Solugen raises $ 357 million to make chemical compounds and plastics from vegetation
Co-Founders of Solugen: CEO Gaurab Chakrabarti and CTO Sean Hunt.
Todd Spoth for Solugen
Chemical companies have historically used petroleum, natural gas, and phosphates to make their products, which exacerbates air and water pollution.
A start-up called Solugen is looking to replace many of these ingredients with chemicals that use renewable resources like simple sugars.
Co-founded in 2016 by CEO Gaurab Chakrabarti and CTO Sean Hunt, Solugen develops and grows enzymes that can convert sugars into chemicals needed to make a wide variety of products and used in many industrial applications.
The company’s bio-based chemical offering already includes water treatments, one chemical that makes concrete stronger, another that makes fertilizers more efficient, and detergents that are strong enough to clean a locker room or mild enough to be used on facial towels.
“The chemical industry accounts for a few percentage points of global greenhouse gas emissions. Eliminating CO2 from the chemical industry cannot be fast enough, ”said Clay Dumas, partner at Lowercarbon Capital.
Along with Singapore’s sovereign wealth fund GIC and investment management company Baillie Gifford, Lowercarbon is one of several venture firms participating in a new $ 357 million round. The deal brings Solugen’s valuation to over $ 1.8 billion and total capital to over $ 400 million.
Solugen cites IEA estimates that chemical production, dominated by companies like Sinopec, BASF and Dow Chemical, added an estimated 880 million tons of carbon dioxide into the atmosphere in 2018, making the chemical industry the third largest source of global CO2 that year. Emissions made.
Most of the chemicals used in the US for industrial purposes are also imported from China, with shipping adding more greenhouse gas emissions to its overall ecological footprint.
Chemicals from corn syrup
In contrast, Solugen makes its chemicals in the US from locally sourced ingredients. For example, the company buys corn syrup from wet mills in Iowa and operates a factory outside of Houston where a petroleum-wax distillery exploded in 2005.
The bio-smithy, as Solugen calls the facility, occupies only 20,000 square meters and produces 10,000 tons of chemicals per year. Some of the equipment came from a candy manufacturer, says CTO Hunt. He says employees who move from traditional petrochemical companies love the clean environment.
Solugen founded his first sustainable chemical plant in Stafford, Texas. The company took over land in 2005 where a petroleum wax distillery exploded.
Todd Spoth for Solugen
Investors expect the company to use the cash injection to “copy and paste” the bio-forge and build similar facilities around the world.
The company also seeks an aggressive stance on the co-founders as it continues to develop new molecules using the cell-free, synthetic biology techniques that led to its early success in water treatment.
According to CEO Chakrabarti, Solugen focused on water treatment chemicals because start-ups had largely ignored the “non-sexy” industry but urgently needed an ecological makeover.
Water cooling towers and sewage treatment plants, Chakrabarti said, use unhealthy chemicals for cleaning and maintenance. Some made with phosphonates even contribute to algal bloom. “It was shocking to learn that these chemicals are not the cleanest because they end up in our water supply. We wanted to make them safer and cheaper at the same time, ”he said.
Solugen manufactures water treatment chemicals and others from renewable raw materials.
Todd Spoth for Solugen
In 2020, Solugen launched its BioChelate water treatment made from simple sugars – a dark brown liquid that Hunt keeps in a vial on his desk. The company is now selling BioChelate to a network of water treatment service providers who transport it and pump it to their customers. Pipes and water systems while monitoring their water quality to keep them clean.
“When you use our chemistry, you protect the inner walls of the water infrastructure,” said Hunt. “This prevents your pipes from rusting and corroding, clogging with limescale or letting biofilms such as legionella live in the water. All of this prevents the pipes from bursting and having catastrophic leaks. It works on anything that is a metal surface. “
Investors love the fact that Solugen is already operational and not just making forward-looking statements about how they will save the planet, said Seth Bannon, founding partner of early investor Fifty Years, who also participated in this funding round.
“Solugen is the first synthetic biology company with a proven track record of scaling both its sales and its own production,” he said, contrasting it with Zymergen, whose shares recently hit nearly 70%, known as the company admitted that it had problems scaling its production and expanding sales.
Solugen also has tremendous potential to develop new molecules to “further decarbonize chemicals,” Bannon said.
For example, Chakrabarti and Hunt said Solugen wanted to use its enzymes and chemical processes to “carbolize” or turn carbon dioxide into useful products, particularly in building materials, formaldehyde-free resins, and new types of plastics.
Others who joined the funding round include Temasek Holdings, BlackRock managed funds, and Carbon Direct Capital Management.