Renewable chemicals company Genomatica has raised $45 million for a demonstration-scale production and early commercialization plans for a green version of butanediol (BDO), a chemical used in spandex, automotive plastics and running shoes.
&''It&'s all about making the same chemicals that are made today from oil and gas, but from renewable feedstocks and at a cheaper cost,&'' chief executive Christophe Schilling told VentureBeat last year.
The company has developed organisms (pictured) that can make BDO from renewable feedstocks.あIt estimates that market to be worth $4 billion. The key with renewable chemicals startups is not that they charge a premium for the chemicals, unlike how some green products are priced. The chemicals must cost the same as the traditional option, Schilling said. The goal is to produce chemicals cheaply from renewable (and potentially cheaper-than-petroleum) feedstocks.
Major companies with sustainability measures could opt to pay the same price for the same chemical that&'s produced in a greener way' or buyers may just simply snap up the chemical because it&'s molecularly the same as a chemical made from any other way and costs the same. The cheaper a company like Genomatica can make the chemical, the better its own profits.
In this round, the company&'s fourth,あGenomaticaあsigned on new investors VantagePoint Venture Partners, which was the largest investor inあthe round, Bright Capital, and Waste Management (which also holds stakes in biofuels startupあEnerkemあand has a partnership withあGenomaticaあto research chemicals that can be created from synthetic gas, or a4ぎAsyngasa4ぎ, captured at landfills). Existing investors joined the new round: Alloy Ventures, Draper FisherあJurvetson, MohrあDavidowあVentures andあTPGあBiotech.
The company will use the funds also for an engineering package to be used in construction of Genomaticaa4ぎa4г first commercial-scale plant, planned to go online in late 2013. The investment will also &''accelerate the development of additional major chemicals in Genomaticaa4ぎa4г product pipeline,&'' according to the company&'s press release. The company has been producingあbio-BDOあat a pilot scale in 3,000-liter fermentations since the first half of 2010.
Genomatica&'s focus on chemicals reflects a potentially lucrative market that biofuels companies are increasingly turning to. Petroleum-derived chemicals are used in everything from the plastic in cell phones to detergent to tennis balls to car parts. Renewable alternatives also exist for palm oil, which is used in soap but considered environmentally unfriendly and can be volatile price-wise. And for startups, chemicals can be a lucrative market. While chemicals aren&'t necessarily cheaper to make than biofuels, they can sell for a lot more money.
And as oil supplies become expensive or even difficult to procure, chemicals buyers like Procter &' Gamble and Unilever are looking increasingly towards the potential in renewable chemicals. Last year, renewable chemicals company Elevance raised $100 million for its work producing chemicals made from natural oils, which can go into personal care products, detergent, fuel and other specialty chemicals markets.
Biofuels startups have moved to make chemicals and food additives part of their business. Solazyme has a joint venture with food ingredient company Roquette and is working to develop renewable oils for soaps made by Unilever. LS9 has a chemicals partnership with consumer goods titan Procter &' Gamble.あGevo, which saw aあ$107 million IPO recently, is working on producing bio-based butanol, which is used in rubber and lubricants. The company, however, is being sued by a joint venture between BP and Dupont, called Butamax, that is also looking to make renewable isobutanol.
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Companies: Alloy Ventures, Bright Capital, Draper Fisher Jurvetson, Genomatica, Mohr Davidow Ventures, TPG Biotech, VantagePoint Venture Partners, Waste Management
People: Christophe Schilling
Companies: Alloy Ventures, Bright Capital, Draper Fisher Jurvetson, Genomatica, Mohr Davidow Ventures, TPG Biotech, VantagePoint Venture Partners, Waste Management
People: Christophe Schilling
Iris Kuo is the VentureBeat's lead GreenBeat writer. She has reported for The Wall Street Journal in Hong Kong, Houston Chronicle, the McClatchy Washington Bureau and Dallas public radio. Iris attended the University of Texas at Dallas and lives in Houston. Follow Iris on Twitter @thestatuskuo (and yes, that's how you pronounce her last name).
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