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Four start-ups boasting fermentation technologies that produce specialty chemicals have notched recent wins, suggesting that investors and manufacturers are taking another look at what has been a dormant arena in recent years.
Checkerspot, a materials firm named one of C&EN’s 10 Start-Ups to Watch in 2018, has raised $13 million in its first round of venture funding from investors Builders VC, Breakout Ventures, and others. The start-up is focused on producing polyurethanes and textile finishes by customizing the triglyceride output of microalgae.
The company’s founders, Charles Dimmler and Scott Franklin, know a lot about algae. Both are veterans of the algae firm Solazyme, which first made a splash back in 2009.
That now-bygone era brought an explosion of start-ups promising to make chemicals and fuels from renewable raw materials. At scale, they claimed, their algae- and sugar-based technologies could compete with fossil-fuel-derived incumbents. But then petroleum and natural gas prices plummeted, and firms like Solazyme that borrowed heavily withered or went out of business.
“What we’re doing now is absolutely built on the shoulders of our past experience, both positive as well as the hard lessons learned,” Dimmler says. Solazyme showed that algae can be produced and processed at scale, he says. But Checkerspot will have a different cost structure, Dimmler argues. Working at a smaller scale, the firm is focusing on valuable, in-demand specialty molecules that can’t be made from fossil sources.
The strategy is appealing to investors. In a blog post describing Breakout Ventures’ interest, Scientific Director Hemai Parthasarathy touts “the power of biological systems to design material building blocks with new properties.”
In three other cases, firms are getting a boost from Asian chemical firms keen for new materials. San Francisco–area Zymergen, which uses automation and machine learning to produce molecules using modified microbes, has signed a development pact with Sumitomo Chemical for biobased polymers and other electronic materials.
Zymergen’s neighbor, the biobased specialty chemical firm Lygos, will also get to prove it can improve consumer electronics. The venture arm of LG Group added an investment of $5 million to Lygos’s second round of funding. Lygos and LG aim to replace petroleum-derived materials with sustainable substances.
The Chinese fine chemical company Zhejiang NHU has different end markets in mind for its $6.2 million seed round investment in Cysbio, a spin-off from the Technical University of Denmark. Cysbio’s fermentation expertise is in producing amino acids and sulfated biochemicals for markets like food, nutrition, and cosmetics. But as for the other start-ups, the draw of Cysbio is the ability to make new functional chemicals for new applications.
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