This $1 billion start-up backed by Bill Gates prints new DNA — and everyone from the DOD to Bayer is on board

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Why this Bill Gates-backed billion dollar start-up is using lab-made yeast...

Forget your smartphone, the coolest piece of technology in your home might be a houseplant.

That's according to Reshma Shetty, the COO and co-founder of Ginkgo Bioworks, a Boston-based biotech startup that bills itself as "the organism company." Founded in 2009 by a group of MIT scientists, and recently named to the 2018 CNBC Disruptor 50 List, Ginkgo uses genetic engineering to design and print new DNA for a variety of organisms — from plants to bacteria — that can then be used for anything from killing antibiotic-resistant germs to producing artificial sweetener and cheaper perfume.

"Plants can self repair, they can self replicate, and they're totally renewable," Shetty tells CNBC Make It. "What we're excited about at Ginkgo, is being able to design biology — design microbes, design plants — to be able to do what we want."

Ginkgo Bioworks

Ginkgo's ability to essentially reprogram the DNA of plants and other organisms — a process that Shetty, who has a Ph.D. in biological engineering, tells CNBC Make It is comparable to "writing a book or programming a piece of software" — is what makes the company so valuable, both in its work and as a business. Large companies pay Ginkgo to develop genetically-modified organisms that make all manner of products cheaper and easier to produce.

For instance, in 2017, pharmaceutical company Bayer joined Ginkgo for a $100 million partnership aimed at synthesizing microbes that would allow staple crops like corn, wheat and rice to produce their own fertilizer. By doing that, Bayer and Ginkgo have the potential to disrupt the $250 billion global fertilizer market by replacing chemical fertilizers with a cheaper, more environmentally-friendly solution. (The production of nitrogen fertilizers normally used on such crops accounts for roughly 3 percent of global greenhouse gas emissions, Ginkgo says.)

Of course, this puts Ginkgo's work in the middle of the ongoing debate over genetically-modified foods, or GMO foods, which have the potential to make food cheaper for consumers while feeding more people, but which detractors argue can have negative effects on the environment and on consumers' health.

"We want to be able to grow food at the same crop yields we get today but without using the polluting chemical fertilizers that we use today," Shetty says of the goals of Ginkgo's partnership with Bayer.

Ginkgo also genetically-engineers yeast to make rose-scented oil that smells like the real thing but costs perfume companies (like France's Robertet, a Ginkgo partner) less than using actual roses and produces more consistent scents. It's the first new rose oil on the market in 150 years, according to Fortune.

With yeast Ginkgo also makes artificial sweeteners for food, which are cheaper and easier to make than those derived from sources like Stevia leaves. And Ginkgo works with the US Department of Defense to custom-design bacteria for probiotics that can treat antibiotic-resistant germs.

Thanks to its ground-breaking synthetic biology projects, the company is reportedly valued at more than $1 billion after raising over $429 million in total funding from its investors, who include Cascade Investment, the investment firm owned by Microsoft co-founder Bill Gates.

But it took Ginkgo nearly a decade to get to that point.

Shetty and three of her co-founders — CEO Jason Kelly, Barry Canton, and Austin Che — each obtained a Ph.D. from MIT in 2008 and were working with professor Tom Knight (also a co-founder) on synthetic biology research projects when the group decided the best way to keep their work going beyond their Ph.D. research was to launch their own company.

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"We wanted to see how far we could take it," Shetty tells CNBC Make It. "So, we decided that a start-up was the best venue for being able to pursue our mission [and] our passion, which is to design biology."

The group formed Ginkgo in 2009 and spent the next several years surviving off of government research grants as they fine-tuned their process of genetically engineering microbes, including building automated tools that the company uses to collect genetic information from organisms, transform cells and rewrite DNA.

This was in the early days of the financial crisis and Ginkgo had no luck attracting outside investors. Money was sometimes tight, and so the co-founders improvised. For pennies on the dollar, Ginkgo bought the incredibly expensive equipment it needed from other biotech firms that had gone out of business due to the economic downturn.

"We put together our first lab for about $150,000, which is roughly 10 to 100 [times] cheaper than what most to biology labs get built for," Shetty tells CNBC Make It.

Ginkgo's star began to rise in 2014, when the startup became the first-ever biotech company to get the backing of tech start-up accelerator Y Combinator (which counts the likes of Airbnb and Reddit among its past participants). "Synthetic biology is one of the fastest-growing areas of tech right now, and Ginkgo is leading the category," Y Combinator president Sam Altman told TechCrunch in 2015.

In March 2015, Ginkgo raised $9 million from investors as part of the company's first significant fundraising round before picking up another $45 million (from a group led by Viking Global Investors) just a few months later.

"That was incredibly exciting to us, because it meant that real people, real investors on Wall Street were valuing our technology and what it could do for the world," Shetty says of Ginkgo's first major financing.

That money, and the other major investments that followed, paved the way for Ginkgo's rapid growth. The company has expanded from about 20 employees to roughly 200 over the past three years, Shetty says, with the early investments representing "the fuel you need to be able to build and launch a rocket ship."

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