The funding is the first tranche of a proposed $12.3 million Series A round, documents show.
The stealth Menlo Park, Calif.-based startup is working to make specialty chemicals from renewable feedstock. The company has not disclosed what inputs it will use or what chemicals it will make.
A chemical company like Rennovia is something of an anomaly in Silicon Valley, where information technology and life science companies vie with cleantech for attention from venture capitalists. Still, some VCs are willing to go out on a limb for a compelling chemistry applied to an industry that has long relied on petroleum as the principle input for its products.
“There was just enough deal precedent in the chemical space that we weren’t treated as being that esoteric, at least by the investors we talked with,” says co-founder Tom Boussie.
Boussie is quick to point out that he didn’t found the company to pursue a save-the-world, green-related agenda.
“The company was not born of a political philosophy, it was the product of opportunities in the chemical industry and this is one opportunity of significant value, diversifying their feedstock base away solely from petroleum,” he says.
To be sure, many startups have tried to use renewable, biologic feedstocks to produce fuel. To date, VCs have invested several billion dollars into ethanol refineries that make the gasoline substitute from corn, switchgrass and algae. But few of the startups have made it to maturity, thanks to volatility in both the cost of inputs and the value of the product they produced. Many startups also have fallen victim to capital requirements, usually to build specialized refineries, which exceeded their ability to raise funds.
However, Boussie says that Rennovia is focused on making chemicals, not fuels. “Margins are higher, volumes are lower and the capital barrier for the same return on investment is lower,” he says.
Rennovia isn’t the only bio-chemicals company to lately garner investor attention.
In the spring, Okemos, Mich.-based Draths Corp. raised $21.7 million in a Series C round from
Khosla Ventures also invested $15 million in Golden Valley, Minn.-based