Another step forward for green chemistry: Genomatica, a San Diego-based company that aims to replace chemicals that are made from oil and gas with chemicals made from renewable resources, said today [Aug. 2] that it raised another $41.5 million in financing and that it will develop a second bio-based chemical.
As part of the deal, an Italian chemical company called Versalis became an investor in Genomatica. Together, they’ll explore ways to make a chemical called butadiene, which is used to make tires, from plants.
Genomatic’s first product, a plant-based chemical called BDO (1,4-butanediol), is being produced in a demonstration plant in Illinois and will be produced at commercial scale by the end of next year at a plant in Italy.
Today’s investment was made at a “significant increase” in valuation to the previous round, the company said:
The investment featured strategic partners, including new investor and partner Versalis, the largest Italian chemical company. Existing investors Alloy Ventures, Draper Fisher Jurvetson, Mohr Davidow Ventures, TPG Biotech, VantagePoint Capital Partners and Waste Management also joined the new round.
I’ve written about Genomatic before (see my 2011 blogpost, Greener chemicals from Genomatica) and its CEO, Christophe Schilling, spoke last spring at FORTUNE’s Brainstorm Green (right). So I got on the phone with Christophe to ask him about the fundraising round. With the announcement, Genomatica said it would withdraw its plans for a $100-million public offering of its stock, which were announced nearly a year ago.
Christophe said the company, which has now raised more than $125 million, has ample funding to take BDO to commercial scale and move ahead with butadiene.
“Fortunately, our model is one where we license our technology,” he said. “We don’t go out and build plants. We don’t have high capital requirements.”
BDO and butadiene are both multi-billion dollar businesses, he said. About half of BDO goes into Spandex, and the rest is made into a variety of other advanced chemicals, foams and plastics. Most butadiene is polymerized to make synthetic rubber.
Genomatica plans to use plants and plant waste — ideally, those that won’t be used for food – make both chemicals, which now come from oil and gas. Butadiene is in short supply at the moment, Christophe told me, because it’s typically a byproduct of oil, which is being replaced in some industrial production of chemicals by cheaper natural gas.
Genomatic has agreements in place with Tate & Lyle, Mitsubishi Chemical, Novamont, Gruppo M&G, Versalis and Waste Management to develop its technology. Christophe says that the company’s plant-based chemicals should cost less and have a smaller environmental footprint than conventional petroleum-based chemicals. He started the company, with the help of a $100,000 grant from the National Science Foundation, in 2000 soon after earning his PhD in bio-engineering.