Toward the close of the previous year, Solugen, a company pioneering the use of synthetic biology to diminish the reliance on hydrocarbons within the chemical industry, opted to postpone seeking a new funding round that would have assigned the company a valuation exceeding $1 billion, as reported by TechCrunch.

Instead, the Houston-based bio-manufacturing firm secured an internal investment of approximately $30 million from its current investors and continued development of its most recent undertaking – an innovative bio-based manufacturing process for a specialized, high-value chemical functioning as an anti-corrosive agent.

This effort signifies a potentially highly profitable new product category for the company and establishes a model for numerous other organizations that are reimagining the fundamental components of life in an effort to replace traditional chemistry with biological processes for manufacturing and production.

Should Solugen successfully launch its high-value chemical into commercial production, the company could replicate the trajectory of leading sustainable technology firms like Tesla – transitioning from a premium, specialized product to widespread market availability. Furthermore, Solugen prioritized perfecting the product line before seeking substantial investment, according to sources familiar with the company’s strategy.

As the global community shifts away from petroleum and its derivatives to lessen greenhouse gas emissions and mitigate or reverse global climate change, the chemicals industry is facing significant pressure for transformation. Addressing the issue of oil consumption extends beyond vehicle electrification, as the extraction industry also produces the chemicals integral to most consumer products of the twentieth century.

Chemicals are ubiquitous and represent a substantial market.

Numerous companies, including Zymergen, have secured considerable funding to develop industrial applications for synthetic biology, and they are not alone. Startups such as Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all attracted significant capital to minimize the environmental impact of food, chemicals, ingredients, and plastics through synthetic biology.

While some of these companies are experiencing initial success with food alternatives and ingredients, the potential of biologically derived chemicals has remained largely unrealized – until now.

Solugen’s new product will yield glucaric acid, a chemical that is challenging to produce and finds application in water treatment facilities and as an anti-corrosive agent – and the company can manufacture it using a manufacturing process with zero, or potentially even negative, carbon emissions, as stated by Solugen co-founder and chief technology officer, Sean Hunt.

The glucaric acid produced by Solugen is more cost-effective and environmentally sound than currently used phosphonates for water treatment, and the company benefits from competition against chemical manufacturers located in China.

Considering the ongoing geopolitical tensions between the two nations, the U.S. is focused on increasing domestic production of high-value products – including chemicals – and Solugen’s technology offers a viable pathway to secure homegrown supplies of essential materials.

Solugen still plans to secure additional funding, but intends to wait until its latest production facility for the acid becomes operational, according to Hunt.

This development is the culmination of several years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, initially recognized the potential of their developed technology for producing specialty chemicals back in 2017, Hunt explained. However, the company first needed to produce hydrogen peroxide as a precursor chemical, Hunt added.

“It is advantageous for us to concentrate on this,” Hunt stated. “As we expand, we can enter more commodity-type markets in the future.”

This is indicative of the significant progress the entire industry is making, Hunt noted. “Synthetic biology has made substantial advancements,” he said. “With our commercial plant coming online this summer [it demonstrates] synthetic biology has reached a stage where we can compete effectively on both price and performance.”

Therefore, the capital investment will coincide with the company’s progress toward completing these commercial-scale facilities.

“It wasn’t that we rejected a term sheet,” Hunt clarified. “We are committed to achieving milestones and goals at a corresponding rate, which is this year. I am very confident and optimistic about 2021.”

Solugen’s co-founder envisions the company’s path as one that other startups in the synthetic biology field will follow – introducing profitable products to the market at the higher end before competing with more sustainable versions of commodity chemicals.

“How does one initiate a company with this degree of capital intensity?” Hunt questioned. “You can begin in the fine chemicals sector where products sell for tens to hundreds of dollars per pound. For us, glucaric acid represents that specialty chemical, and then we will move into commodity production.”