Terra Oleo: Sustainable Microbial Oil Alternative to Palm Oil

A Different Path: Terra Oleo's Innovative Approach to Oil Production

While many young people express their independence through unconventional life choices, Shen Ming Lee channeled her rebellion into entrepreneurship.

Lee shared with TechCrunch that her upbringing was deeply rooted in the traditional palm oil sector. Her family operates a leading palm oil production business, a fact that initially caused her some discomfort.

Palm oil has become the dominant vegetable oil globally, finding its way into a vast array of products – from everyday snacks and beauty products to essential medicines and biofuels. However, its widespread use has unfortunately led to extensive deforestation, particularly within the tropical regions of Southeast Asia.

The Genesis of Terra Oleo

The initial concept for Lee’s venture, Terra Oleo, took shape in 2022 during a meeting with co-founder Boon Uranukul. Uranukul, a doctoral student at MIT, had pioneered the development of microbes capable of creating plastic precursors from agricultural byproducts.

Lee expressed a strong desire to build upon her family’s established legacy, but in a manner aligned with her values as a member of Generation Z, prioritizing sustainability. This led to a collaborative exploration of how to leverage Uranukul’s expertise with her industry connections and strategic network.

For almost two years, the Singapore-based startup operated discreetly, focusing on the development of microbes that can convert agricultural waste into various types of oils.

Terra Oleo has successfully secured $3.1 million in funding from ADB Ventures, Better Bite Ventures, Elev8.vc, The Radical Fund, a corporate investor within the palm oil industry, and additional investors, as exclusively reported to TechCrunch. Both Lee and Uranukul have also been selected as part of this year’s Breakthrough Energy Fellows program.

Focusing on High-Value Products

Given the numerous derivatives possible from palm oil, Lee and Uranukul undertook a comprehensive mapping exercise to identify optimal starting points. They prioritized products offering both high value and technological feasibility.

Lee clarified that while crude palm oil is often considered the ultimate product, it actually represents a commodity with relatively low profit margins. Instead, they opted to concentrate on producing higher-value items, such as cocoa butter and specialized oils utilized in the cosmetic and pharmaceutical sectors.

The company selected three yeast species based on their inherent ability to generate specific oils when provided with organic waste streams, including those from agriculture and biodiesel production. Subsequently, they employed genetic and metabolic engineering techniques to enhance and refine the microbes’ capacity to produce desired fats and triglycerides.

Currently, oil production is limited to laboratory-scale quantities measured in grams. However, Lee stated that the newly acquired funding will be allocated towards scaling up production to kilograms.

Terra Oleo is already capable of producing oils suitable for the cosmetic and pharmaceutical industries at a cost significantly lower than current market prices. This cost advantage stems from the microbes’ ability to directly synthesize the desired chemical compounds, eliminating the need for expensive refining processes.

“We anticipate margins exceeding 80% for certain specialty oleochemicals, due to the high costs associated with conventional production methods,” Lee explained.

The Challenge of Scaling and Industry Transition

Achieving the scale necessary to substantially replace palm oil presents a significant challenge. According to the USDA, global palm oil production reached nearly 79 million metric tons last season, although market growth has remained stagnant over the past six years.

Lee views this as an opportunity to demonstrate to existing palm oil producers the viability of alternative approaches.

“A rapid shift away from palm oil is unrealistic,” she stated. “Given its prevalence and versatility, the transition will likely be gradual, involving collaboration with the industry to achieve a more diversified production landscape.”