’s brewing roots, EvodiaBio’s first commercial product is a replacement for the hops used in beer. Leveraging biology’s strength in stereochemistry, they produce clean-label terpene formulations with strong performance and competitive unit economics, while avoiding the seasonality and water-intensity of hops and sidestepping the difficulty of chemical synthesis. EvodiaBio developed novel strains of yeast to get an advantage in terpene production and then wisely chose a high-value product for their market entry in order to be able to produce economically at a very small scale.

Companies like EvodiaBio aren’t expanding biology’s capabilities, which have always been broad. They’re leveraging the maturity of nature’s toolkit and applying it creatively and lucratively. The next biomanufacturers to expand this list will prioritize performance and versatility, choose end markets where biology is both the ideal manufacturing platform and cheaper than the incumbent, and stay capital-efficient along the way. EvodiaBio checks these boxes, and we’d love to hear if your idea does too.