‘Green technology’ firm based on MSU science lands $21M in venture capital
PLYMOUTH, Minn. " Draths Corp., a next generation chemical company founded on Michigan State University science, has raised $21 million in new venture funding to commercialize chemical intermediates used to make nylon and other products with renewable resources instead of petrochemicals.
(Media-Newswire.com) - PLYMOUTH, Minn. — Draths Corp., a next generation chemical company founded on Michigan State University science, has raised $21 million in new venture funding to commercialize chemical intermediates used to make nylon and other products with renewable resources instead of petrochemicals.
TPG, a global private investment firm, is the lead investor in the latest funding round, joined by CMEA Capital of San Francisco and by Khosla Ventures of Menlo Park, Calif. The funding came despite an otherwise dismal quarter for VC investments, according to figures tallied by the National Venture Capital Association and PriceWaterhouseCoopers.
“This is basically the emergence of what will be the chemical industry for the 21st century,” explained Draths Chief Science Officer John Frost, a University Distinguished Professor on leave from the MSU Department of Chemistry. “The old chemical industry, it’s only going to last as long as petroleum and natural gas are available … at a price that makes any kind of sense using it as a starting material.”
The company was founded in December 2005 by Frost and his wife, Karen Draths Frost, a former assistant professor of chemistry. Based in Plymouth, Minn., and operating a research laboratory in Okemos, Mich., Draths is commercializing a suite of technologies developed in the Frost’s MSU lab and licensed by the university.
Prior to the new funding, Draths had raised $1 million in angel early stage financing, followed by a $5 million investment from Khosla Ventures late in 2007.
The latest Draths investment round came during a quarter when venture investment nationwide dropped 47 percent from the fourth quarter of 2008, according to the quarterly NCVA/Pricewaterhouse Coopers survey. Clean technology investments, which rose last year against an overall declining VC trend, suffered the steepest drop among categories in the first quarter of 2009, according to the report.
Draths is initially targeting the $20 billion nylon chemical intermediates market, aiming to supply consumer goods makers using renewable resources. The new funding will allow the company to begin the scale-up of the technology as well as develop commercialization pipelines for the rest of its broad technology platform
“In our first generation polymer we’re making, there’s a need and demand for one new plant globally every year to be built. It’s going to be hard to compete with us for a new plant,” Frost predicted, given the cost and environmental drawbacks of petroleum feedstocks.
“This company is a combination of molecular biology, genetic engineering and synthetic chemistry,” Frost explained.
“Our technology is based on taking sugar, genetically engineering the microbe and optimizing the fermentation conditions to obtain a high-yield conversion of carbohydrate into the intermediate. We also have established the chemistry for converting that intermediate into product,” he said.
The range of applications to which the technology could be applied is wide, officials said. Draths, for example, also could provide sustainable solutions to the $80 billion chemical aromatics industry, which includes such common products as paints, coatings and other widely used materials.
“It is exciting to see the great progress Draths has made,” said Mike Poterala, executive director of MSU Technologies, which works with companies and investors to commercialize MSU’s inventions. “Seeing a successful business formed around environmentally friendly MSU technologies with a presence in mid-Michigan – it doesn’t get much better than that.”
Michigan State University has been advancing knowledge and transforming lives through innovative teaching, research and outreach for more than 150 years. MSU is known internationally as a major public university with global reach and extraordinary impact. Its 17 degree-granting colleges attract scholars worldwide who are interested in combining education with practical problem solving.
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This story was released on 2009-04-28. Please make sure to visit the official company or organization web site to learn more about the original release date. See our disclaimer for additional information.