16 Venture Capitalist Backing Microbiome Tech Startups
The Microbiome Tech Investment Landscape
This article serves as a follow-up to my initial piece on The Gut-Brain Connection
Venture Capitalists are coming for your gut biome
Venture capitalists renowned for their successful investments in SaaS, Fin-techs and Marketplaces are now redirecting their attention and capital towards a potential new frontier: companies specializing in probiotic pills, plant extract-filled capsules, and other nutritional supplements. With the gut biome increasingly linked to a wide range of chronic diseases, including depression, obesity, diabetes, and cancer, these investors are recognizing the vast untapped potential of microbiome technology.
In 2007, the Human Microbiome Project (HMP) embarked on a mission to unravel the complex role microbial flora plays in human health and disease. Over the course of a decade, through two distinct phases, the HMP meticulously collected, sequenced, and catalogued the genetic material of bacteria obtained from nearly 250 individuals in good health. These groundbreaking efforts showcased the undeniable impact of the microbiome on our well-being and propelled the subject into the forefront of scientific and entrepreneurial exploration. Since then, startups and investors alike have flocked to this exciting space, eager to seize the myriad opportunities it presents.
As mentioned in my article on innovations in the gut-brain connection, the market projections solidify the compelling nature of microbiome tech investment. The global market for the human microbiome is expected to reach a staggering $3 billion by 2029, reflecting a wealth of opportunities for those willing to venture into this rapidly expanding landscape. Additionally, the projected market value of probiotics, a key component of the microbiome industry, is set to soar to an astonishing $123 billion by 2030.
Venture Capital Investment
Venture capitalists globally allocated a substantial $436 million across 66 deals in 2021 to support the growth of probiotic companies and other supplement startups. This investment amount reflects a five-fold increase compared to their investments in the same sector five years ago.
The majority of funding rounds in the microbiome sector have predominantly taken place at the seed or early stage, with median deal sizes averaging a modest $4 million in the previous year. Additionally, the startups raising funds in this space typically have relatively low median post-money valuations.
Microbiome funding rounds have primarily concentrated in North America and Europe, with these regions leading the way in investment activity. However, there is a notable rise in the number of funding rounds occurring in the Asia Pacific region, indicating a growing interest and involvement in the microbiome sector.
When identifying investment in this space, there are three primary sectors:
Digital Solutions
Probiotics & Tailored Supplements
Home Testing & Personalized Nutrition
16 Venture Capitalist supporting Microbiome Tech Startups
Bold Capital Partners: Invested in Seed Health & Viome
Threshold Capital: Invested in Salvo Health
Sequoia Capital: invested in Pendulum
Indie Bio: Invested in Sun Genomics
Founders Fund: Invested in Seed Health
Koshla Ventures: Invested in Viome
Balderton Capital: Invested in ZOE
SOSV: Invested in Sun Genomics and others as AnimalBiome
Flight Fund: Invested in ZOE
Accel: Invested in Digbi Health
Voima Ventures: Invested in Alba Health
Accomplice: Invested in ZOE
7wire Ventures: Invested in Vivante Health
Felicis Ventures: Invested in Pendulum & Salvo Health
Artis Ventures: Invested in Seed Health
8VC: Invested in Seed Health
Corporate Investment
Johnson and Johnson Innovation – JJDC has emerged as a prominent corporate investor in the microbiome startup arena, actively participating in 11 deals within this field over the past decade. Notably, in the previous year, the venture arm demonstrated its commitment by backing Locus Biosciences' series B funding round, which successfully raised $35 million. Locus Biosciences specializes in the development of precision medicines targeting bacterial infections and microbiome-related diseases, aiming to combat the rising threat of antimicrobial resistance.
With the numerous benefits of probiotics for digestion, including improved immunity, gut health maintenance, weight management, and the prevention of obesity, the industry is poised for significant growth in the coming years. The increasing awareness of these health advantages is expected to drive demand, particularly as consumers embrace plant-based diets due to the rising trend of veganism. In response to these market dynamics, many industry players are introducing plant-based probiotics to expand their consumer base.
From a business perspective, probiotics and other supplements possess two key advantages that commonly attract venture capitalists:
Firstly, they offer a dependable source of recurring revenue, as people incorporate daily supplement consumption into their routines or food manufacturers utilize them as additives for insulin control, improved digestion, or weight loss purposes.
Secondly, the supplement industry enjoys a regulatory environment that is less stringent compared to pharmaceuticals. While supplement ingredients must meet safety standards and manufacturers are prohibited from making unsubstantiated claims of superior effectiveness, supplements do not undergo the same rigorous approval process as pharmaceutical drugs.
Trust Your Gut
+ endurance is good,
Martin
P.S. I used some of the following sources to obtain the data for this article:
(1) Globalventuring.com (2) Human Microbiome Project (3) Pitchbook (4) Crunchbase
Very interesting topic.