Genomatica bags $15M as green chemicals trounce biofuels

Despite a rosy outlook early on, biofuels have hit a wall. Too expensive and unwieldy to scale, most projects have stalled in the demonstration stage, unable to make the leap to market. Several of the companies that make them, however, have discovered a lucrative loophole: green chemical manufacturing.
Going a step further, Genomatica, a company that scuttled biofuel ambitions in favor of full-time chemical production, has just raised $15 million in a third round of funding (PDF) to make the industrial chemical business at large more sustainable. It says this financing should be enough to build its own demonstration plant before breaking into full-scale commercial production.
Much like LS9, Synthetic Genomics, and Codexis — companies pursuing biofuel strategies in addition to chemicals — Genomatica’s core business is the microbe it engineered to convert sustainable feedstocks (corn, switchgrass, sugar cane, biomass) into fuels and chemicals. The company, which uses sugar as its primary feedstock, says its strain of e.coli has reached a level of efficiency and speed that makes production of green products cost competitive with petroleum.
Genomatica’s number one product, 1,4-butanediol (BDO), is incredibly versatile — a key ingredient in durable polymers used in clothing, cars and electronics, as well as solvents. The global BDO market, which hit 1.25 million tons last year, represents a $4 billion opportunity, the company says. Until now, all of this BDO has been produced using petroleum. It’s a ripe area for change.
In addition to pushing its sustainably-derived BDO to market, the company wants to expand its portfolio of chemical offerings. It plans to partner with other big chemical manufacturers to change how they’re doing business as well, probably by licensing its microbial technology at a high price.
Its new demonstration plant is expected to come online next year, pumping out 1 ton of BDO a day. It hasn’t chosen a location yet, but estimates that the facility will create between 30 and 40 new jobs.
With green chemicals fetching much higher prices than fuels, investors are going to start shifting their attention, analysts predict. Codexis has also seen a lot of success with its emphasis on the chemical market. While it still has an interest in fuel production, the revenue and profile its achieved with its chemical offerings gave it the boost it needed to file for a $100 million IPO.
Genomatica’s recent round of funding was provided by TPG Biotech, Mohr Davidow Ventures, Alloy Ventures, and Draper Fisher Jurvetson. Based in San Diego, the startup has raised upwards of $35 million in the last three years.
[Image via Genomatica]
Tags: biofuels
Companies: Alloy Ventures, Codexis, Draper Fisher Jurvetson, Genomatica, Ls9, Mohr Davidow Ventures, Synthetic Genomics, TPG Biotech