Ryan Grant Little: 0:42

Welcome to Another Climate Tech Podcast interviews with the people trying to save us from ourselves. Imagine if you could eat food with protein that's both healthy and carbon negative. That dream is only a year or two away from coming true, thanks to Arkeon, a company that's been making waves in the food industry and has been a big draw to investors, myself included. I spoke with co-founder and CEO Gregor Tegl at their US office in San Francisco. I'm Ryan Grant. Little thanks for listening, gregor. Welcome to the podcast. Hey, thanks for having me. So let me see if I've got this right. Archeon produces the building blocks of protein from just CO2 and an ancient microbe that's found at the bottom of the sea or volcanoes or some relatively hard to reach places, so this isn't the kind of business that someone starts in a garage or a dorm room with a laptop. Give me the background on it.

Gregor Tegl: 1:43

Yeah, you're totally right, Ryan. We are using microbes that are found in the ocean water, in underwater volcanoes, and that are capable of producing a minor, as it's the building blocks of proteins. These all came together. I assume you could also do it in a garage if you want to and if you're brave, but it definitely was different in our case.

Gregor Tegl: 2:04

It actually was over 10 years of research, especially by my co-founder, simon, that discovered this microbe that is capable of producing all these amino acids, right from CO2 and hydrogen.

Gregor Tegl: 2:16

And it all started with Simon initially studying this microbe and the physiology, really understanding what this microbe is doing, and I think it was just five years into this research on this specific microbe that he discovered the production of all the amino acids we need in our nutrition. And Simon was really looking forward and was not only fascinated by the physiology and this metabolic feature, but he was also very interested in the biotechnological exploitation of this feature. So he started understanding can this microbe be cultured and cultivated in a bioreactor? Because that's usually, if you find a new microbe, that's the biggest issue. It does cool things, but it often cannot be cultivated to an economically feasible state, and that's how it started. We came together in collaboration. So three co-founders of Archeon Simon Günther, myself and further developed a disadheardous concept, brought it to maturity, and when we knew that we can cultivate it, when we knew it was economically feasible, which was around in a one-liter bioreactor setting, we kicked off Archeon in the end.

Ryan Grant Little: 3:24

So let's just walk through it, you have this ancient microbe that basically eats CO2 and then, from that, creates as like a. It's like bees. I don't know what's the analogy for those of us who don't have a PhD or a postdoc. It's like bees, but they're these micros are bees, and they're taking CO2 instead of like pollen and instead of honey. They're creating amino acids that are the building blocks of proteins for food, for use in all kinds of applications, but most importantly, I think, for food.

Gregor Tegl: 3:59

Yeah, I couldn't pitch our technology better than you just did. That's exactly it. These microbes produce these amino acids. They naturally excrete them, get them out of the cell. So we are not harvesting the cell itself. We don't have to crack it open in order to retrieve our amino acids. They're outside the cell, in the culture medium and ultimately that's where we can isolate them from, either as mixtures or as single amino acids. On the use cases, you're totally right.

Gregor Tegl: 4:29

What Arkeon is focusing on at that stage is to produce foods, create a minor acid for different use cases in food. That's a huge, established market. The amino acid, the global minor acid market is around 26 billion to date, being projected to dramatically, dramatically grow to around 50 billion between 2030. And around a third of the use cases and of this global amino acid market is in food. That goes from different application as functional ingredients, but also much more also as a part of a nutritional ingredient.

Gregor Tegl: 5:01

So we are talking a lot about plant proteins to replace animal proteins, which is fantastic, but we're also aware of the downsides of plant proteins when it comes to taste profiles the beanie after taste of a soy or a pea protein, and that's something we want to really have solutions for with our amino acids amino acids, ultimately. So one example is a protein water that we developed that has around 15 grams of protein, just introducing the our amino acid mixtures, and it still tastes good. So with that we could create a protein water, to just give you one example of a use case, that is full of protein, of the proteins we need, of the compositions we need, but that is also clean label that doesn't rely on any additives that we need to introduce to offset or mask flavors, unwanted flavors. We can introduce nutritional functionalities, but also taste functionalities. So we have amino acids that are a mixture that tastes sweet and that replace, like incumbent sugars, cane sugars and so on in these applications.

Ryan Grant Little: 6:10

So many use cases to talk about you can kind of design others. I think 21 amino acids that can go into building these types of proteins for food, if I remember correctly from your pitch deck a couple of years ago. I should say also that I'm an investor in you guys because you're basically, as far as I can tell, creating carbon negative food. Right? Is it actually carbon negative?

Gregor Tegl: 6:33

Yes. So if you look at the value chain of our key on, so scope one, scope two, we are your carbon negative. Nothing on this planet is carbon negative. If we consider this code three, what is the traffic to the case? So we are consuming substantial amounts of carbon dioxide. One large fire, it would be 40 000 tons of CO2 per year. If you scale that, if you think about large production scale and the economy of scale, this ends up in a tremendous use up of carbon dioxide. So on a scale one and two, yes, we are carbon negative.

Ryan Grant Little: 7:08

Okay so, and scope three being the supply chain. But indeed, if the actual work that you're doing to create protein is carbon negative, so not just carbon neutral, then I mean this is why isn't this on the front page of the newspaper right now?

Gregor Tegl: 7:24

A fantastic question. We are about to scale this technology right. We are a startup, we just commissioned a pilot facility and we are now in the next year's ramping up to a demo facility and by 26, which we call internally and I guess now also now externally the ramp up phase of our key and really we start building up the first commercial plants. This is when we actually get tangible. Why are we not in the use? We are not producing the powder that the public can use at the moment, so it comes as a like, as a powder form.

Ryan Grant Little: 7:54

basically that goes as a B2B ingredient. Can you talk about some of the numbers? What does this look like and what is scale up mean, both in terms of like Tonnages or, I don't know, veggie burgers or CO2 equivalent offset? Can you give some numbers alongside what that scale up looks like? Yeah, sure.

Gregor Tegl: 8:11

So maybe starting with one fully scaled by rector, because that's always a nice unit I mentioned before there are 40,000 tons of carbon dioxide.

Gregor Tegl: 8:20

With that we can offset and utilize. Per year in one of those fully scaled bioreactors, let us produce around 4000 tons of a minus. It's really talking about the current deals that we are achieving and of course, when we think about a large scale facility and a fully fledged commercial scale facility, that does not only include one by rector but most likely let's see for biorectin. So we know that One utilities we planted out can actually feed for biorectin, which would allow us to produce around 16000 tons Of a minus. It's pretty one facility offsetting also and the respective amount of carbon dioxide in that regard. So that would be close to 160,000 tons of minus of CO2 that we can offset In that regard and that's one facility that's already a good share of powder and minus. It's for the market but of course the minus that demand is much larger and we hope to further expanding the use to come after first fully fledged commercial scale facility.

Ryan Grant Little: 9:22

Where does? It's a lot of CO2 that you need, so you're not just put a sticking vacuum in the air where you getting this from.

Gregor Tegl: 9:28

Yeah, we are the offset industrial carbon dioxide and there are different opportunities with, of course, one of the most pure carbon dioxide streams by your channel to, if we think about, by ethanol plants, think about breweries. Those are all producing substantial amounts of carbon dioxide in a very pure grade and we are in collaboration with different large corporates where we explore their streams and the carbon dioxide of streams and also in regard, how much do they actually have to purify for us, because that's another thing you usually also in the steel industry, for gases are purified. You have to be purified. Carbon dioxide is isolated from it in a very high purity, which is good for the steel industry. But by ethanol plants, do they actually have to take all these substantial measures? Have a carbon dioxide that is 99.999% pure we know for our key and definitely doesn't have to be that case in order to still be count as food grade and be utilizable by our process.

Gregor Tegl: 10:30

So this is where we get this you to from. This is also the growth model of our key on the one partner very early on to it already now with carbon dioxide emitters. This is a incredible potential for companies like us. We are a carbon capture and utilization company. Right, we are the minus its producer. But how we do it? Is it in a ccu approach? So partnering with the carbon dioxide in the industry is the way to move forward, because this industry strongly incentivize to offset the carbon dioxide, especially with the credit systems and tax systems potentially that are currently piling up, and they are also interested in co-investing or investing in our production facilities. So we are currently working on models how we can work together in concerted fashion and building up production capacity and also have to support of this industry while helping this industry to offset the carbon dioxide.

Ryan Grant Little: 12:25

Arkeon is a Vienna based company. You're in San Francisco right now. You've been traveling across the US quite a bit. I wonder what the reception has been over there. State side I know you're in North Carolina not too long ago. You're west coast now. What are people saying there? People excited both kind of on the industry side, on the investment side. What's the reaction been?

Gregor Tegl: 12:45

Yeah, I mean very positive, and that's not only because of Arkeon and what we are building. It's generally something, generally a trend and a necessity we see on this planet. We have to deal with our carbon dioxide emissions, we have to deal with our GHG emissions, CO2 being a large portion of that, and what we're seeing is, of course, those in the US even more so, more aggressively so, compared to Europe strong incentives to tackle this issue better today and yesterday than tomorrow. And what we've seen, especially in the US, if you ask me, is that the IRA is having an incredible impact on the entire industry, on the entire ecosystem.

Gregor Tegl: 13:26

Inflation reduction act yeah, the inflation reduction act, the Biden-Harris administration, which is doing fantastic things. It's, on the one hand, it's incentivizing also offsetting carbon dioxide with carbon capture and storage technologies, sequestration technologies, but also with CCUs, something that we are still a bit lagging behind in Europe compared to the US. We also see strong subsidies for the green hydrogen industry and for the growing green hydrogen production industry in the US, which is, of course, the best case scenario for any gas fermentation company out there. It doesn't matter if it's Arkeon doing anaerobic gas fermentation, so only using hydrogen and CO2, or other gas fermentation companies, because clearly hydrogen is a major cost contributor to our production costs and we see huge measures there and see a huge drive there to let these technologies grow, flourish and to plug them into the existing ecosystem. So that's also a part why we have a satellite office here in the US, here in San Francisco. We want to be part of this drive and we want to be a part of this puzzle that needs to be built as soon as possible.

Ryan Grant Little: 14:37

What are some of the challenges that you're facing? I mean, your company is only two years old. You were recently named the best place to work, basically in Austria, which is a pretty amazing, pretty amazing accolade, and you've got obviously a very strong culture. But what are the day-to-day struggles that you have right now, building this company from zero to a point now where things are happening very fast, yeah, a lot of challenges and we like to embrace challenges.

Gregor Tegl: 15:07

So, honestly, this is also part of the culture and why I think we have such a good culture at Arkeon, because, if I can say it like that, we like to embrace the suck. It's also, I think, a healthy attitude for a startup. Challenges is all about scaling. It's about ramping up as fast as possible our production capacity, and it cannot be fast enough. Me myself and the entire executive team and the entire company we would rather like to see production capacity being operational yesterday than tomorrow. We are also operating at a very fast pace, but clearly it comes with natural limitations. We have to build up also an ecosystem, so we are ultimately in a minor as a producer.

Gregor Tegl: 15:48

We see a strong demand pool on the product side. There is a strong demand of sustainably sourced minor assets, but of course, to build that all up it takes time. Production capacity, building up a demo facility even this all takes time. We see all the delivery delays on the hardware side if it comes to bioreactors and utilities. So this is something that definitely is not playing in our favor and that's also a reason why the Pytal Trusilty was commissioned a half a year later than anticipated. That's definitely one of the biggest challenges to keep up without development speed, but also to have this facility being built. If I can name this one challenge, it might be that one definitely.

Ryan Grant Little: 16:33

You're talking to investors quite a lot. A lot of clean tech investors were formerly, in the 2010s, software investors and they're used to things happening faster. They're not used to a lot of capex-heavy things like bioreactors, which have lead times and scarcity as well. They're used to the only scarcity really being developers. I wonder to what extent you're seeing since you have a front row seat on this you're seeing attitudes change as investors start to understand that this climate, tech investment landscape, is different from software, and to what extent, maybe, what role you're playing in educating them as well in that, yeah, yeah, it's definitely different in our case.

Gregor Tegl: 17:14

So we cannot invest 10K and have the first product on the market, the first MVP. That is definitely very different. But we see a general understanding for that different modality and I mean it's definitely if you mentioned educating the space on that we are very frank and honest about the capital requirements we have. We are very honest about the scaling risks we have. We are also very aware of that. I think we also are our greatest scrutinizer in that way. We scrutinize our entire approach and how to move forward every day and try to find the most capital that way moving forward.

Gregor Tegl: 17:52

I think when we look back into the industry of food tech, there has been this bull market and there has been a lot of capital being invested into piling up production capacity, different precision fermentation companies, which is clearly something we don't find ourselves in anymore now and I think it's totally good like that Because we have to.

Gregor Tegl: 18:15

It's not bootstrapping, but we have to find capitalized ways of hitting the same milestones that others had substantial capital for back in the days still two, three, four years ago, and that is good and that also brings investors and companies and startups like Archeon better together, because we are talking now at the same level.

Gregor Tegl: 18:39

We have a very pragmatic view on how we develop this company, how we develop and scale this company and our demands and, with being frank, being honest and talking really on one level and having a shared understanding with investors is also something I'm seeing as tremendously beneficial at the moment in the space, because there is no excuse, the language, but there is no fluff anymore about we are. In two years we are producing 100,000 tons of amino acids, no problem and of course, this is all gone, this fluff is all gone, and that, honestly, is so much more constructive in also having conversations with investors, having conversations with corporates, because we know what we are building and we know about the importance as well. So, generally, a lot of honest talking about, to sum that up, about what our capital requirements are, and it just helps, honesty, just helps.

Ryan Grant Little: 19:39

My favorite part of that answer is that you said excuse the language and then said fluff, so I think I still don't have to mark it as explicit on Spotify.

Gregor Tegl: 19:50

Well, but it has been something, in my opinion, that has really. You know, when we started incubating Archean and I started understanding the entire area, the investment environment at the moment, I heard so many crazy fluffy stories about how we're going to change the world and this and that, and, of course and we all want to change the world, but it takes like effort, it takes us a capital, depending on what you're doing, and I think that has not been mentioned enough, and the correction that took place in the last year and last one and a half years was tremendously beneficial in that. So maybe in that regard, fluff is maybe a harsh word and not so hard. Yeah, I think the correction has been good.

Ryan Grant Little: 20:34

I think we overcorrected for a little while there and we're probably still in this period of overcorrection. It's always hard to see really good companies struggle to get their rounds in while, as you say, some of the fluffy companies got some pretty good valuations a few years ago. But I think this in general is a really important correction and it reminds me a lot. You know, as an internet entrepreneur in the late 90s, I remember in 2000 people just saying like okay, well, the internet's over. That was, you know, it's good experiment, looks cool, looks like it had some potential, but that's it. And then you know not exactly. I just want to ask you a couple of questions or one question about kind of yourself and your motivations. So if I kind of track your adult's life through education and your career, it's largely about it's largely a quest for new technologies that can revolutionize the utilization of the planet's resources. And I wonder if this is like you watched a lot of superhero movies, or where does this drive come from?

Gregor Tegl: 21:36

So that's good. So it doesn't come from watching superhero movies. It started I always had very good conversations, back when I'm thinking, with my parents on the dinner table about how we produce things on this planet, and I was educated in thinking about things and not just accepting them, and that's when I started. I must have been around 15, 16 when I felt like this is pretty 90s, how we're producing some of those things on this planet still. And that was back in the days when I was I don't know. It was 2005, 2006, 2007, 2008.

Gregor Tegl: 22:11

And I felt like there must be a smarter way which actually drew me into and put me into studying biotechnology. And all of a sudden I was exposed to all this knowledge about how we can utilize microbes to produce things that we currently chemically synthesize or how we can actually replace that. There was something I was very keen about replace chemical synthesis and chemicals with enzymes. So that's I got totally hooked on and that was my what my academic career was about in the end and what my PhD was about and what my postdoc was about. And beside I also started collaborating, of course, with one of my co now co founders didn't know that back in the days about sustainable fermentation technologies. So ultimately I thought like there is so many tools that we can utilize and still it's not realized in industry and in an economic setting.

Gregor Tegl: 23:03

And I was always drawn in finding technologies. But very early on I was really interested in the economic exploitation of those technologies, because there's so many cool ways of changing so, ways of using biology and utilize biology to produce things more sustainable on this planet, but they all have, or many of them have, some bottlenecks. That hits the economic reality. And yeah, and I kept going, that's what I did in my twenties, more or less like pursuing technologies, technologies, technologies, and ultimately one of them now being Arkeon, turned out to be really an economically viable approach and it was just a fascination for how biology can aid the production of essential goods and it's just my great passion that I developed very early on.

Ryan Grant Little: 23:49

I think I could pretty uncontroversially say that you're someone at the forefront of fighting climate change and I wonder what excites you? What are you optimistic about in the periods ahead?

Gregor Tegl: 24:02

The status quo. Look at what we're doing at the moment. In climate change, there are two things. The one thing is the conversations, the societal conversations that are now going on. I had this moment I still remember it must have been three years ago or two years ago with a friend. We went climbing up somewhere in the south of Vienna and we were discussing about climate change, as we do so often, and all of a sudden we said, hey, do you recognize that it's not only us now talking about climate change and accepting it and want to do something against it, it's also everyone out there, not only our bubble anymore. That was the first big excitement because I thought like, oh my God, so now it's not only me talking, now it's not only me and my bubble talking, it's everyone accepting that we have to take measures in order to mitigate climate change. That's the first cool thing that excited me back in the days and that still excites me. I'm still wondering sometimes to some people, some societies can ignore climate change. And the second thing that excites me a lot is the transition we find ourselves in at the moment. Of course there's the transition. That is why don't we talk about archery and CCUs carbon capture and sequestration utilization. That is still pretty much in the bubble.

Gregor Tegl: 25:19

I'm very happy when I read in the news the Austrian government is now also accepting carbon capture and sequestration as being a possible solution for the future and generally the energy transition we find ourselves in. I think we are. I'm not sure how, where we are and how good of a track we currently are. There's still so much to do, but we find ourselves in an exponential growth of EVs on the streets. We find ourselves in an energy transition. When we talk about solar PVs, that is much faster than we anticipated a few years ago, and that's what really excites me, because that will unlock so many other climate mitigation technologies. We have green energy at our disposal and in abundance, and that's what I just enjoy watching and I enjoy being part of the transition as well, so super exciting.

Ryan Grant Little: 26:11

That's a great place to leave the conversation. Gregor, where's the best place for people to find you online?

Gregor Tegl: 26:16

So LinkedIn is the best place to find me online. Arkeon. At arkeon. bio, everyone can reach out to us. There's a little sector where you can reach out. Leave us a message. If you want to be in contact with us, do it there. I have to be frank, it's a much more reliable source having been in contact with us, because my LinkedIn is sometimes a bit crowded. So at arkeon. bio or at LinkedIn, you find my name there.

Ryan Grant Little: 26:40

Especially with a fundraising round coming up. You're not going to be sleeping a lot or having a lot of time for casual conversations on LinkedIn.

Gregor Tegl: 26:49

Well, I love to have casual conversations, but they are definitely more sleep deprived than they used to be.

Ryan Grant Little: 26:56

Gregor, I'll let you get back to it. Thanks a lot for joining. Thanks so much for having me, thanks. Thanks for listening to Another Climate Tech Podcast. It would mean a lot if you would subscribe, rate and share this podcast. Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom. Find me, Ryan Grant Little, on LinkedIn. I'll be back with another episode next week. Bye for now.