Rivertop Renewables: Portrait of a green chemicals start-up

Jim Stoppert, the incoming CEO of early stage renewable chemicals company Rivertop Renewables, remembers when the entire industry was in start-up stage in the 1990s.

“When we started NatureWorks we felt awfully alone,” recalled Stoppert, who was CEO of what was then known as Cargill Dow and later acquired its current identity. “In 1997, biofuels hadn’t kicked in, and at the end of 2000 Cargill pulled me into the venture. I did the rounds of the chemical companies, and got a lot of blank stares in the 2001 time frame.”

Stoppert, who will helm the Missoula-based glucaric acid manufacturer from his base on the west coast of Florida, chuckled when I reached him by phone this week. “They said we don’t think bio-based products have a place in the market, and
if they do have a place, we’ll do it ourselves.”

Enter from stage left the forces of Al-Queda.

“When 9/11 happened a switch was thrown, people started to become more aware. Prior to that, most people didn’t know where plastics and chemicals come from – hydrocarbons. Now, suddenly, they wanted to do their part. Literally the phone was ringing off the hook.”

So, why come back after having helped to establish companies like Segetis and NatureWorks?

“I’m not a technology guy myself,” Stoppert said, “I love what it enables. This is my 8th company in this space, and each time I left it was with the idea not to run a company but to consult with a lot of companies. But I get involved with a special one, and then I have to jump in.”

Stoppert’s first encounter with the precursor to Rivertop dates back a decade now.

“Rivertop came to Cargill in 2000 trying to get us working with polymers from glucaric acid. I said how can you  work on polymers from glucaric acid when you don’t have glucaric acid? You are working on the wrong thing. And, you know, they went out and figured out glucaric acid and it was the birth of a platform. When we got back in touch, by the end of first week I was hooked. I have to be part of this.”

What defines Rivertop renewables, and what is glucaric acid anyway?

“What defines us is a unique technology. It’s a very simple business from a process and applications standpoint. Typically you take 5-7 years to establish a new polymer, we’ll do it in around three. That’s because the driver for glucaric acids are that phosphates are being regulated out of the detergent market around the world. Companies not happy with the alternatives, ours works, and is low-cost. It’s a global movement driven by regulation.”

So, Rivertop will be attacking the detergent side demand for glucaric acid with a process that creates glucaric acids from bio-based feedstocks. How will it be processed, and by whom, and when, and where?

“We can do contract manufacturing millions of pounds by the 2nd half of next year,” Stoppert said. “we’ll be a 2 year old company by then – unheard of. After that, we can grow rapidly.”

What are the challenges?

Stoppert paused to reflect. “Well, the challenges are the same as any new company, and we hope to have the networks to get things done quickly. First, as CEO of a startup, 50 percent is raising funds. Second, in parallel, we have to build out the organization. We have some great great people, but not enough. Third, we have to build a plant.”

No interest in licensing?

“In the chemical industry, licensing fees are modest, it’s really difficult to make licensing work, not like pharma. To capture value, you have to build plants and make product. Initially we will contract manufacture, then begin to build a market. When we get to 20 million pounds, then we open a plant. We will build first in NAM then think global, using partners to develop projects internationally.

How goeth the fundraising?

“Our third round should provide enough to take us to pilot and demonstration. Clearly we’re already talking to strategics, who will like to be a part of it as end users, and could consume enough themselves to build a plant. But strategics move more slowly, and there’s a high likelihood this round will be all VC.”

“We want to build the pilot so we can move then to full scale, ” Stoppert added. “We
don’t need to build a 5-10,000 pound pilot. We’re at lab scale already. Maybe we’ll do around 100,000 pounds.”

Feedstocks?

“We’ll be near our initial feedstock, which will be glucose. No need to build close to the end user, because really glucaric acid is just an ingredient among many for the customers. As cellulosic refineries mature and develop, we’ll obtain raw materials from cellulose, but for now we’ll be focused on corn.”

Feedstock price stability?

“I learned this in spades at Cargill, more in the chemical industry than in the renewable industry. We always trying to gain price stability, and Cargill’s attitude was “how many years of stability do you want. Cargill takes the variability out of it. When the ethanol market went down in 2008, these were inexperienced people in hedging, and they took positions that literally bankrupted the company. It doesn’t have to be that way. And in our case, even if the price of corn doubled our costs would rise only 30 percent.”

Stoppert pauses.

“Really though, if corn doubles but all other feedstocks do too and there would be $100 oil. The key is not to ensure that your feedstock costs are low, but that they are low compared to everyone else’s.

“In the case of phosphate replacement, our customers have to make a change. Our competition is not phosphates, but the other alternatives. Compared to those, we have a cost and performance advantage.”

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