CEO, Cultivarium
The future of American manufacturing isn’t just digital—it’s biological. As we stand at the precipice of the bioeconomy era, bridging the gap between laboratory innovation and industrial-scale production has never been more critical. Over the past two decades, synthetic biology has matured from an academic curiosity into a credible platform for manufacturing materials, foods, therapeutics, and fuels. Yet despite technical advances in DNA synthesis, strain engineering, and fermentation control, the financing structures and how we reward progress still lag behind.
Venture capital (VC) dollars are harder to raise for capital-intensive projects. Corporate partners want de-risked access to innovation, and startups need intermediate liquidity to avoid selling out too early. The current model forces brilliant academics with breakthrough technologies to become experts in industrial manufacturing overnight or watch their innovations die in the lab.
Borrowing a familiar framework
The Biobucks model that transformed pharmaceutical partnerships offers a powerful framework for accelerating bio-industrial manufacturing, creating a new paradigm where large corporations and nimble startups combine forces to compete globally and help secure America’s technological leadership.
Biobucks are a familiar concept in the pharmaceutical industry, but mostly unfamiliar territory in industrial biotech. Biobucks refer to a large sum of potential money in a licensing or collaboration agreement between big pharma companies and smaller biotech startups, tied to defined R&D and commercial milestones. In traditional Biobucks deals, only six percent of the total partnership value is paid upfront, with the remaining contingent on achieving specific milestones. In Q1 of 2024, pharmaceutical companies provided $2.28 billion of upfront cash to smaller startups, which is 35% of the $6.5 billion that venture capitalists invested in startups.
A typical pharma deal might include:
- $5M upfront for early-stage IP
- $10M upon starting a Phase I clinical trial
- $50M for completing a successful Phase III clinical trial
- Royalties on future drug sales
This approach has generated remarkable market-driven progress, such as Pfizer’s $700 million Biobucks deal across 10 programs with Flagship Pioneering. These partnerships work because they solve fundamental misalignments while managing the high failure rates inherent in biotechnology development.
Yet biomanufacturing has no equivalent. Most deals fall into one of three buckets: fee-for-service R&D, equity-based partnerships, or long-term supply agreements. These are simple to execute but aren’t built for staged innovation and tangible outcomes along the way. For a startup engineering a novel microbe to produce a commodity chemical or climate-smart polymer, there’s no standard framework to capture intermediate value creation. As a result, too many promising strain engineering programs stall after lab-scale proof-of-concept.
Why adopt BioIndustrial Bucks now?
It’s time we introduce BioIndustrial Bucks (BIBs), milestone-based deal structures tailored to the realities of industrial biotech and scaled to meet the moment. The window for American leadership in bio-industrial manufacturing is narrowing. China’s substantial government investments in biotechnology and the EU’s comprehensive biotech strategy announced in March of 2024 demonstrate that international competitors recognize the strategic importance of this sector. The United States must leverage its unique advantages—world-class research institutions, an innovative startup ecosystem, and scalable industrial manufacturing capabilities—through systematic BIB partnership approaches.
BIBs offer a compelling path forward for the symbiotic relationship between biotech startups and their corporate counterparts to flourish. These milestone-based partnerships empower academics and entrepreneurs to focus on breakthrough biology with the support of non-dilutive funding and corporate partners’ decades of manufacturing expertise and market understanding. For corporate partners, this structure limits upfront risk while gaining access to cutting-edge innovation.
Secrets of a successful BIB model
While the milestone Biobucks model is an established structure, it needs adaptation for bio-industrial manufacturing. Introducing BioIndustrial Bucks as a standardized approach creates alignment, scalability, transparency, and risk distribution. The successful BIB model has three essential components:
1. Adapted financial structuring
Unlike pharmaceutical development with its well-established deal structures and clinical trial phases, bio-industrial partnerships must navigate different risk profiles, timelines, and milestones that warrant payout. For example, payment milestones shift from clinical endpoints to manufacturing metrics: pilot plant demonstration at 500-2,000 L scale, cost-reduction targets achieving competitive production economics, and regulatory approvals for new bio-based chemicals or materials.
Imagine a fermentation startup partnering with a global corporation like Cargill to make a drop-in bio-based ingredient. Instead of a one-time service fee or vague revenue share, the deal could be structured like this:
- $250K for 10 g/L titer in shake flask
- $1.5M upon a successful tech transfer to 300 L pilot plant
- $3M for achieving <$3/kg cost projection at 10,000L scale
- $5M + 2% royalty for delivery of the first 10-ton shipment
- Environmental, Social, and Governance (ESG) bonus of $1M as a result of avoidance of 1,000 metric tons CO2
2. Corporate technical expertise and resources
The technical knowledge sharing and scalable resources that large corporations bring to a BIB collaboration are an essential part of the mix. Large industrial companies possess irreplaceable assets for biotech scale-up, including decades of expertise and process optimization, access to waste feedstocks, expansive testing facilities, and supply chain integration. Cargill’s partnership with ENOUGH and BASF’s acquisition of Verenium weren’t just financial transactions—they exemplify how specialized knowledge and infrastructure can be leveraged to achieve cost targets and accelerate progress in bringing cutting-edge bio-industrial applications to market.
3. Government involvement
The federal government already provides powerful institutional frameworks for sophisticated risk management, tax-incentivized funding programs that are designed to complement private sector initiatives, and policies to catalyze bio-industrial partnerships.
On the risk-management front, the Department of Energy’s TRL framework, combined with NIIMBL’s Biomanufacturing Readiness Levels (BRLs), provides systematic approaches to evaluating technical progress. Additionally, the DOD’s Manufacturing Readiness Levels (MRLs) address scale-up challenges specific to industrial biotechnology. These various readiness frameworks can transform partnership negotiations from subjective assessments to data-driven milestone structures.
Additionally, the National Biotechnology and Biomanufacturing Initiative has committed $2 billion to ensure “we can make in the United States all that we invent in the United States.” Yet without robust private sector engagement through partnership models like BIBs, this vision remains unrealized. To maximize BIB partnerships’ potential, federal policymakers should consider three proven incentive frameworks—the CHIPS Act, tax deferrals and capital gains exclusions in designated Opportunity Zones, and permanent R&D tax credits—to create a new model of public-private partnerships (PPPs). These incentive frameworks leverage proven bipartisan models, and mirroring them can create comprehensive benefits for investment in biomanufacturing facilities and equipment, workforce development, innovation, and R&D that make corporate participation in BIB partnerships highly profitable.
Lastly, the emerging policy landscape supports expanded corporate-startup partnerships. The National Biotechnology and Biomanufacturing Initiative’s call for a National Biotechnology Coordination Office would provide centralized coordination across multiple agencies, while proposed Independence Investment Funds could provide non-dilutive risk capital for early-stage ventures. Organizations like BioMADE have already shown how this vision can be operationalized through milestone-based grants and infrastructure co-development. Through cost-sharing and milestone-oriented funding, BioMADE has fostered the development of nine new bioindustrial projects, including waste-to-bioproducts, natural rubber from dandelions, and scalable purification processes, demonstrating that government grants can mirror BIBs’ logic without prescribing the science. These initiatives create the regulatory clarity and financial foundation necessary for large-scale corporate engagement in BIB structures.
Despite current budget challenges, American leadership in artificial intelligence, biotechnology, and augmenting our workforce is a bipartisan issue, because they are national security issues. Senators Todd Young (R-IN) and Alex Padilla (D-CA) are leading the legislative groundwork with six key bills. The proposed Foundation for Enabling Biotechnology Innovation Act aims to “foster public‑private partnerships” and “accelerate U.S. biotechnology commercialization,” while the NSCEB-endorsed report explicitly calls for making “biomanufacturing scale-up predictable, rapid, and cost-competitive” through federal investment. These efforts, though nascent, show that political will is aligning around incentive structures to support a model such as BIBs.
Making BIBs a reality
The timing couldn’t be better. America’s entrepreneurial advantage lies in our boldness and willingness to innovate with new ways of doing business. While other countries may have government-directed industrial policies, the U.S. excels at creating novel partnership structures that align private sector incentives. BIBs represent exactly this kind of American innovation: a market-driven solution that leverages our unique combination of entrepreneurial startups and industrial expertise.
Corporate leaders, biotech startups, investors, industry participants, and federal policymakers all have a role to play in seizing the opportunity to own America’s bio-industrial leadership. BIBs offer a roadmap, but what remains is the will to act. The companies and policymakers that recognize this moment and commit to systematic BIB development will shape the next chapter of American manufacturing. The bioeconomy revolution is not inevitable—it requires deliberate choices and sustained commitment through new models of public-private collaboration.
Henry Lee, PhD, is the CEO of Cultivarium.
