Houston, Texas-based chemical manufacturing startup Solugen, which was cofounded by Forbes Under 30 alumni Gaurab Chakrabarti and Sean Hunt, announced Wednesday that it has raised a $32 million series B round, which the company will use to expand its manufacturing facilities. The round was led by Founders Fund, and that firm’s partner Brian Singerman will be joining the board. Wester Technology Investment, Y Combinator, Refractor Capital and others participated in the round, which brings the total amount of venture capital raised by the company to over $55 million.
The company’s primary product is hydrogen peroxide—a chemical that has been long manufactured in the Houston area. Traditionally, the chemical is made through a complicated—and toxic—manufacturing process that uses hydrocarbons derived from oil.
Solugen manufactures it completely differently. Rather than using the traditional chemical process, the company instead uses enzymes derived from bacteria that have had their genomes edited using CRISPR. And instead of using oil, the company produces its hydrogen peroxide from plant sugars found in food waste. The company uses the hydrogen peroxide in a number of other products, some of which include chemicals derived from byproducts of the reaction that creates the hydrogen peroxide. Those products are used for number of applications in oil & gas as well as water treatment, agriculture and other industries.
The process doesn’t create any toxic byproducts and more importantly, the company’s “bioreactors” where the hydrogen peroxide is produced is modular, meaning that small bioreactors can be placed near where its customers are, rather than forcing the company to ship the chemical over long distances, which increases the end price.
In the immediate future, however, Solugen will be focused on building its first major plant—capable of producing around 1,000 tons of hydrogen peroxide a year—at a 5-acre site in Houston that was once a polyethylene wax distillery. The remaining capital will be focused on the development of what it calls “mini-mills”—mobile bioreactors that can produce its products closer to its customers.
One reason for producing so much that quickly is because, according to Chakrabarti, there’s been a big demand for its products. “We thought people would just see us as ‘another green company,’” he said. “But the price point is good, and we’re becoming a dominant brand.”
Although the company did not disclose exact figures, it claims that it’s seen nearly 10x growth year over year thanks to contracts with oil & gas firms, and that when the new plant comes online next year, it will see revenue in the “double-digit millions.” In 2018, the company sold off a brand of biodegradable household wipes it had developed, Ode to Clean, to U.S. manufacturer Diamond Wipes. However, the company will remain the chemical supplier for the brand.
Looking forward, the company’s founders are looking into expanding the company’s product offerings, including the potential to produce plastics with biological processes. It’s also looking at the possibility of forming joint ventures with ethanol plants throughout the Midwest, which would make good sites for the company’s mini-mills because they’re located near its customers, and it also provides the ethanol companies with more revenue streams.
“Our mission is to decarbonize the chemicals industry, so transportation has to go,” said Chakrabarti. “We need to make smaller plants in order to be profitable, so we’re going to lean into working with ethanol producers.”