As Silicon Valley faces a tech reckoning, biologists point to the next big opportunity – CNBC

Senior automation engineer optimizing automated lab protocol on colony picker.

At one of the world's largest synthetic biology conferences this week, a food truck handed out papaya and yogurt samples to hundreds of attendees.

The papaya wasn't any ordinary papaya: It was a genetically engineered fruit that Dr. Dennis Gonsalves designed to be naturally resistant to the ringworm virus. Because of his invention, pesticide use dropped in Hawaii and production flourished.

The conference was SynBioBeta, and it has gotten so big that it moved this year from a conference center in San Francisco's Mission Bay, which is often reserved for biotech meetings, to a large converted Honda dealership on the grittier side of San Francisco's downtown core. The event has been around since 2012 to bring together founders working on biological alternatives to chemical-based processes, and its organizer John Cumbers previously worked as a synthetic biologist at NASA.

The event was a refreshing break from the current malaise facing the traditional "tech" industry.

Many of the big consumer tech companies that started after the Great Recession, like Uber and WeWork, were supposed to make investors and employees rich, but instead have collapsed in value amid scandals and persistently unprofitable business models. Giants of the industry, like Facebook and Google, are under assault from both sides of the aisle in Washington, D.C., for being too powerful, too careless with privacy and too addictive. Venture capitalists are fighting with banks over the IPO process. The smartphone revolution is more than a decade old, and the would-be replacements -- self-driving cars, computerized eyeglasses -- always seem to be another five to ten years away.

This conference presented a much more optimistic view of technology's potential, focused on biology rather than microprocessors.

At booths stationed throughout the space, entrepreneurs presented inventions ranging from industrial robotics to designer proteins. They all hailed from different industries including retail, food and manufacturing, but they shared a common vision that after decades of investment in information technology, it was biology's turn.

A food truck promoting GMOs

Christina Farr, CNBC

"The conference has an irreverent, counter culture vibe to it," said Jorge Conde, an investor at Andreessen Horowitz, who spoke at the event. Conde said that the founders are a "new breed" and they reminded him of the first generation of Silicon Valley entrepreneurs in the era of Steve Jobs.

"You're seeing this explosion of creativity, and also idealism," he said. Many of the founders, he noted, are attempting to build real, money-making businesses while also attempting to create solutions that are more sustainable and eco-friendly in an era of climate change.

Conde, who has been attending the event for a few years now, described synthetic biology as "the ability to design or program organisms to make things for us."

He's one of a growing number of investors in the space, alongside billionaires like former Microsoft founder Bill Gates and Amazon CEO Jeff Bezos, who are spurred in part by the success of the Beyond Meat IPO. Former Google CEO Eric Schmidt personally spoke at the event, noting that "biology will undoubtedly fuel computing." The synthetic biology market is now expected to hit $55 billion by 2025.

In recent years, venture-funded companies like Zymergen and Ginkgo Bioworks have raised hundreds of millions of dollars in venture capital to provide a platform of sorts for the next generation of synthetic biology companies. The idea behind them is to make it easier for companies like Beyond Meat to flourish on the consumer side, but also to support industrial applications. (Note that Beyond Meat is the one tech-related IPO that's done spectacularly well this year, and is the only reason overall tech IPOs are outperforming the S&P 500.)

Ginkgo, for instance, is looking to spur a slew of new plant-based alternatives to meat by funding research into proteins and developing the key ingredients in the lab, so that food companies can focus on things like texture and flavor. Founded by a group of MIT scientists, it uses genetic engineering to design and print new DNA for a range of organisms, including plants and bacteria.

"A lot of start-ups come to this conference, but I've also seen 'futures' teams here from big companies like Lululemon and Adidas," said Christina Agapakis, a scientist turned creative director at Ginkgo, which has raised more than $700 million in venture capital. "These are people who are looking ten years out for new materials, and for more renewable and biodegradable options."

Christina Agapakis, a synthetic biology writer with Ginkgo Bioworks, displaying the company's magazine.

Christina Farr | CNBC

Ginkgo, one of the larger companies at the conference, set up its own espresso coffee booth and handed out a magazine called Grow to promote genetically modified organisms or GMOs. It also highlighted some of the companies that Ginkgo has started to invest in, like Motif, which is helping foster a lot more companies like Impossible Foods and Beyond Meat by working on the plant-based proteins that provide that meat-like flavor, and Cronos, which is looking to create rare strains of cannabinoids in the lab, some of which are being researched as a pain management solution for chronically ill patients.

"A lot of folks in our world aren't using the term 'GMO,' and instead will say it's something like 'gene modification' or 'CRISPR,' said Agapakis, referring to a technique that allows for specific and rapid modification of DNA in the genome.

But Agapakis' company is embracing it. At last year's SynBioBeta, attendees took selfies in front of an "I heart GMO" sign. Agapakis is hoping that her company can help make GMOs distinct from companies like Monsanto, which spurred a reaction from activists for its use of genetic engineering to promote profits. Ginkgo is hoping to revitalize the term, and associate it with socially-conscious products like meat-free burgers and cow-free leather.

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As Silicon Valley faces a tech reckoning, biologists point to the next big opportunity - CNBC