Solugen is making chemicals from sugar, not petroleum

Chemical companies have historically used petroleum, natural gas and phosphates to make their products, exacerbating air and water pollution.

A start-up called Solugen aims to replace many of these ingredients with chemicals using renewable resources like simple sugar.

Co-founded in 2016 by CEO Gaurab Chakrabarti and CTO Sean Hunt, Solugen designs and grows enzymes that can turn sugar into chemicals that are needed to make a variety of products and used in many industrial applications.

The company’s bio-based chemical offering already includes water treatments, a chemical that makes concrete stronger, another that makes fertilizers more efficient and detergents that are strong enough to clean a locker room or mild enough to be used on facial wipes.

“The chemicals industry represents a few percentage points of global greenhouse gas emissions. Zeroing out CO2 from the chemicals industry can’t happen fast enough,” said Clay Dumas, a partner with Lowercarbon Capital.

Lowercarbon is one of several venture firms participating in a new $357 million round, alongside Singapore’s sovereign wealth fund, GIC, and the Baillie Gifford investment management company. The deal brings Solugen’s valuation north of $1.8 billion and its total capital raised to over $400 million.

Solugen cites IEA estimates that chemical production, dominated by the likes of Sinopec, BASF and Dow Chemical, contributed an estimated 880 million tons of carbon dioxide to the atmosphere in 2018, making the chemicals industry the third-largest source of global CO2 emissions that year.

Most chemicals used for industrial purposes in the U.S. are also imported from China, with shipping contributing more greenhouse gas emissions to their overall environmental footprint.

By contrast, Solugen makes its chemicals in the U.S. from domestic ingredients. It buys corn syrup from wet mills in Iowa, for example, and operates a factory outside of Houston that was the site of a petroleum wax distillery that exploded in 2005.

The Bioforge, as Solugen calls the facility, takes up just 20,000 square feet and produces 10,000 metric tons of chemicals a year. Some of the equipment came from a candy maker, CTO Hunt says. He says employees who move over from traditional petrochemical companies love the cleaner environment.

Investors expect the company to use the cash infusion to “copy and paste” the Bioforge and set up similar plants around the world.

The company also aims to hire aggressively, the co-founders said, while continuing to develop new molecules using the cell-free, synthetic biology techniques that led to its early success in water treatment.

According to CEO Chakrabarti, Solugen has focused on chemicals for water treatment because start-ups had largely ignored the “non-sexy” industry, but it desperately needed an environmental makeover.

Water cooling towers and wastewater treatment facilities, Chakrabarti said, use unhealthy chemicals for cleaning and maintenance. Some, made with phosphonates, even contribute to algal blooms. “It was shocking to learn these chemicals are not the cleanest, because they end up in our water supply. We wanted to make those safer and cheaper at the same time,” he said.

Solugen introduced its BioChelate water treatment made from simple sugar — a dark brown liquid that Hunt keeps in a vial on his desk — in 2020. It now sells BioChelate to a network of water treatment service providers who haul and pump it into to their customers’ pipes and water systems, while monitoring their water quality to keep it clean.

“If you use our chemistry, you protect the inner linings of water infrastructure,” Hunt said. “This keeps your pipes from rusting and corroding, from getting blocked up with lime, or letting biofilms like legionella live in the water. All of this prevents the pipes from having bursts and catastrophic leaks. It works on anything that is a metal surface.”

Investors love the fact that Solugen is already operational, not just making forward-looking statements about how they’ll save the planet, said Seth Bannon, founding partner of early investor Fifty Years, which also participated in this funding round.

“Solugen is the first synthetic biology company with a demonstrated ability to scale both their sales and their own manufacturing,” he said, contrasting it with Zymergen, whose stock recently cratered nearly 70% when the company disclosed it was having trouble scaling its manufacturing and expanding sales.  

Solugen also has huge potential to develop new molecules to further “decarbonize chemicals,” said Bannon.

For example, Chakrabarti and Hunt said Solugen wants to use its enzymes and chemical processes for “carboligation,” or turning carbon dioxide into useful products, especially building materials, formaldehyde-free resins and new types of plastics.

Others who joined in the funding round include Temasek Holdings, BlackRock managed funds and Carbon Direct Capital Management.