A cellulosic sugar start-up that says it can extract sugars from cellulosic sugars with just heat, pressure and water (and a year ago few knew even existed) announced this morning it has closed a $50 million financing round led by the largest chemical company in the world. BASF, which posted $63 billion in sales in 2010, invested $30 million in Philadelphia-based Renmatix. BASF says the technology could help it broaden its use of renewable raw materials and improve the cost of its supply chains.
Renmatix’ technology breaks down cellulose through supercritical hydrolysis, a process by which heat and pressure are applied to a slurry until the chains of sugar break down into the smaller components usable by biofuel and biochemical producers. The process does not use any of the pretreatments or enzymes companies like Codexis, Genencor, and Novozymes have been spending tons of cash developing.
The low cost and simplicity of Renmatix’ process has made it a front-runner in the cellulosics market, CEO Mike Hamilton told me earlier this week. “I think a lot of people fell in love with the biology of enzymes, but hardcore chemists like BASF recognized the importance of chemistry in solubilizing sugars. Our process is very elegant. There’s simplicity to it, and we learned how to drive the process efficiently.” Hamilton says the funds will be used to build its first industrial-scale plant, which should be announced in the first half of 2012.
Until recently, the Kleiner Perkins start-up had been “stealthy” (by it’s own admission). It opened a technology center at King of Prussia, PA in September, an event that featured technology VC superstar John Doerr and Amyris CEO John Melo, among others.
Hamilton says the also deal validates the company’s technology and follows a recent trend for big chemical companies to expand into renewables. “Big oil firms like Total and Shell took an early position in renewable startups,” he says. “Now we’re seeing interest from big chemical companies,” with billion-dollar deals like DSM’s acquisition of Martek Biosciences and DuPont’s recent purchase of Danisco.
“This is key because big chemical companies are going to drive adoption for these materials—not start-ups,” Hamilton adds. But whether the end product is a chemical or a fuel, “cheap sugar gives you an enviable position,” Hamilton adds.
Hamilton says Renmatix will also use the funds to optimize the process for other feedstocks. The company currently uses woody biomass at its demonstration-scale facility at Kennesaw, GA, and is building a technical center at King of Prussia, PA.