Startup pivots from biodegradable plastic to nutraceuticals
LSU Biological Sciences Associate Professor Naohiro Kato never intended to go into the nutraceutical business. He created a business, Microbiology LLC, to capitalize on a breathtaking discovery that used algae to make biodegradable plastic.
The market for biodegradable plastic is enormous, around $8 billion in 2023 and an estimated $44 billion by 2029. While demand is a good thing, the scale proved too large for Kato’s startup.
“In order to produce commercial levels of biodegradable plastic, we needed an algae pond at least 100 acres in size, as well as equipment, chemicals and machinery. The total investment was around $20 million,” Kato said. “It was kind of a chicken-and-egg situation. Investors were interested, but they wanted assurances we could make commercial amounts of plastic. The only way to do that was with a large pond, and we needed investors to fund it.”
Fortunately, Kato had been through the National Science Foundation’s Innovation Corp training. The classes equip scientists with the business skills they need to improve their odds of commercial success. A major part of the training is interviewing 30 prospective customers about their needs. If necessary, entrepreneurs adapt their inventions to fit.
I-Corps helped Kato identify an alternative business path. Kato’s eco-friendly plastic costs about 10 times as much as regular plastic. Kato’s original plan was to offset some of that cost with other valuable compounds in the microalgae, or microscopic plants. One of those compounds is an antioxidant called fucoxanthin, which has anti-cancer properties.
The price for 100 10-milligram capsules is more than $200. In 2023 the nutraceuticals industry sold $210 million worth of fucoxanthin supplements.
With the biodegradable plastic path closed, Kato pivoted to nutraceuticals. It took him two years to advance his technology enough to produce medical-grade fucoxanthin. Kato can make an ounce of the antioxidant, enough for 2,800 10-milligram capsules, for around $300.
The fucoxanthin manufacturing process requires far less algae, chemicals or machinery. For now, Kato is growing the algae in his lab and borrowing equipment from other LSU professors to create the highly purified antioxidant.
“I-Corps was a very good program for me because I never thought about this path, nutraceuticals, or customers’ needs being different from my research,” Kato said. “I also learned how to present my ideas to businesspeople, which is much different than making a scientific presentation to an audience of academics. It requires a different mindset.”
