 I didn't know that one out of every two fish was farmed instead of caught. Aqualiger has been is just repeating the patterns of the wild which is feeding small fish to big fish. You know they go out and catch 20 million tons a year of herring and anchovy and menhaden these little bony oily fish. They grind them up and press them out into a fat ingredient called fish oil and a protein ingredient called fish meal and those are commodities that are internationally traded and those are the key ingredients to make aqualizer feeds that's how you get these special proteins and oils that these marine creatures require to be healthy. Fish meal has the price band of fish meal has more than doubled and it's gone up between five and six x since 1995. We like dirty CO2 because that's cheap or people might pay us to take it and our bacteria you could say eat or remediate a lot of the things that the EPA is actually concerned about these bacteria that can take the CO2 and use the hydrogen and grow. The proteins in those bacteria are intentionally very similar to the proteins of the small fish that the big fish eat in the wild puts off about 1.2 million tons a year of CO2. We could make 600,000 tons a year of our novo meal from that. Boom! What's up everyone? Welcome to Simulation. We are still at IndieBio demo day. We are talking to David Say now from Novo Nutrients. What's up? Hey, thanks for coming on the show. Great to see you again. Yes, absolutely. And also congratulations on finishing up the pitch and getting the company rolling. So let's talk about this. So and as we talk about making neutral food from CO2, as we talk about that I want to also give us the quick bit on that and then we'll get into the detail but I also want to know about who you are and how you even got to this point. So give us the quick bit and start with the how you got to the point where you're at. Okay, so I graduated college at the dawn of the commercial internet and I developed a taste for entrepreneurship in that context. And then in the early 2000s I realized that I didn't want to keep making e-commerce sites for baseball cap collectors and that kind of thing. I wanted to do something that was more important for fundamental human needs. And so not long after that I discovered aquaculture which is to say I really had no idea where seafood was coming from before that. I didn't know that one out of every two fish was farmed instead of caught even at that time. That's the stat line. And now it's more now it's a majority of seafood is farmed. And but there was this incredible pioneering work being done by people in the open ocean like using the other 98 percent of the earth's water surface that we don't do much with to grow food. Like Jacques Cousteau said we must farm the oceans as we farm the land and he was like way ahead of his time but that's starting to happen now and it's an incredible resource. So I got actually got fired up by reading an article in Wired Magazine and then I found that one of my one of my college classmates a friend of a friend had independently developed an identical interest and he was a very successful serial entrepreneur. And so essentially he had the money I had the time and we started a group called Aquacopia together originally as the aquaculture Investigator of his family office and later as an independent fund manager company with a venture fund. And so how did you go from Aquatopia to Novel Nutrients? It's Aquacopia like corn. So basically it was always clear to me that one of the biggest opportunities in aquaculture was what you feed the fish because everything else is very specific a salmon farm is very different from a tilapia farm which is quite different from an oyster farm or a seaweed farm. The one thing that like not all but many of those things have in common and almost all aquaculture has in common is you got to feed the thing so you can eat it. And everything in the ocean has evolved for hundreds of millions of years to eat other things in the ocean. Yeah right but on land for the last 20,000 years we've gotten good at producing a few things oil seeds and grains mostly and there's not much of an overlap between those right fish and shrimp in the ocean they want to eat other fish and other shrimp that's not what we can grow in our fields and so there's this fundamental technology opportunity actually a biotech opportunity to serve that. So you have to grow ocean food to feed ocean food that we want to eat. Absolutely yeah or has it at least simulated be nutritionally equivalent to it. Yeah yeah okay so now yeah so keep continuing. So really you know what aquaculture has been is just repeating the patterns of the wild which is feeding small fish to big fish and so you know they go out and catch 20 million tons a year of herring and anchovy and menhaden these little bony oily fish they grind them up and press them out into a fat ingredient called fish oil and a protein ingredient called fish meal and those are commodities that are internationally traded and those are the ingredients to make aquaculture feeds that's how you get these special proteins and oils that these marine creatures require to be healthy but those are commodities that have been under tremendous pressure and the prices keep going up and up so like even in the time that I've been in the business since 2004 fish meal has the price band of fish meal has more than doubled and it's gone up between five and six x since 1995. Whoa and that's the wrong way we want it to drop. Yeah I think so if we want to preserve our oceans and not over fish them and if we if we want good food to be relatively inexpensive if you're going to eat an animal you need to control the cost of what you're feeding that animal and you want to do it with something that is also doesn't have contaminants because you know that mercury and things like that will end up in people so there are a lot of reasons to try to make use of inexpensive resources to generate feed and I met this company Novo Nutrients before it was Novo Nutrients when they were more of a little more of a science project and realized that they were taking untreated industrial emissions of CO2 basically pollution and turning it into nutrition and that blew my mind. Yeah and what how does that work what is the CO2 that is being transitioned to nutrients? So it's a lot like the way that that those plants in the field work right if you're if you're a stock of wheat uh it's using photosynthesis to take CO2 from the air and solar energy and then you know that's what grows the cells in the plant forms the wheat that eventually you know is in bread um there's some water and soil right nutrient as well exactly and so we need exactly the same things we we also use water uh we also but not nearly as much a tiny tiny tiny fraction of the water that you would use to grow a plant on land and we need a little we need a little bit of nitrogen and phosphorus and sulfur like the elements that you want but the biggest thing that we need is CO2 and then secondarily we need hydrogen so in our case it's the same kind of CO2 capture that plants do we're just doing in an industrial setting where the CO2 is being made anyway by a cement plant or by the you know milling paper um making steel these are all things that produce a tremendous amount of CO2 that has nowhere to go besides the sky and so we give it a second life in a very valuable way. So the CO2 that is a byproduct of steel and these massive industrial processes can then have a novo nutrients yeah section of the of the yeah basically you just got it you get the CO2 to us and we feed it to our bacteria okay and now let's okay cool so let's talk about this so the CO2 comes to you what does novo nutrients have that you said feed it to the bacteria yeah okay and then they keep telling us about that okay so this is actually the core of our intellectual property and the heart of our technology whatever you can tell us yeah which is to say it's a framework for designing consortia consortia consortia means different kinds of microbes that work together where the hole is greater than the sum of the parts and so in our consortia the core primary producers are these bacteria that can take the CO2 and use the hydrogen and grow but then there's another layer around them of secondary producers other species other strains that can't survive directly on CO2 and hydrogen but the waste products of the prime producers give them what they need to thrive and so in this way like consortia in nature which are you almost never find a microbiome itself because in the same way that nature absorbs a vacuum evolution is going to use all the resources that are available in an area and basically you know organisms are going to evolve and move in until almost all the resources are used and at the microbial level it's it becomes these consortia and so that's our our patent application or one of them at least is around a very particular subset of all the possible consortia that is specifically designed to to be able to produce nutrition very efficiently quickly and inexpensively from industrial CO2 so what exactly happens the bacteria is a bacteria that takes the CO2 and uses that to do what that enables it to grow and exactly so these are microbes that grow by cell division yes so it's exponential growth and we're just giving them the food that they need to split to make more bacteria and then that those microbes are the food that the aquaculture wants yeah I mean it's fish meal exactly that the proteins in those bacteria are intentionally very similar to the proteins of the small fish that the big fish eat in the wild so the a profile of a protein is like what amino acids are in it which of the building blocks of protein are in it and to what degrees and so our inventor and founder Brian Sefton designed this consortia specifically to try to get an amino acid profile that's like an anchovy which is sort of the gold standard for marine proteins and so we've gotten it's very interesting to see the graphs next to each other we've gotten quite quite close but what's even more interesting is if you take away the fish meal amino acid graph and put in the nutritional needs of a specific animal like a salmon or a shrimp because that's really what you want to you don't want to necessarily substitute for what they eat you want to substitute for what they should be eating what would be the perfect protein for them and there's this concept of an ideal protein which is actually that and we're doing some work to try to achieve ideal proteins but that would be next generation for us that's not what we have today yeah yeah interesting so then there's this you kind of you put it as a golden standard yeah maritime marine protein it's called the the the good stuff is called super prime fish meal super prime fish meal yeah interesting so then the same composition of amino acids that make up the proteins and fish meal you have bacteria that is yeah we're we're close oh close better and some worse than others but we're working on this is really a first draft for us what we have today and we have many ways to improve as we go to mark two mark three and so forth and then david how receptive are the fish in the aquaculture to eating the fish meal so we uh we just did a test actually um so the usda and the us fish and wildlife service have a joint lab in bozeman montana where this is pretty much all they do um yeah our tax dollars at work but in this case you know to create better and cheaper seafood is really is mainly what they're thinking about and so uh they set aside 200 trout half of them got the control diet which had the super prime fish meal in it and half of them got a diet which was gosh i think it was about 40 percent nova meal which is much higher than you would actually use in a real situation but they wanted to see is it safe that's the first thing yeah and yeah the safety levels were like almost identical but then it it also you could also measure growth and what we saw was especially as time went on and the fish were bigger and therefore um you know it would be more expensive to feed them because they eat more when they're bigger our growth rates were better than than the control and so that's like very promising for us yeah so yeah growth rates is huge and then also i'm curious if the the cost to feed becomes much less as well yeah so um you're not going and taking a crap loads of fish from the ocean to feed other fish exactly so if you look at the publicly traded companies that do that right they're companies that especially have fishing fleets they go catch the fish they process into these ingredients they sell the ingredients the publicly traded ones um seem to have around a seven percent average profitability right um our gross margins should be 60 percent at scale yeah now that's not all going to that's not going to translate to all the corporate profitability but there's a huge difference there huge difference and so sustainability that's all it takes you to instead of take wildlife yeah yeah and so that means that our production cost is just much lower yeah and that's the simplest way to say it now now can you use just any co2 does it have to be like a somewhat clean source of co2 you know we like dirty co2 because that's cheap or people might pay us to take it and our bacteria actually eat a lot of the things or you could say eat or remediate a lot of the things that the EPA is actually concerned about in emissions are we not then eating the co2 the dirty co2 because then if the bacteria it's the co2 fish eat the bacteria then we eat the fish so then so digestion is all about breaking things down yeah and when the bacteria take in these compounds their chemoautotrophs they get food from chemicals so they're actually their chemical reactions going in the bacteria that taking apart the molecules that would be problematic for people so when they take apart the problematic molecule then that what what occurs so that it's not there then at all well it's it's like the same elements can either be something very benign like a healthy protein or it could be a poison right so a good example this actually our bacteria can take apart cyanide so we would remediate cyanide if it was in a in a in a flu stack that the one thing that we can't you can't take apart right our elements so we have to avoid elemental contaminants like mercury like arsenic or radioisotopes which is also is that also why you can't like take mercury out of this whole fishing seafood dilemma is because it's something that limits our ability to take that element out yeah i mean the mercury gets in through the water and up through the food chain from like the very smallest creatures plank the phytoplank and so once you get a tuna how are you going to get the mercury out are you going to like go sell buy like sell by sell sure even even then i don't think we have the nanotechnology for that so the best thing is prevent the mercury from going in in the first place and for us that means if the smoke stack has a lot of mercury coming out of it we don't use that smoke stack and there are billions of tons a year of co2 from different kinds of sources and so it's easy to avoid or relatively easy to gravitate to the ones that are producing the right kind of dirty co2 yeah for us yeah and then it's so interesting about how the bacteria breaks the molecule to the point where we're not actually there's a chemical process that goes on that makes it so that we don't eat that and i'm speaking generically but yes and this is what we try and do on the show we try and get down to the i can't guarantee that every possible you know problematic molecule could be broken down but we've looked at we've looked at the main ones that are actually present in fluid gases and we're confident that we can find sources in cement plants steel mills oil and gas facilities pulp and paper mills and bioethanol manufacturing among other those are just the top five just does a strange question i guess as you scale over time the amount of fossil fuels that we use decreases over time so where do you get your dirty co2 from them well so there are a lot of industrial processes that are not related to fossil fuels that just have to create co2 so oh interesting like so cement for example that just the the chemical process for the formation of cement produces a ton of co2 for every ton of cement approximately right and so you know down the street here if you go to cupratino there's lehigh cement which is part of the heidelberg group which one of the largest uh if not the largest cement group in the world and that particular facility um puts off about 1.2 million tons a year of co2 and we could make 600 000 tons a year of our nova meal from that whoa and that's a lot the state of california limits these guys to releasing the amount of co2 that they did in the late 70s or early 80s and so if their co2 wasn't being emitted that's right they could make more cement which is what they're in the business of doing so there's a lot of value here yeah not just in this incredible protein but in also just make you know reusing the co2 and preventing it from going directly into the atmosphere now are you positioned right next to the cement factory or are you positioned at a centralized location where the cement factories from around the world ship their co2 to you well so the there are cement factories that are significantly bigger than the one in cupratino there are ones that are four million tons a year or more right and at four million tons that creates two million tons a year of product yeah which will be valued at around three billion dollars uh which means it's it has the same value as the annual production of soybeans from nebraska which is like 330 million bushels um that's a lot of protein and so it it we don't we won't need multiple sources coming to one point we can we can take the production to the inputs and the inputs are co2 and hydrogen so that's the other part is the hydrogen the hydrogen okay okay and then now just give us the kind of the the you know the fish and meal that you make the super fish fish meal that you make that that then is fed to aquaculture systems around the world through what would be this right yeah would it so so there are multi billion dollar companies all they do is they make feed and some of them make feed for pigs and chickens and fish some just make feed for shrimp some just make feed for salmon and so these feed milling companies will be our customers feed milling companies feed mills okay cool yeah so then you sell to them and they go and distribute it to salmon or shrimp or whatever exactly because well they're in the business of buying a wide variety of ingredients mixing them in different recipes and creating these feeds which are a lot like they look a lot like and are a lot like a dry cat or dog food and then that's their product that they sell the farms or they sell to distributors okay great um is there something else about nova nutrients that we should know on the way out yeah um everything I've just described is natural and will be regulated as such but half of our team is our synthetic biologists and they're thinking about what kind of engineering can we do to create even higher value better performing products and so a lot of the things that today are considered that get put into feed like vitamins enzymes carotenoids which are really good antioxidants right omega threes are things that we can have our bacteria manufacture internally and then they won't have to be added to feed because we'll be delivering these this value added protein meal that's enhanced with all these valuable biochemicals and then our customers and females won't have to buy those things separately they'll get a nice bundle um and and that opens up all kinds of possibilities and the reason why we can do that is because we have a generalized bio manufacturing platform that we have chosen to use first in animal nutrition and aquaculture because it's that's just such a great initial market um but it represents a fraction of what we can do man this and are you are you how where do you sit on like the long term push for with companies like finless that are working on growing the actual fish in the big bioreactors we see them as potential customers for us because we create nutrients from non-nutrients and companies like finless and new age meats and Memphis meats take nutrients and turn them into food so in a sense they're actually very much like a fish farm so they would take directly from you we think we can produce products for them yeah yeah right because they want proteins and fats that their tuna cells can take up and grow and replicate these tuna cells are not interested are not capable of taking the small molecules and reproducing the way that our bacteria can and so yeah we we really want these new food tech companies to succeed because that's a market where we can get in on the ground floor and provide a higher quality protein to them and and other things that they need at a lower cost and and this is also true for for the plant based meat companies right so uh with your ripple or beyond meat or impossible um you're out there buying a lot of specialized proteins from made from peas or lentils but really what you're interested in is a high quality protein that doesn't cost more than it has to and so yeah we really want to be a foundation of the food system whether people are doing cellular agriculture plant-based meats or doing it sort of the old-fashioned way by raising pigs or chickens or uh Mediterranean sea bass I would have never stumbled upon that this notion that you can have bacteria consume microbes consuming CO2 that then can feed evolution's amazing man and and yeah we didn't have to build it right it was out there for us we just had to put it in the right framework yeah put in the right framework yeah and again it's it's it's it's the it's the design of the of the selection of the specific amino acids that make those proteins that then can be fed to the our core intellectual property is a framework for designing consortium microbes yeah consortium not just bacteria but our patent application also specifies specific types of yeast micro algae yeah other fungi yeah that can all work together and we're just enabling the growth not only of our workhorse bacteria that can work that can live on the CO2 and hydrogen directly but dozens of other species that have their own special properties that can now indirectly live on CO2 and hydrogen that's the magic the the consortia of microbes can use the CO2 as the fuel for them and do they then make the specific proteins that you want to feed the fish yeah we don't have like precise protein by protein control right yeah but you can change the it's like an orchestra so you can we want this many violins we want this many trumpets we want this many french horns and that's the that gets the sound right you can't get it exactly like you're not going to get the sound waves exactly what you want but you can get very close and sort of you know close enough for government work this has been so interesting again like you said evolution so fascinating you just got to put the right parts of the piece to get pieces together and boom you can do almost anything like this this is nuts as humans we've now evolved to the point where we can use other evolution and guide it and so yeah directed evolution hopefully with lots of stewardship and love for planet earth and absolutely like taking CO2 from these cement plants and putting it into fish feed this is so so interesting Dave thank you so much for talking to us really on our show it's been super fun thanks everyone for tuning in much appreciated