Genera repositions itself, gets $118M investment – Movin’ on up to get a piece of the pie

Like The Jeffersons, one of the longest running sitcoms from the 1970s and 80s, Genera is movin’ on up. While they aren’t moving “to the east side, to a deluxe apartment in the sky”, they are located in East Tennessee and Genera certainly “got a piece of the pie.”

And a big pie at that. A $118 million pie in new investment money for this Tennessee-based biomass company. The financing was anchored by an equity investment from WindSail Capital Group, which partnered with investors Coppermine Capital and Stairway Capital in the Genera financing.

The money will be used for Genera’s first manufacturing facility to produce its Earthable line of sustainable agricultural fiber products. Construction has begun already and the facility will be operational in the latter half of 2020.

According to The Digest’s exclusive interview with Dr. Kelly Tiller, President and CEO of Genera, the facility will process more than 50,000 tons of feedstock to produce more than 36,000 tons of products annually. But keep on readin’ because those numbers might be going up before you know it…

The feedstock

First, what is the feedstock and what will it be used for? Genera will use locally grown grasses and other agricultural crops to make compostable food service packaging products like plates, bowls, and takeout containers at its new manufacturing facility in Vonore, Tennessee. In addition to making products that are a sustainable alternative to plastics and polystyrene (Styrofoam-type products), Genera’s Earthable fibers are also used to produce a wide array of towel, tissue, cupstock and other paper products.

According to Genera’s press release, Earthable will be the largest fully integrated, domestic solution for ag-based fiber and food-grade packaging in the United States, designed to meet the growing, consumer-driven demands for more eco-friendly products in the food and consumer industries.

Genera is all about local sourcing. Made in the USA. Even better, made close by in East Tennessee. They are getting their feedstock within a 50-mile radius of the facility in Vonore, according to Tiller. This means lower transportation costs, lower GHG emissions, supporting the local farmers and economy, and more. Win, win, win!

So, back to the feedstock…let’s talk grass. The fibers are derived from locally grown high-yield, conservation crops like switchgrass and biomass sorghum. Genera has already begun to work with local East Tennessee farmers to produce the feedstock it will use in its new manufacturing facility and is actively seeking additional farm partners in the region. Hint, hint: They need more farm partners, they need more feedstock, the demand is there folks!!!

The interesting thing here is that Genera can use a wide variety of feedstocks, so why switchgrass and biomass sorghum? That’s the question we presented Tiller with, who said it’s about sourcing local.

“The feedstocks we’ve selected are highly tailored to the location of this project,” Tiller told The Digest. “We looked for the right blend of sustainability, quality, characteristics, and this region and even the culture of farmers in this area to determine the feedstocks. A wide range of feedstocks can be used, but the optimal feedstock is pretty location specific.”

This means that if, or should we say when, Genera expands beyond East Tennessee, they can utilize whatever biomass feedstocks are abundant and most suitable to the new location. Now that’s being adaptable while integrating local culture and feedstocks into your business, AND making it even more attractive for consumers who are increasingly looking for locally made, sustainable products.

Let’s get techy and agy…

“Genera’s core expertise, beyond the fiber technology, is agricultural feedstocks,” Sam Jackson, Vice President, Business Development told The Digest. “We have spent more than a decade developing the most sustainable agricultural supply chain possible. A key driver of environmental impact in the production of ag-based pulp and fiber is the impact of agricultural production of feedstocks. Factors such as crop variety selection, fertilizer usage rates, and other inputs all contribute, either positively or negatively, to the sustainability of the product.”

“While Genera’s pulping technology works with a wide range of biomass feedstocks, Genera has selected switchgrass and biomass sorghum as the best fit for this initial manufacturing location, not only because of their fiber characteristics, but because they offer positive local environmental impacts,” said Jackson.

“All of the crops selected have high yields per acre, offering improved input and harvesting efficiency over most traditional crops”, said Jackson. “None of the crops require irrigation, relying instead on only natural rainfall. Switchgrass is perennial, meaning it is planted once and will regrow year after year. This life span can exceed 20 years. Perennial crops offer reduced soil disturbance, improved wildlife habitat, and enhanced carbon sequestration characteristics. Biomass sorghum is lower input (less fertilizer and chemicals) compared to traditional row crops and still offers significant environmental benefits. Ultimately, the proprietary feedstock blends Genera uses to produce high quality pulp take advantage of all of these sustainable characteristics and are well suited to the specific production region.”

“Additionally, the technology we are utilizing to create fiber from the feedstocks is much more sustainable than traditional wood pulping processes,” said Jackson. “We use dramatically less water and energy throughout the process. In fact, Genera recycles the process water and does not discharge any wastewater. The process does produce a coproduct stream in the form of a high-solids syrup that contains lignin and other materials. Genera is developing markets for that material as it has specific properties that make it attractive in a wide variety of animal feed, industrial chemical, and other markets.”

The facility

Genera’s fiber production facility is expected to be ready to deliver Earthable products to the marketplace in 2020, initially bringing 80 new jobs to Vonore. The company will begin hiring in early 2020, including skilled operators and maintenance positions. Even before the Vonore facility begins operations, overwhelming customer demand for its products has the company looking at options to increase production capacity at the Vonore facility potentially increasing total employment by 50%, according to the press release.

The buyers

While The Digest tried to get the scoop on Genera’s customers, Tiller said they do not disclose their customers or other offtake details. But she admitted that yes, the facility has multi-year contracts in place with several large customers.

Their press release alludes to further growth for Genera even before starting operations as they are already contemplating expansion of their initial scope, noting the possible 50% increase in jobs based on the big appetite for locally made, high quality products. That is a clear indication of where it is going, so stay tuned on that.

The reactions and the partners

Like the Jeffersons, Genera isn’t going at it alone. They’ve got friends around, like TennEra LLC, an affiliate of the University of Tennessee Research Foundation (UTRF), which leased its former biorefinery in Vonore, Tennessee, to Genera for the development of the new manufacturing facility.

“We are excited for the positive rural economic benefit of Genera’s fiber production facility in East Tennessee and beyond, furthering UT’s land grant mission,” said Stacey Patterson, president of UTRF and UT vice president for research, outreach and economic development.

“With this new investment, we can begin to answer the increasing demand for environmentally conscious solutions with a truly farm-to-table product made in America,” said Dr. Kelly Tiller, President and CEO of Genera. “We’re excited about the new revenue stream we can offer our local farmers. Our Earthable plant-based paper and packaging products really resonate with consumers. We are passionate about delivering sustainability improvements to the marketplace while making positive impacts in rural economies.”

“We and our partners are investing in Genera because they are pioneering a solution that will serve both our domestic rural economy and the rapidly growing demand for environmentally friendly packaging in the consumer market,” said Ian Bowles, Managing Director of WindSail Capital Group. “The market opportunity for domestically sourced, non-wood fiber and packaging products is enormous. Genera is uniquely qualified to deliver this solution to the market, given their industry-leading experience managing agricultural biomass supply combined with the team’s experience in biomass processing and manufacturing.”

The repositioning…the movin’ on up…the piece of the pie

If you look back at some 2016 pieces about Genera in The Digest, you’ll see they described themselves as a company that “leads the nation in the commercialization of integrated biomass supply chain solutions for the biofuels, biopower and biochemicals markets.”

Having been around since 2008 it’s a given that there is some adaptation, some modifications, some repositioning but it is remarkable to see how Genera has done this in such a successful way to tackle challenges that seem to frequently barrage the industry.

Back in 2016, Genera offered “services that range from turn-key biomass supply chains solutions to individual component services such as feasibility studies, land acquisition, energy crop establishment and production, harvesting, storage and logistics, non-crop biomass aggregation, and preprocessing of biomass crops into uniform format feedstocks.”

In 2015, Genera launched its first mobile agriculture app, Biomass, developed to serve as a tool for planning, selecting and calculating biofuel crop needs, for use with Android and Apple smart devices. Their focus on lignocellulosic crops and technology and research tools has served them well as they have been able to transition quickly into a company that is ready to meet market demand for biobased sustainable disposable products.

Their good work isn’t going unnoticed either. As reported in The Digest in May, Genera was the statewide honoree for Conservation by Business for the statewide conservation award given by Tennessee Wildlife Federation.

Ok, so have they changed and repositioned themselves completely? Well, not really when you look a little deeper. Tiller told The Digest, “The common denominator is biomass production and supply, that hasn’t changed.”

She noted that they still focus on the space between a field and an industrial process that uses that biomass and for well over a decade, they have gained a lot of experience over various biomass feedstocks and end use processes.

So what HAS changed?

As Tiller put it, “We are taking that core expertise a step further and becoming our own manufacturing customer.” They now have technology, additional resources and expertise to integrate the biomass supply chain with the process and technology that produces an intermediate – a pulp in this case – and further integrate again to produce molded fiber products – like take out containers, clamshells, packaging, plates, bowls and other food service items, and more.

“Yes, in some sense it is an extension and expansion of our core business but much of it is tied in with what we’ve done for long time,” Tiller told The Digest. “The primary driver is customer demand.”

Bottom Line

The Digest knew Genera would be smart about repositioning itself to better succeed in the advanced biobased marketplace. During The Digest’s “4 minutes with… Keith Brazzell, Chief Operating Officer, Genera Energy” back in March 2015, Brazzell, told The Digest, “We must understand who needs our products and why. Some people got into this industry because of a mandate or because of the science. We need to solve a need or strong desire from consumers.”

Sounds like Genera gets it. And they are now achieving it. They have a clear vision of what they need to do to meet the desire from consumers and with this latest $118 million investment and construction of their newest facility, they are well on their way there. You could say they are movin’ on up and finally getting a piece of the pie.