May. 9, 2011, 4:30am PT
Adapted from an article by Jeff St. John http://gigaom.com/author/jeffstjohn/
Verdezyne Inc., a synthetic biology company that genetically engineers yeast that eat plant sugars and excrete biofuels and biochemicals, has just landed an undisclosed equity investment from British oil giant BP and Dutch biochemicals company Royal DSM. Mark this news down as another biotech-based startup teaming up with the industry incumbents to facilitate commercialization of their green fuels and bio-chemicals.
The undisclosed round will fund the Carlsbad, Calif.-based startup’s operations through the next few years, as well as help it build two pilot plants to churn out both ethanol and adipic acid, a precursor to nylon and other polymers, Previous VC investors, Monitor Ventures and OVP Venture Partners, also took part in the new round.
As for projects and partnerships with BP and DSM, a company spokesperson said Verdezyne was looking at “additional relationships” that could fit into both companies’ broader green fuels and chemicals efforts. “The companies’ technologies seem to be very complimentary,” he said.
Several biofuel and biochemical startups are inking partnerships with oil, chemical and consumer products giants, which have deep pockets and a broad distribution channel that can help bring these still expensive and hard-to-make products to market. Amyris has a deal with Procter & Gamble to produce chemicals for consumer products, and Codexis is working with Shell on a sugarcane-to-biofuel project. Other such partnerships include Exxon’s partnership with Craig Venter’s Synthetic Genomics to genetically engineer algae for biofuel, as well as agricultural products giant Cargill’s partnership with Gevo, the Khosla Ventures-backed cellulosic ethanol company that went public in February.
Verdezyne was founded in 2005 as CODA Genomics, a University of California at Irvine spinout that used computational technology to design and produce genes and gene libraries for the research world. Three years ago, the company board shifted to the idea of using their technology to make their own biofuel and biochemicals, and changed the company name.
Verdezyne has been able to design yeasts that eat either plant sugars or oils. Verdezyne has a deal with big yeast maker Lallemand to put Verdezyne’s ethanol-making yeasts for increased yields into use in a pilot plant project to be built later this year. This year will also see the start of another pilot plant project using yeasts that make adipic acid, which the company can do at costs much lower than traditional methods using petroleum by-products. Adipic acid is a $6 billion/year market chemical for the manufacture of nylon, polystyrenes, and other plastics polymers.
Verdezyne will still need help with breaking down cellulosic (and hemi-cellulosic) materials into the sugars it needs to eat to tackle converting grass, straw, sugar cane stalks and other such tough plant material into chemicals. Interestingly, one of BP’s other big moves into biofuels came in January with its $98 million purchase of Verenium, a startup that makes enzymes that break down cellulosic biomass into sugars — a technology that could be quite complimentary to what Verdezyne can do with sugar feedstocks.
Verdezyne is an industrial biotechnology company founded in 2005 as CODA Genomics by UCI professors G. Wesley ‘Wes’ Hatfield and Richard ‘Rick’ Lathrop. Verdezyne uses metabolic pathway engineering tools to create unique microbial strains for cost-effective production of bio-based fuels and chemicals. Current investors in Verdezyne include: chemical industry giants British Petroleum (London UK) and Royal DSM (Netherlands); venture capital firms OVP (Seattle, WA) and Monitor Ventures (Palo Alto, CA); and angel investors from the Life Science Angels (Northern CA) and the Tech Coast Angels (Southern CA). For more information on Verdezyne, visit www.verdezyne.com.
About BP Alternative Energy Ventures
BP Alternative Energy, launched in November 2005, combines BP’s interests in low carbon energy. The portfolio includes biofuels, wind, solar, and technology development in carbon capture and storage. With a commitment to invest $8bn up to 2015 in renewable energy sources, Alternative Energy is an integral part of BP. More information at:
www.bpalternativenergy.com. BP Alternative Energy Ventures (AE Ventures) is a corporate venture capital team whose goal is to help innovative companies and entrepreneurs bring smart clean energy solutions to market faster and at scale. They selectively invest in early and growth stage companies in the clean tech energy sector that have disruptive and defendable technologies. Target areas are aligned with BP Alternative Energy’s core businesses as well as venturing into areas of innovation in the carbon markets and the wider landscape beyond BP’s traditional reach. AE Ventures actively supports its portfolio companies, working with them to create long-term financial and strategic value whilst creating access and learning for the BP Group. More information at: www.bp.com/ventures.
About DSM Venturing
DSM Venturing is an active investor in start-up companies, which create innovative products and services in Life Sciences and Materials Sciences that contribute to the quality of life. DSM Venturing's mission is to explore emerging markets and technologies in order to support DSM's innovation and growth strategy. Besides financial support, DSM Venturing supports the start-up companies with DSM's knowledge, resources and networks in order to establish mutual benefits and learnings. To DSM, venturing is an integral part of DSM's open innovation approach, focused on teaming up with innovative players all over the world. DSM has annual net sales of about EUR 9 billion and employs some 22,000 people worldwide. The company is headquartered in the Netherlands, with locations on five continents. DSM is listed on Euronext Amsterdam. More information at: www.dsm.com.More information at: