Risks

What are the main risks?

• Defensibility: larger and better-funded companies might be able to replicate or implement part of Sun Bear’s results. The fact that most of the technical differentiator lies with the process of fermenting the oil, proprietary know-how leaks or IP infringement might be difficult to discover, and therefore the patents might have limited enforceability.

• Scientific/technical risk: the implementation of the pathways that would increase the yield and reduce the costs might take longer than expected - with consequences on the

• Commercial risk: the larger food companies might be difficult to approach and Sun Bear might not be able to get its pilot contracts in place.

• Fundraising: in a deteriorating fundraising environment, players in the alternative oil space that are further along their journey might catalyse most of the investments, and it could be harder to raise for startups that have started later.

Are there any technological breakthroughs that they need to make

And what is the likelihood they can achieve them?

The production of triglycerides from yeast cells is relatively well understood. However, there are two main achievements that Sun Bear needs to make:

• Scale up the production while developing the flavours, texture, and other features required by their customers;

• Engineer the metabolic pathways that will enable the cells to produce by using less expensive feedstock and more efficiently.

Both these represent significant unknowns that other companies have not managed to overcome. Sun Bear stands a good chance if the company can stay consistent with the development plan they have set out, and hire a team of scientists that can deliver it.

Are we sure the customers want the product or service?

Sun Bear will start collaborating with smaller food companies such as plant-based meat producers, which need to improve their oil profile to get a higher melting point and better flavour. A low melting point causes a quick depletion of the oil content of the product while cooked. In order to get the final product to stay juicy, the content of oil has to be increased. A higher melting point would prevent this.

These pilot projects will give the company the confidence to scale its production methods and address large food conglomerates in 2024. These companies need palm oil alternatives both due to the regulations that are already preventing them from using products linked to deforestation and the wider societal pressure towards decarbonisation and sustainable supply chains. Sun Bear will be in the position to address that need as the relevant changes in the food industry become more substantial.