Green brick builder looks to cement $15M

After working in the building materials industry for 35 years, Mike Kane has a habit of tapping on walls and counters to see what they are made of. Or he’ll look up at ceilings and the insulation behind it and remark with a head nod, “Yes. I’ve made that before.”

If he were to find some wood in his office, Kane would knock on it for good luck since he hopes to soon wrap up a $15 million Series C round of funding.

Kane is CEO of VC-backed CalStar Products, a Newark, Calif.-based startup that uses a chemical process to make a “green brick” it says requires about 90% less energy and generates 90% less carbon dioxide during production than traditional clay bricks.

“We’re up against an industry that pretty much hasn’t changed how it makes bricks for thousands of years,” Kane says. “We need the Series C to expand.”

The company previously raised $15 million over two rounds of funding from Foundation Capital and EnerTech Capital.

Kane tells PE Week that CalStar has already raised about half of the Series C round in debt and equity, including commitments from Foundation and EnerTech, and is in the midst of fund-raising, looking for one or two more venture firms to complete the round.

The new funding will coincide with the company’s rollout of its first factory for low-carbon bricks that’s set to open in Caledonia, Wis., in December. The plant will have the capacity to produce about 10 million green bricks a year, initially. CalStar hopes to eventually open a few more brick-making plants in the Midwest over the next five years that will allow it to make up to 600 million green bricks a year, or roughly less than 10% of the overall U.S. brick market, which averages about 6 billion to 8 billion bricks a year.

“That should comfortably position us in the green brick space as it grows,” Kane says.

CalStar is locating its plant in Wisconsin to service the brick-heavy geography of the Midwest and to be near supplies of fly ash. The company’s proprietary method of making bricks in various sizes and shapes involves using fly ash, a powdery residue byproduct of coal-fired electrical plants and which normally ends up in landfills.

Typical bricks, mostly made up clay, are cooked in a kiln that’s heated at 3,000 degrees Fahrenheit for between 24 hours and 48 hours. CalStar’s bricks—which include fly ash, sand and a small amount of chemicals—are doused in steam in a curing process that takes about eight hours.

As a result, CalStar says that each of its bricks creates 0.2 pounds of carbon dioxide emissions, compared to a traditional brick which produces about 1.3 pounds.

To the casual observer, the finish fly ash bricks have the same look and feel as traditional clay bricks. Kane says they meet the same safety requirements and will cost the same per unit as their clay-fired cousins.

Kane says the plan is to begin wholesale distribution next year and to eventually branch out into retail sales. CalStar plans to produce bricks and pavers, at first, but intends to expand to include roofing tiles, blocks and other building materials, which represents an estimated $11 billion annual wholesale market nationwide.

Washington, D.C.-based Brick Industry Association maintains that brick-making technology has changed and that brick is much stronger today than it was just a few decades ago, and it only takes about 30% of the energy to extract, manufacture and deliver brick today as it did in 1970.

BIA spokesman Stephen Sears, who questions the reliability of fly ash, says that clay brick is environmentally friendly because it is made from naturally abundant materials and does not contain highly toxic compounds. However, in an email to PE Week, he did not address the kiln process, which CalStar does not use. Sears also says that CalStar should not call its product a “brick” since that word refers to moist clay or shale hardened by heat.

Nevertheless, Paul Holland, who leads the cleantech practice at Foundation Capital, says that CalStar is one of a growing number of companies that is creating safe, green alternatives for the building materials business. Another example is Serious Materials Inc, a Sunnyvale, Calif.-based maker of energy-saving windows, drywall and other eco-friendly building materials.

Both Serious Materials and CalStar are backed by Foundation Capital and both were founded by Marc Porat, a Silicon Valley entrepreneur who in the 1990s co-founded General Magic, maker of a handheld communications device that started as a project inside Apple.

“Serious and CalStar are part of a second industrial revolution, a green revolution,” says Holland, who adds that he has ordered a palette of CalStar’s pavers to be installed at his Portola Valley, Calif.-based estate, which is currently under construction and which Holland says will be “the greenest custom-built home in America.” Among its many green features, the home will incorporate various environmentally friendly materials.

“We have a set of products, including brick, which has been around for thousands of years that can be improved using technology,” Holland says. “The fact that Foundation has invested in two green infrastructure companies should indicate where we think this industry is headed.”

Holland credits Kane and his long history in the building materials industry for helping sell CalStar’s cleantech story to the construction industry and to VCs.

Several months ago, shortly after CalStar raised $8 million in its second round of funding from Foundation Capital and EnerTech Capital, Kane was recruited from Holcim Inc., a supplier of blended cements and related components.

Although he’s new to Silicon Valley, Kane is not new to innovation. At Johns Manville Corp., a maker of roofing and insulation, Kane introduced“formaldehyde-free” fiberglass wall insulation.

His initial thought at coming to Silicon Valley was that this is the wrong place to develop brick technology.

But he says Ph.D.s literally are coming in off the street and knocking on his office door.

“I’ve never had so many smart, young Ph.D.s working for me,” says Kane, who has worked in the construction materials business for more than 35 years. “CalStar’s technology has nothing to do with me. It’s about the R&D team we have here in Silicon Valley.”