Stealthy biochemical startup Rennovia has just raised $6 million of a planned $12.4 million investment from 5AM Ventures and Versant Ventures, according to regulatory documents filed earlier this month.
Just what chemicals the Menlo Park, Calif.-based company wants to make, and how it's going to make them, are less clear. Calls to the company weren't immediately returned Friday, and it doesn't have a Web site.
Biochemicals don't present nearly as big a market as biofuels, but they do present more predictability for startups. As Rennovia co-founder Tom Boussie told PEHub, "Margins are higher, volumes are lower and the capital barrier for the same return on investment is lower."
Several startups have launched specifically to tackle the biochemical market, and others have diversified from initial biofuels focus to add industrial chemicals to the list of products they'd like to make from renewable sources.
One example is LS9, which has raised $20 million from Khosla Ventures, Flagship Ventures and Lightspeed Venture Partners to make biofuel from sugar using genetically engineered microbes. In May, the South San Francisco-based startup launched a partnership with consumer products giant Procter and Gamble focused on biochemicals (see LS9, Procter and Gamble Ink Biochemicals Partnership).
Similarly, OPX Biotechnologies, which has raised $17.5 million for its microbes that turn sugar or syngas into biodiesel, is also seeking to make bioacrylic to sell into the $10 billion-a-year acrylic market (see OPX Lands $17.5M for Bioacrylic, Biodiesel).
Others are tackling specific chemical markets. San Diego-based Genomatica, which makes industrial chemicals MEK and BDO using sugar and genetically engineered microbes, has raised $23.5 million from Mohr Davidow Ventures, Alloy Ventures and Draper Fisher Jurvetson. (see Genomatica: Microbe-Made-Chemicals Could Save Empty Ethanol Plants).
And Golden Valley, Minn.-based Segetis wants to use a thermochemical process to turn cellulosic biomass into a chemical called levulinic ketal, which can be transformed into a variety of chemicals. It raised $15 million from Khosla Ventures in 2007 and is looking to raise $15 million to $20 million more, CEO Jim Stoppert said earlier this week (see Segetis: Making a Brand New Biochemical).
How well these companies do will depend on the viability of their technologies, but also how well they can stack up against the price of oil and natural gas, which are the feedstocks for most of the industrial chemicals made today.
While chemical buyers may be leery of using a new biochemical to replace the petroleum-derived chemicals they're familiar with, they may also welcome the price stability that could come from a product whose price isn't tied to the ups and downs of the oil and gas markets, biochemical backers point out.
Novomer, which has raised $21 million for technology to turn carbon dioxide and carbon monoxide into chemicals for plastic manufacturing, sees an added benefit in the carbon reductions that its process yields. Just how valuable that may prove to be will depend on the price of carbon, of course (see Carbon Dioxide-to-Plastic Guys Get $14M).
