When most kids rebel against their families, they might become a ski bum, join a band, or go to art school. Shen Ming Lee decided to start a company.
Lee told TechCrunch, “I grew up in the conventional palm oil industry. My family’s business is one of the top producers in the palm oil space. And so I grew up a little bit — I have to admit — ashamed of what my family does.”
Palm oil has come to dominate the market for vegetable oils. The raw ingredient and its derivatives appear in everything from snack foods and cosmetics to pharmaceuticals and biofuels. But along the way, it has deforested vast swaths of the tropics, especially in Southeast Asia.
The germ of Lee’s startup, Terra Oleo, emerged in 2022 when she met co-founder Boon Uranukul. As a doctoral candidate at MIT, he had developed microbes that could produce building blocks of plastics using agricultural waste.
Lee said, “I really had this desire to build something that was maybe going to build on my family’s legacy, but in a way that was more in line with my values as a Gen Z, sustainability-leading person. We got thinking about what we could do differently, matching his expertise with my connections and strategic network.”
The Singapore-based startup has been operating in stealth for nearly two years to develop microbes that can transform agricultural waste into a variety of oils.
Terra Oleo has raised $3.1 million from ADB Ventures, Better Bite Ventures, Elev8.vc, The Radical Fund, a strategic corporate investor from the palm oil industry, and other investors. Lee and Uranukul are also part of this year’s Breakthrough Energy Fellows cohort.
Palm oil can be refined into dozens of derivatives, so Lee and Uranukul mapped them to determine where to begin. They asked which were the most high value and which were technologically easier to tackle as lower hanging fruit. Lee said there is an illusion that crude palm oil is the end all be all, adding that the raw ingredient is a very low margin commodity. Instead, they decided to skip straight to higher-value products, including cocoa butter and specialty oils used in the cosmetic and pharmaceutical industries.
To make those oils, the company selected three yeast species based on the microbes’ abilities to produce certain oils when fed with organic waste, including from agriculture and biodiesel production. It then used genetic and metabolic engineering to boost and tune their ability to produce certain fats and triglycerides.
Currently, the company is still in the lab, producing grams of oil at a time. But Lee said that Terra Oleo plans to use the funding to produce kilograms worth of the stuff.
Already, Terra Oleo can produce oils for the cosmetic and pharmaceutical industries at costs far less than what they sell for. This is mostly because the startup’s microbes produce the right chemical from the start, eliminating the need for pricey refining. Lee said, “We’re looking at upwards of 80% margins for some of these specialty oleochemicals because they’re really expensive to produce conventionally.”
Hitting the scale needed to replace significant amounts of palm oil won’t be easy. Last season, the world produced nearly 79 million metric tons, according to the USDA, though the market hasn’t grown significantly in the past six years.
For Lee, that’s an opportunity to show existing palm oil producers that maybe there’s another path. She said, “We’re not going to change from palm oil to other sources overnight. It’s so prevalent, it’s such a versatile ingredient that I think it’s going to be a slow transition where we’re working with the industry to get to that diversified production mix that we want to see.”