August 18, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

China has rapidly undergone a significant shift from being largely rural and agrarian to a more urban and market-engaged society. This overarching evolution has brought food production away from fragmented smallholders into the reality of commercially-scaled industrial agricultural production and beyond, to tech-driven food and ag innovations that have the power to revolutionize food production and answer a host of challenges from food safety and environmental contamination, to standards of animal husbandry.

Managed by  general partners Matilda Ho and Joseph Zhou, Shanghai-based Bits x Bites works to answer these particular challenges by focusing on the underserved subsegments of the Chinese food supply chain, backing early stage Chinese and international innovators advancing bioscience, data science, and processing technologies across precision agriculture, crop and animal health, alternative proteins, and nutrition.

In November 2020, Bits x Bites announced a first close at $30 million on its new fund that, at the time, had a target in place of $70 million. Just one year later, in November 2021, the investor announced a final close on its second fund, oversubscribed at $100 million. 

Backing the fund’s mission are some of the world’s most prestigious LPs representing global industrial footprints across both biosciences and food, including Syngenta Group Ventures, animal nutrition company Adisseo, Esco Lifesciences, Cavallo Ventures, the venture capital unit of Wilbur-Ellis, along with global investment company Temasek, and government-backed investment arms such as DisruptAD, the venture platform of Abu Dhabi-based ADQ, and other leading financial institutions and family offices.

With this momentum, Bits x Bites has become a key backer of many leading early-stage startups transforming our food systems through technology, predicting that 2022 would be a banner year in China for biotech.

“The appeal of agrifood investing for the Chinese market goes beyond its mammoth role in the global supply chain or its vibrant tech activities in AI/ML and biotech,” said Matilda Ho, founder and managing director of Bits x Bites, in November 2021. “What is often overlooked is this tech ecosystem’s relentless drive toward cost-based innovations, building solutions to fuel efficiency and to make sustainable and healthy ingredient options more affordable.”

Bits x Bites’ latest investment announcement carries this common theme of biotech throughout the fund’s latest trio of capital commitments:

Mojia Biotech: This startup was actually the first investment made by this fund, back in November 2020. Today, Bits x Bites participated in an $80 million Series B for the biomanufacturing company that produces essential nutrients, beginning with Vitamin B5 and biopolymers. 

Led by Temasek, this round also included LYZZ Capital and Sento Investments.

“Sustainable ingredients manufacturing is a pillar for a thriving green economy,” said Joseph Zhou, managing partner, Bits x Bites. “And with the recent delays and shortages in the global supply chain highlighting the importance to reduce reliance on raw material imports, we see huge potential for Mojia Biotech to apply its technology across different chemical ingredients, and to become a leader for next-generation green chemical production.”

Changing Biotech: After backing the company through its $8.5 million Pre-Series A round, Bits x Bites returned to lead a $22 million Series A for this company using microbial fermentation technology to develop ingredients for new animal-free foods and beverages. Eight Roads Ventures, Sherpa Healthcare Partners, and Hillhouse also joined Bits x Bites in this round. 

Despite being the third-largest dairy producer in the world, China imports 30 percent of its dairy milk – and demand continues to climb. In 2021, per capita consumption of milk in the country reached 14.4 kilograms, representing year-on-year growth of 10.6 percent. However, the management of additional cattle needed to keep pace with this demand would result in negative environmental impacts, and would work against China’s efforts toward becoming carbon neutral by 2060.

Changing Biotech is working on a solution by fermenting proteins from microbes. Its first product is a single-cell protein from a fungi strain already approved in China as an edible microorganism.

Using this high-protein, high-fiber, low-fat, zero-carb ingredient, the company has developed a range of applications including milk, yogurt, chocolate, cookies, and snack puffs at its five-ton fermentation facility.

Cataya: Recognizing that synthetic biology presents extraordinary opportunities for food security and the reducing of greenhouse gas emissions, Bits x Bites has chosen to participate in a $16 million Series A for Cataya, a synbio startup developing human nutrition and personal care products such as artemisinin, farnesene, and Vitamin E.

Other investors in the round were Source Code Capital and Sherpa Healthcare Partners.

“Very few companies have Cataya’s caliber of experience forming their backbone,” said Zhou. “We couldn’t be happier to be an early partner of the company and help it build on this solid foundation to become a synbio powerhouse.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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