Modern agriculture runs on nitrogen or Ammonia. But its major production method, the Haber-Bosch process, is at odds with industry sustainability goals. Synthetic fertilizers produced by this process deliver the high yields farmers depend on, but it also has high energy use, carbon emissions, and growing regulatory pressure. On the other hand, organic fertilizers are sustainable, but often underperform, especially in liquid systems. They release nitrogen too slowly or inefficiently, leading to ~30–35% yield losses, which destroys farm economics even if organic produce commands a premium.
This leaves farmers in a difficult position. They are forced with a trade-off they can’t afford: either protect yields with synthetic inputs or go organic and risk significant production losses. The result is a clear and persistent market gap for a fertilizer that is both sustainable and high-performing, but does not compromise farm economics.
Algaenite is building a biological solution to bridge this gap. Instead of relying on fossil-fuel-based ammonia synthesis, the company uses naturally occurring cyanobacteria that fix nitrogen while generating their own energy through photosynthesis.
To better understand how they are doing it, we spoke to Lior Hessel, CEO of Algaenite. This article contains notable highlights from our entire conversation.
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This interview is part of our exclusive Scouted By GreyB series. Here, we speak with the founders of innovative startups to understand how their solutions address critical industry challenges and help ensure compliance with industry and government regulations. (Know more about startups scouted by GreyB!)
“If we rely only on nature doing its work, the planet can only support about 2 billion people.”
– Lior Hessel
Lior Hessel is an agricultural engineer and entrepreneur with an M.Sc. in Engineering from New York Polytechnic University and a background from the Technion.
He is the founder and CEO of Growponics and has worked on more than 40 automated hydroponic greenhouse projects across four continents, covering over 24 hectares and involving investments of over $40 million.
Earlier in his career, he served as CEO of OrganiTech, a hydroponics company. He has implemented agricultural projects in multiple countries, including Israel, the U.S., Germany, Spain, China, and Singapore.
Hessel has received the EU Seal of Excellence and Horizon Farm to Fork Phase 2 funding. He is also an inventor with multiple U.S. patents. Under his leadership, Algaenite has secured backing from the European Innovation Authority.
Turning cyanobacteria into on-farm ammonia factories
Algaenite’s technology is built around photobioreactors that cultivate naturally occurring cyanobacteria capable of fixing nitrogen from the air. They use sunlight to produce the energy needed to convert nitrogen into ammonia.
This self-sustaining system allows continuous production of bio-based liquid fertilizer without external energy inputs or added nutrients. The output is a nitrogen-rich fertilizer that can be supplied directly via fertigation systems, especially in hydroponics and drip irrigation. This helps provide plants with readily available nutrients in a form compatible with modern irrigation methods.
You’ve spent years in agriculture and hydroponics, so what exact problem were you trying to solve with Algaenite?
Lior: We started from a very practical farming problem. Growers need nitrogen to produce food, but the current way the world gets nitrogen fertilizer depends on ammonia made through the Haber-Bosch process. That process helped feed the modern world, but it also consumes huge amounts of energy and creates major emissions. So the challenge was never whether ammonia matters. It absolutely does. The challenge was how to make it a better way.
For us, the trigger was hydroponics. Our customers wanted organic produce, but there was no good liquid organic fertilizer for hydroponic systems. Farmers who tried existing options lost yield because the nitrogen available to the plants was not high enough. That made organic hydroponics economically unworkable. We built Algaenite to solve that specific bottleneck: giving farmers the nitrogen they need in a form that works commercially.
I noticed your approach uses cyanobacteria rather than a conventional chemical process. How does the technology actually work?
Lior: We use natural strains of cyanobacteria that do two important things at once. One part of the filament fixes nitrogen from the air into ammonia, and the other part performs photosynthesis and produces the energy needed for that fixation. I often describe it as a Haber-Bosch factory with a solar farm attached, all inside a tiny biological system. The key point is that we are not engineering these organisms from scratch. We identified natural strains that already do this efficiently.
From there, the real work was engineering. We had to build photobioreactors that are large, robust, and cheap enough for commercial agriculture. Laboratory bioreactors are far too expensive to use at a farming scale, so we redesigned the system from the ground up. That is what allowed us to move from an interesting biological idea to something that can make fertilizer at a price farmers can realistically consider.
A large grower would probably ask whether this can ever reach a meaningful scale. How do you think about scalability?
Lior: I believe this can ultimately scale to replace a very large share of agricultural ammonia demand, but we are being realistic about where to start. Our immediate target is the fertigation market: hydroponics, drip irrigation, sprinklers, and related systems. It is a smaller segment than broad-acre crops like corn or wheat, but it is already a multi-billion-dollar market, and it has a very clear pain point because liquid organic fertilizer options are limited.
I do not think a technology like this replaces Haber-Bosch overnight. Big industrial shifts take time. Solar and electric vehicles also took decades before they became mainstream. Our job is to start with a market where the value is obvious, prove the economics, and keep improving the system until the range of applications expands.
You mentioned on-site fertilizer production. What does that look like for a farmer economically?
Lior: Our model is to produce fertilizer on the farm, right next to where it is needed. In a place like Connecticut, a two-acre farm could install a system for a few hundred thousand dollars and see payback in roughly two to three years, mainly because the grower can move into certified organic production and earn a premium on the produce. That premium is what makes the economics work so well.
We are also building the business model so farmers do not necessarily need to carry the upfront cost themselves. We can structure it more like a leasing or licensing arrangement, where the farmer pays for the fertilizer output while financing partners help support the installation. That way, the grower can benefit from better margins and organic pricing without needing to take on the full capital burden from day one.
I’ve seen many bioreactor systems struggle with contamination and strain stability over time. How have you handled that challenge?
Lior: That is a very fair question, because contamination is a major issue in many biological production systems. One advantage of our strains is that they produce their own ammonia, so they do not need an external nitrogen source like nitrate. Any contaminant that enters the system usually does need that nitrogen source, so it struggles to compete. That gives us a natural barrier against contamination.
There is also the sugar issue. In many microbial systems, you feed sugar, and once you do that, you create the conditions for unwanted microorganisms to grow. Our system does not rely on that kind of sugar feed.
The cyanobacteria use sunlight to create the energy they need. That makes the operation much easier because we do not have to maintain the kind of sterility that most traditional bioreactor systems require.
From an engineering standpoint, what was the hardest obstacle to overcome?
Lior: The biggest challenge was cost. Most photobioreactor systems are essentially lab concepts scaled badly. People take something small and delicate, make it larger, and end up with a system that is far too expensive for agriculture. That works if you are producing a very high-value pharmaceutical ingredient. It does not work if your customer is a farmer buying fertilizer.
So we had to rethink the hardware completely. The materials, the manifolds, the tubing, and the way the whole system is manufactured and assembled had to be redesigned for industrial agriculture.
If we had failed at that step, the biology could still have been impressive, but the business would not have worked. Farmers need solutions that are affordable, robust, and easy to operate.
Beyond fertilizer, do you see this platform opening up other product lines?
Lior: Yes, because once you are making ammonia biologically, you are making ammonia. We have already seen interest from other industries, including cosmetics.
But the more exciting, longer-term opportunity may be protein. Our systems also generate a large amount of biomass with a high protein content, and that opens the door to animal feed and potentially food applications.
That said, we are disciplined about focus. Right now, agriculture is the priority because the need is immediate and the business case is strong.
Alternative protein is a big future opportunity, but it is not where we are placing our first commercial emphasis. First, we want to prove the fertilizer model at real customer sites and build from there.
As I understand it, your next step is commercial proof. What expansion plans are in motion now?
Lior: We are preparing three commercial beta sites in Connecticut, Denmark, and Spain. For me, these sites are about much more than showing that the biology works. They are meant to prove that the system works economically for paying customers in real agricultural conditions. That is the milestone that can unlock much faster adoption.
In parallel, we are raising our seed round to complete that proof of concept and position the company for broader partnerships. We are very open to collaborating with fertilizer companies and other strategic players, but first, we want hard commercial performance data from the field. Once that is in place, I think the partnership opportunities can grow quickly.
Meet our Interviewer – Shabaz Khan, Marketing Manager at GreyB
Shabaz Khan, Marketing Manager
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