Arkeon’s Struggles: A Cautionary Tale in Gas Fermentation

Founded in Vienna in 2021, Arkeon aimed to revolutionize the protein production landscape by utilizing gas fermentation. Their innovative approach sought to decouple protein sourcing from agricultural land by feeding microbes with gases instead of sugars. However, just four years later, the startup has filed for insolvency, raising the question: what happened?

Funding Challenges and Market Risks

A source familiar with Arkeon’s technology suggested that a particularly challenging funding environment contributed significantly to their downfall. There were “uncertainties surrounding the consistent and affordable supply of necessary input gases and an underdeveloped strategy for effectively entering the product market.”

Industry experts pointed to the myriad risks presented by Arkeon as detrimental to its appeal to investors. Laura Turner, a former principal at Agronomics, noted that the company may have been overly ambitious. “Attempting to integrate multiple high-risk elements at once created a complex narrative that was difficult to communicate effectively to investors, customers, and partners, especially in today’s funding climate,” she explained.

Execution Over Novelty

Turner emphasized that success in synthetic biology leans heavily on execution rather than just scientific novelty. “There is no sustainability premium; you must lead with a killer product. The companies that succeed are those that anchor their platform around a unique product with real market demand and build the bioprocess around it.”

Insights from Cofounder Dr. Gregor Tegl

In a discussion with AgFunderNews (AFN), Arkeon cofounder Dr. Gregor Tegl reflected on the chain of events leading to their insolvency.

Challenges in Fundraising

AFN: Can you explain what led to the decision to file for insolvency?

GT: We began fundraising successfully in 2024, with an initial closing scheduled. However, we unexpectedly lost an investor overnight, which created concern across the syndicate. When one investor drops out, others become anxious, questioning their confidence in the project, which ultimately destabilized our fundraising efforts.

Product Development Evolution

AFN: What products were you focusing on, and did that change?

GT: Initially, we focused on using wild type microbes to produce amino acid mixtures as alternatives to whole plant proteins. However, we pivoted to creating single amino acids with genetically modified microbes due to significant batch-to-batch variability. This shift was a strategic move that didn’t fully align with established agreements, causing additional setbacks.

Progress and Challenges

AFN: How much progress had you made?

GT: We had a fully operational pilot plant and were seeking funding for a demo-scale facility to validate our technology at a larger scale.

Securing Resources

AFN: How challenging was it to secure clean, affordable hydrogen sources?

GT: Initially, we aimed to use green hydrogen produced via electrolysis, but as sustainability concerns took a back seat, we began considering grey hydrogen, which, while more available, raised further questions about sustainability.

Future of Gas Fermentation

AFN: Do you believe gas fermentation for protein production is viable?

GT: Yes, gas fermentation decouples protein production from agriculture, allowing access to abundant feedstocks. It has significant advantages, such as lower contamination risks, due to the unique conditions created in the fermentation process.

Market Viability

AFN: Can you compete on price with existing amino acid production processes at scale?

GT: According to our techno-economic analysis, we could have matched existing prices.

Investor Hesitance

AFN: Why were investors skeptical despite these advantages?

GT: Over the last decade, the industry became enamored with new technologies but often overlooked the customer perspective. Our situation involved minor internal issues and a significant pivot from mixed to single amino acids, coupled with long lead times, which made potential investors hesitant.

Conclusion

Arkeon’s experience illustrates the volatile nature of emerging technologies in the biotechnology sector. As the journey of gas fermentation evolves, the lessons learned from Arkeon’s challenges serve as critical references for future startups navigating similar waters.

Further Reading

• Gas fermentation: the future of sustainable protein, or hot air? In conversation with Aerbio
• Unibio CEO: ‘We have the most efficient reactor design for gas fermentation’
• Gas fermentation startup Solar Foods bags $10.6m grant to enter pre-engineering phase of commercial-scale plant
• Can gas fermentation deliver on its green promise for food and feed? In conversation with Calysta