Genomatica Raises $15M to Build Demo Plant For Sustainable Chemical Production
We’ve been waiting for this one since last summer.
San Diego-based Genomatica is announcing today it has raised $15 million in a Series C venture round led by a new investor, TPG Biotech, to build a demonstration plant to make a common industrial chemical through a renewable technique, and to develop a bigger pipeline of other petrochemical alternatives.
Genomatica’s existing investors, Mohr Davidow Ventures, Alloy Ventures, and Draper Fisher Jurvetson, joined in the round with TPG Biotech, which is affiliated with TPG, the global $45 billion investment firm. The company has raised a total of $38.5 million since it was founded in 2000, according to CEO and co-founder Christophe Schilling.
Genomatica, which describes itself as a sustainable chemicals company, uses a fermentation tank filled with sugar and genetically engineered microbes to produce mass quantities of 1, 4 butanediol. Also known as BDO, the hydrocarbon is an intermediate chemical widely used by the petrochemical industry to make plastics, solvents, pharmaceuticals, textiles and automotive components.
When Genomatica said last June it had succeeded in making commercial-grade batches of BDO, Schilling told me that achievement had cleared the way for construction of a small-scale industrial BDO demonstration plant. Now, after nine months, the company has secured the necessary funding to move ahead with those plans. Schilling says the demo plant will be big enough to produce about a ton of BDO a day, although he adds that the company has not yet disclosed where it plans to build the plant. Such a facility would require a 30,000-liter fermentation vessel (about 7,925 gallons) housed in a facility that could be as big as 20,000 square feet.
In a statement released by Genomatica, TPG Biotech principal Patrick McCroskey says, “After careful and rigorous scrutiny of this competitive field, no company is better suited to drive low-cost petro-alternatives into the chemical industry. In short order and through extremely efficient use of capital, Genomatica has proven its sustainable chemicals platform and demonstrated that it possesses a unique way to develop many low-cost processes that target billion-dollar-plus chemical markets, while reducing dependence on petroleum feedstocks.”
Genomatica ultimately hopes to displace the existing BDO industry with its biological production process, which represents a potentially greener and cheaper technology. The company estimates the global market for BDO at about $4 billion a year, and says some 2.5 billion pounds of BDO was consumed globally in 2007, made entirely from non-renewable petrochemical processes. Genomatica says it also has reached BDO production levels using its technology that it projects will be cost-competitive with incumbent petrochemical plants today. Genomatica says researchers have achieved a 20,000-fold increase in the concentration of BDO produced by microbes over the past 18 months. The company currently has 40 employees, although Schilling says, “It’s fair to say with this investment, we’ll be seeing significant [employee] growth over the next year.”
While Genomatica’s technology is similar in many ways to companies like San Diego’s Sapphire Energy that are developing algae-based biofuels, Schilling says the capital requirements for expanding to industrial-scale BDO production is fundamentally different.
“I don’t think that we’d be able to get an investor like TPG unless they were confident that those capital costs are manageable,” Schilling says. “The ultimate market that you’re trying to tap into is not as large as the [transportation] fuel market,” but an intermediate chemical like BDO will sell for two to four times as much as an equivalent fuel commodity, and the margins are much higher.
In addition to building a demonstration plant for producing BDO, Genomatica says it plans to expand its development of other large-market chemicals that can be produced using Genomatica’s proprietary sustainable technologies.