[India] The founders of Sea6 Energy know in their bones that the company owes its existence to a series of coincidences early in its history. The first of these was in 2009, when founders Sailaja Nori, Nelson Vadasseri, Sayash Kumar and Sowmya Balendiran were students at IIT-Madras.
They were trying to raise funds for an international competition, and one of their professors had told them to meet Shrikumar Suryanarayan, former R&D head of Biocon and then a visiting professor at IIT-Madras. When the students walked into his room, their best hope was to raise Rs 1 lakh for buying chemicals. They walked out three minutes later with a cheque for Rs 5 lakh.
Sea6 is now based at the Centre for Cellular and Molecular Platforms (C-Camp), the Bengaluru-based incubator built by the Department of Biotechnology (DBT). Two and a half years after it raised Rs 35 crore from Tata Capital, Sea6 claims to have broken even and its founders are confident of becoming profitable next year. Very few biotech companies in the country have been able to reach profitability so quickly. In fact, one has to search hard to find even a few successful Indian biotech products startups in the last decade.
“Sea6 has gone through a startup lifecycle that many entrepreneurs have not been able to,” says Ramaswamy Subramaniam, the first CEO of C-Camp and now a professor at the Institute of Stem Cell Biology and Regenerative Medicine (InStem).
In 2009, when the students wanted to apply for iGEM — a worldwide synthetic biology competition — starting up was the last thing on their minds. They had planned a regular academic career for themselves, with a PhD abroad the next step after IIT. The iGEM competition was being held at the Massachusetts Institute of Technology (MIT) in the US, and is the most challenging student competition in synthetic biology.
For the competition, the students had to build genetically engineered systems that could solve real-world problems. For third-year biotechnology students at IIT Madras, it was a serious challenge. “Now everybody is doing it,” says Mukund Thattai, professor at the National Centre for Biological Sciences (NCBS). “At that time the students needed to be motivated.” Thattai has been helping students for the competition since 2006.
The IIT-Madras team was denied a visa to go to MIT, but they won a prize after making a presentation through video conferencing. Suryanarayan then took them to dinner at the Marriott in Chennai and kept listening to their conversation. “I realised that my job was done if I could hand-hold even one or two of them,” says Suryanarayan. At that time, biotech start-ups were yet to form in IIT-Madras. They entered another competition conducted by the Association of Biotechnology Led Enterprises (ABLE) and won the third prize. The three split the prize money of Rs 2 lakh. Nori and Balendiran used their share of Rs 40,000 to apply to US universities.
“It is not a valuations-driven company. Sea6 Energy understands the technology but it is one company that is not in love with it. They have developed other aspects of the business” Taslimarif Syed, CEO, C-Camp
In the ABLE competition, the students had designed a system for making biofuels with microalgae, tiny algae that grow in fresh water or the oceans. It was a problem that interested Suryanarayan, who organised the funds to send three of them to a microalgae conference in San Diego. Making fuel from microalgae was the rage at that time in the renewable energy startup world. The students spotted a problem with the idea quickly. “No one in the conference was talking about the economics of microalgae,” says Nori.
“The core of successful companies is the ability to use the market. The economic conditions of energy changed, but it did not daunt Sea6” Bala Manian, serial entrepreneur in Silicon Valley.
They decided to do the calculations themselves. The conference was in January. By March they had the verdict: biofuels from microalgae will never work due to high costs. “They were engineers and so could do the calculations easily,” says Suryanarayan. “At that time they were two years ahead of their counterparts elsewhere.” They discarded the microalgae idea and started thinking about their PhDs and jobs.
Sea Change Nori got a PhD admission offer from the University of California in San Diego, and Nelson had a campus placement offer. Before the students could disperse, Nelson saw a newspaper story about seaweed cultivation off the Tamil Nadu coast, and realised that this plant, often called macroalgae, was the answer.
“Shrikumar Suryanarayan has learned how to leverage one idea and develop several ideas around it” Kiran Mazumdar-Shaw, founder, Biocon
It grew very quickly, could be cultivated in the open sea and needed little energy or nutrient inputs. They had known about seaweed and its potential but never realised that it was being grown off the coast of Tamil Nadu. What they needed was a process to convert the seaweed into fuel.
Seaweed is usually grown in shallow waters because the plant slowly sinks to the bottom. When the company started looking at seaweed cultivation, it began to develop a platform to anchor the plant in deeper waters.
Sea6 was formed in July 2010, raising `8 crore from some investors, including Kiran Mazumdar-Shaw and Suryanarayan, who became the chairman. Through a partnership with Novozymes, Sea6 developed a process for converting seaweed into sugars, which could be converted into fuel.
The founders also realised that the process was not cost-effective at low oil prices. The company had to develop other products to survive till the technology was fully developed and the economics was right. In 2012, Sea6 was moved from IIT-Madras to CCamp. Time was ripe for more coincidences and partnerships. C-Camp had facilities for doing sophisticated analysis. It is situated on the campus of the University of Agricultural Sciences (UAS), rubbing shoulders with NCBS and In-Stem.
With a two-minute walk, Sea6 employees could get expertise in many areas of modern biology. Through the work of the Central Salt & Marine Chemicals Institute in Bhavnagar, Sea6 founders had known that seaweed was a good plant growth stimulant. With the help of UAS scientists, the company standardised a plant stimulant, now being marketed by Mahindra Agri Business.
Plant growth stimulators are a growing category of agricultural products around the world. The market research company Grand View Research forecasts that the market would grow to $6 billion from around $4 billion now. As Sea6 investigated the properties of seaweed, their scientists found other interesting facts. It boosted the immunity of plants and made them more resistant to viral infections. Farmers struggle around the world with viral infections, and so Sea6 had another potential agricultural product.
The tomato leaf curl virus and papaya ringspot virus are major threats to the respective crops in India. “If a tomato plant is hit by the virus before flowering,” says plant pathologist and UAS professor N Nagaraju, “the farmer has to write off the entire crop.” Sea6 and UAS are now collaborating on the development of a product based on seaweed, which will improve the plant’s ability to withstand the infection. It is set to become the next product of Sea6.
Seaweed is usually grown in shallow waters because the plant slowly sinks to the bottom. When the company started looking at seaweed cultivation, it began to develop a platform to anchor the plant in deeper waters. Such a platform had to withstand powerful waves, and so had to be strong. Engineers in Sea6 developed a structure that is flexible as well as strong, which is able to withstand forces in the sea by distributing them all around the structure, just like the way a cat takes the shock of a landing by distributing the force all over its body.
Once this structure was developed, the company realised that it had potential beyond seaweed. One application is an offshore solar farm. The floating platform could be used for offshore desalination units and for developing aquaculture systems in deeper waters. One slightly far-fetched idea is to develop offshore residential and utility areas. There are plenty of places around the world — remote islands being one example — that could do with solar farms and desalination units. “Shrikumar has been able to leverage one idea,” says Biocon chairperson Kiran Mazumdar-Shaw, “and develop several ideas around it.”
Being present in C-Camp has had its benefits, apart from the facilities and expertise. Students often drop in from adjacent institutions and stay on as employees. Sea6 has hired six PhDs from NCBS, InStem and UAS. It has 20 people from IITs, including its chief financial officer. Its team of scientists and engineers include marine biologists, aerospace engineers, ocean engineers, mechanical engineers and biotechnologists.
In spite of all the progress, Sea6 might face some rough weather ahead. It now has 40 people but the lab is still in C-Camp. Growing in size while retaining the connections with the scientific institutions could be hard when it moves out of the research cluster. Its industry, biotechnology, is still plagued with problems that could weigh the company down. “The regulatory ambiguity of the sector continues,” says Vineet Chadha, partner of Tata Capital Innovations Fund, which has invested in Sea6. “It does not help any biotech company.”
Finding investors will be hard, as Sea6 is also not likely to get high valuations. “It is not a valuations-driven company,” says Taslimarif Syed, CEO of C-Camp. On the other hand, it has potential for revenues and long-term growth, and so could attract private equity investors. “They understand the technology,” says Syed, “but it is one company that is not in love with it. They have developed other aspects of the business.” This capability sets Sea6 apart from most biotech startups in the country.
Photo: Sea6 developed a process for converting seaweed into sugars, which could be converted into fuel. The founders realised that the process was not cost-effective at low oil prices. The company had to develop other products to survive till the technology was fully developed.