Bioengineering pioneer Genomatica has raised $90 million in private funding to accelerate the commercialization of two chemicals it has developed from renewable sources—chemicals that are being used today in plastics, cosmetics, and personal care. The company says it will also use the money to further ongoing development of a third chemical, to be used in sustainable nylon.
A new investor, New York-based investment firm Casdin Capital, led the financing, Genomatica announced Wednesday. Previous investors also participated in the round, including Genomatica’s largest shareholder, Connecticut-based hedge fund Viking Global Investors, and Ginkgo Bioworks, a venture-backed synthetic biology company in Boston. Ginkgo, which raised a $275 million Series D funding round in late 2017, has been valued at more than $1 billion by its investors, which include Casdin and Viking.
Venture-backed companies backing other startups is unusual, but not unheard of: Earlier this year San Diego-based Brain Corp, a Qualcomm spinout that has raised more than $100 million to fund its development of autonomous machines, led Bay Area-based robotics company Savioke’s $13.4 million Series B financing round.
In a prepared statement, Ginkgo CEO and co-founder Jason Kelly lauded what he described as Genomatica’s ability to provide high-volume bio-based chemicals at costs competitive with petrochemical production. With the additional investment into Genomatica, Ginkgo is “doubling down” on renewable chemicals, he said.
Ginkgo designs custom microbes for customers across industries, including agriculture, beverage, perfume and, most recently, cannabis. Back in 2014 it was the first biotech company accepted by Y Combinator, the famed Bay Area accelerator.
As part of the deal, Genomatica said it will get more access to Ginkgo’s services and “foundry,” the production facility where its software and robots are used to design, make, and test organisms.
Casdin, which primarily backs life science innovations, has previously invested in other San Diego companies, including biotech Ignyta, which was acquired by Roche (NASDAQ: RXDX) in 2017 for $1.7 billion.
Genomatica has developed processes to make the chemical butanediol, or BDO, which is used in plastics and apparel, and butylene glycol, used in cosmetics and personal care, from renewable sources.
At the moment the company’s business model is analogous to that of Qualcomm, which has historically earned most of its profits from licensing, although its wireless chip business also brings in revenue.
Genomatica’s process has been used to manufacture tens of thousands of tons of the chemical BDO. In 2016 Italy’s Novamont opened a $110 million industrial-scale facility—the world’s first, the bioplastics firm said at the time—to make the ingredient using the process developed by Genomatica. The chemical is used in products like biodegradable, compostable plastic bags, coffee capsules, and food packaging.
As for butylene glycol, Genomatica is in the early stages of commercializing its process for making the solvent and conditioning agent often used in cosmetics, according to Steve Weiss, who heads Genomatica’s marketing. The chemical, which the company calls Brontide, is used today to make more-sustainable cosmetics and personal care products; it’s possible Genomatica could one day make and sell it rather than (or in addition to) licensing the process to make it, as it does with BDO, he said.
Still in development at the company is a process to make a sustainable nylon, which could be used in textiles such as clothing and carpets. Earlier this year Genomatica signed a multi-year deal with Italian firm Aquafil, a producer of nylon fiber, to make a plant-based version of caprolactam, an ingredient in sustainable nylon.
The company has had stretches of difficulty over its 20-year history. Falling oil prices reduced demand for Genomatica’s bio-based BDO, which prompted the firm to develop a process to make butylene glycol, which commands higher prices.
But it appears to be entering a new stage with this latest round of financing, which brings the total it has raised since it was founded in 1998 to $231.8 million, according to Weiss.
Genomatica, which employs 100 people in San Diego, wouldn’t reveal its revenue numbers. However, Weiss said that in 2017 the company earned more than it ever had previously, and that revenue this year was on track to surpass that record. Genomatica is headed by CEO Christophe Schilling, who co-founded the company and became its chief executive in 2009.