Alt-fuel companies don't like to talk about it much, but it is probably better to classify many of them as pet-food makers or soap companies.

Waste products – glycerin, protein, sillage – are the unglamorous byproducts of the alternative fuel business. Not everything that comes out of a plant, after all, ends up in a gas tank. Some cellulosic ethanol companies use the lignin, the tough material that helps plant stay rigid, harvested from wood chips and other plant matter as a fuel in their own operations. Algae companies like Solix say they will sell algae byproducts to the pet-food market.

Glycos Biotechnologies, armed with $5 million in Series A funding, says it can help improve the byproducts picture. It has developed a fermentation process in which microbes convert glycerin or other materials into higher-value industrial chemicals. Draper Fisher Jurvetson and DFJ Mercury, two of the early firms in industrial microbiology, lead the round.

The core technology for glycerin conversion was originally developed by Professor Ramon Gonzales at  Rice University. The first project was to develop synthetic molecules from glycerin with the aid of microbes that were molecularly identical to current petrochemical-based chemicals.

Expect to see Rice pop up more in the coming years. The university – along with Georgia Tech, the University of Texas, University College Dublin, the Technion in Israel and UC Davis – has begun to more aggressively promote technology transfer. The lab-to-startup path has lead to millions in royalties and worldwide acclaim for places like Stanford, MIT, UC Berkeley, and the University of Illinois.