Terra Oleo Oil-Producing Microorganisms Could Replace Destructive Palm Oil Plantations

When most kids rebel against their families, they may become ski butts, join a band, or go to art school. Shen Min Lee decided to start a company.

“I grew up in the traditional palm oil industry,” Lee told TechCrunch. “My family’s business is one of the top producers in the palm oil field. And I grew up a little – I have to admit – I’m ashamed of what my family does.”

Palm oil has now dominated the vegetable oil market. Raw materials and their derivatives appear in everything from snack foods and cosmetics to pharmaceuticals and biofuels. However, along the way, they deforested vast strips of tropical regions, especially in Southeast Asia.

The germ of Lee’s startup Terra Oleo emerged in 2022 when he met co-founder Boon Uranukul. He developed a microorganism that can use agricultural waste to produce plastic components.

“I really had this desire to build something that is built on family heritage, but that’s a person who leads sustainability in a way that aligns with my values ​​as a Gen Z,” Lee said. “We coincide his expertise with my connections and strategic networks and think about how we can do different things.”

The Singapore-based startup has been operating stealth for almost two years to develop microorganisms that can turn agricultural waste into a variety of oils.

Terra Oleo has raised $3.1 million from strategic corporate investors in the ADB Ventures, Better Bite Ventures, Elem8.VC, Radical Fund, Palm Oil industry, and other investors. Lee and Uranukur are also part of this year’s groundbreaking cohort of energy fellows.

Palm oil can be refined into dozens of derivatives, so Lee and Uranukur mapped them to decide where to start. “What is the most valuable? But technically, what is the easy thing to tackle and lower the fruit we are hanging from?” Lee said.

“There’s an illusion that coarse palm oil is the end of everything,” she said, adding that the raw ingredients are “a very low margin product.” Instead, they decided to skip straight to high value products, such as cocoa butter and special oils used in the cosmetic and pharmaceutical industries.

To make these oils, the company selected three yeast species based on the ability of the microorganisms to produce specific oils when fed with organic waste, including agriculture and biodiesel production. Genetic and metabolic engineering was then used to enhance and regulate the ability to produce specific fats and triglycerides.

Currently, the company is still in its lab and produces grams of oil at once. However, Lee said Terra Oleo will use the funds to produce kilogram-worthy items.

Already, Terra Oleo can be produced at a much lower price than what it sells at the cost of oils for the cosmetic and pharmaceutical industries. This is mainly because startup microorganisms produce the right chemicals from the start, eliminating the need for expensive purification.

“We’re looking at a margin of over 80% for some of these specialized Oreochemicals, because they are really expensive to produce traditional ones,” Lee said.

It’s not easy to hit the scale necessary to replace a significant amount of palm oil. According to the USDA, the world has not grown significantly over the past six years last season, but the world produced nearly 79 million tonnes.

For Lee, it is an opportunity to show that existing palm oil producers may have another path.

“We’re not going to change from palm oil to other sources overnight,” she said. “It’s very common. It’s a very versatile ingredient, so I think it’s going to be a slow transition working with the industry to get to the diverse production mix we want to see.”