San Diego-based startup Creo, an ingredient company that produces rare and novel cannabinoids, has officially launched after spending four years in research and development mode.
Founded in 2016, Creo is using the age-old natural process of fermentation, combined with technological innovation to develop a wide variety of cannabinoid products.
Its proprietary fermentation process claims it can produce rarer cannabinoids — such as Cannabidiol (CBD) and Cannabigerol (CBG) — without needing the actual plant.
Co-Founder and CEO Roy Lipski got the idea for Creo, after discovering biosynthesis technology from Ramon Gonzales, a professor in the department of chemical and biomedical engineering at Rice University. The two would later incorporate the company and then found a biotech partner to help accelerate the commercialization process.
Now a joint venture, Creo has partnered with San Diego’s Genomatica, an industry-leading biotech firm which specializes in fermentation-based cannabinoid production technologies.
Genomatica which has a 150-person office in UTC, invested a large amount of capital into the startup and is a major shareholder in the company.
To date, Creo received close to $50 million in equity investment. The most recent funding came from Genomatica, followed by a significant investment from a high-profile angel investor.
“There has hardly ever been in history, when you have a $5 billion market growing at 30% annually each year. It’s a huge market and growing very fast. At the time, there were no big companies in the industry focused on what we were doing, the people that were involved were pretty amateur,” said Lipski. “We decided to form the company together in early 2016, raised a bit of money and spent the next 14 months developing our proof of concept.”
Four years later, Creo is now ready for its commercialization phase. However, a highly-regulated industry, there is still are a ton of regulatory hurdles the startup will have to overcome before it can reel in profits. In the process now, Creo anticipates to receive the green light from government officials sometime in 2021.
The first cannabinoid the company aims to target is CBG. Best known as the “skin cannabinoid,” the chemical is commonly used in skincare products. It has properties related to skincare anti-inflammatory and helps moisturize skin.
In terms of business model strategy, Creo plans to work across several different verticals including retailers, consumer packaged goods, and the pharmaceutical sector.
At the end of this year, the company will complete its first production with a Midwest-based manufacturer to produce large quantities of samples to demonstrate to potential customers.
In addition, the company is also looking to partner with a handful of organizations to launch various skin-related products to showcase its flagship CBG solution.
Choosing San Diego
“California is the single biggest market for medical cannabis, we’re in one of the two best spots in the country, which are — San Diego and San Francisco,” said Lipski. “Between the two I’d rather be down here.”
Prior to founding Creo, Lipski successfully founded several other pioneering technology companies, including Infonic, an early AI software business, and Oxford Catalysts, a publicly listed renewable fuels technology company (valued at $500M). He holds a science degree from Cambridge University.
Shuchi Sarkar serves as the company’s chief marketing officer. Prior to joining CREO she was the global head of marketing for HP’s printing business and held similar roles at Compaq, Motorola, and Ogilvy. Creo’s vice president is David Brinkman and Alastair James is the executive director.
Looking ahead, Lipski believes the company has an early mover’s advantage enabling them to build out its extensive patent portfolio, establish key relationships and secure the necessary financial backing from investors.
The startup aims to be cash flow positive by the end of next year and currently has a team of 50 involved in its project.
“I’m really excited to become part of the community. San Diego is a great place for our business and also on a personal level, I love turning science into real world products that help people’s lives,” said Lipski. “There’s fantastic science here in San Diego and I look forward to continuing to help bring science into the real world to benefit people.”