A Rivertop Runs Through It: Rivertop Renewables lands $26M as Cargill, First Green Partners climb aboard

April 10, 2014 |


Rivertop to commercialize its novel, sustainable chemicals for consumer products and industrial applications.

How does an early-stager get to the next level? Try a hot anchor product, innovative technology, and the right connections.

In Montana, Rivertop Renewables, a Montana-based producer of novel chemicals derived from natural plant sugars, announced that it has raised $26 million in its Series B investment round from Cargill, First Green Partners and existing investors.

The impact for Rivertop

Rivertop will leverage these funds and an existing manufacturing relationship to produce market development quantities of salts of glucaric acid for select customers.  In addition, it will complete construction and begin operations at a semi-works facility at its headquarters in Missoula, where it will optimize its process for world-scale deployment. Rivertop plans to hire more than 20 employees in the next 12 months to support commercial development, effectively doubling the size of its workforce.

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Rivertop’s initial focus will be on commercializing opportunities in the dishwasher detergent and corrosion inhibitor markets. The company will explore additional opportunities from among several large industries including home and personal care products, oil and gas, building and infrastructure, agriculture and food.

Cargill, First Green Partners and Rivertop

Some enterprising Digest reader is probably going to write me tomorrow to detail a dozen investments that First Green Partners have made since the company’s formation at the end of 2011, but I’ll be darned if I can find one. First Green founders Doug Cameron and Tom Erickson aren’t known for shouting from the rooftops each time they make a move — but if they’ve been prolific in investing to date, it’s been very much on the QT.

Certainly this is their first widely-known lead in an investment round, and to be honest, we’re surprised that it’s glucaric acid, given all the attention given to “green-black technologies” at the time of their formation.

But that was only half of their focus. Avowedly, the other is renewables with transformational opportunities in fuels and chemicals, and Rivertop fits right in there with glucaric acid.

The Glucaric Rush

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What is glucaric, anyway? It’s an organic acid and an emerging platform chemical with wide applications in detergent, de-icing, cement, and anti-corrosion markets.

It’s not the first $25M+ cap raise for biobased glucaric. In fact, not even the first this quarter.

In March, ADM has committed to a $25 million equity investment in Rennovia, which develops catalysts and processes for the cost-advantaged production of chemical products from renewable feedstocks. Rennovia’s initial focus is on the development of catalytic process technologies for the production of bio-based adipic acid (AA) and glucaric acid (GA).  The company has demonstrated the capability to convert glucose to glucaric acid to adipic acid, using Rennovia’s catalyst technologies. And is developing the capaity to make hexamethylenediamine (HMD), which can be combined with adipic acid to make 100% renewable nylon-6,6. You might as well have found a way to convert sugar into the Hope Diamond.

The 35523

One of the reasons why Glucaric acid is one of the 12 rock-star chemicals identified in what we call in Digestville “The 35523”, a survey done by PNNL’s Todd Werpy and NREL’s Gene Petersen for the Department of Energy back in 2004, identifying the hottest areas of opportunities for making biobased chemicals from renewables. For reasons that perhaps only the DOE knows, its labeled “35523” in the download.

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If you haven’t read this document, you need to download it right away and read it. Not kidding. It’s that fundamental to understanding so much of what has transpired, and may yet transpire, in the biobased chemical space. If you wonder why so many companies have moved ahead on succinic acid — just one out of 10,000 or more chemicals that could be made from renewables — well, you’ll find that succinic makes the Top 12 list.

So does glucaric acid.

Werpy and Petersen wrote:

This report identifies twelve building block chemicals that can be produced from sugars via biological or chemical conversions. The twelve building blocks can be subsequently converted to a number of high-value bio-based chemicals or materials. Building block chemicals, as considered for this analysis, are molecules with multiple functional groups that possess the potential to be transformed into new families of useful molecules. The twelve sugar-based building blocks are 1,4-diacids (succinic, fumaric and malic), 2,5-furan dicarboxylic acid, 3-hydroxy propionic acid, aspartic acid, glucaric acid, glutamic acid, itaconic acid, levulinic acid, 3-hydroxybutyrolactone, glycerol, sorbitol, and xylitol/arabinitol.

Now, you might also have spotted “3-hydroxypropionic acid” on that list and wondered why First Green didn’t go with an opportunity in that direction, since Doug Cameron himself was principal investigator on an important “3-HP from renewables” research funded by Cargill and DOE, back in his Cargill days.

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One reason — Rivertop has done a lot of work in developing glucaric, it needs a push towards commercialization, and makes a tempting investment target for funds that don’t have all the time in the world to realize returns from their investment.

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“Eventually, all things merge into one, and a river[top] runs through it.” – Cargill, First Green, Rivertop’s complex relationship braid

It probably didn’t hurt that Jim Stoppert served a term as Rivertop’s CEO a few years back – given his extensive web of Cargill and First Green contacts going back to his days as CEO of Cargill Dow (now, NatureWorks). In fact, Jim at one stage succeeded Doug Cameron as CEO of Segetis when that renewables player was first getting off the ground — this, at a time when Doug had become Chief Science Officer at Khosla Ventures.

After Jim departed from the Rivertop top job in the spring of 2011, there was a hiatus of around 18 months before Mike Knauf came in as the new CEO. Clearly, Mike arrived with a mandate to sharpen the commercial pathway, and raise capital. Where he has succeeded, on both counts.

It’s not an entirely easy thing to raise money for a venture in Missoula, Montana. It’s not exactly close to — well, anywhere, unless you have a taste for fly fishing, log cabins in the Bitterroot style, or have business to conduct with the University of Montana.

It’s a special place, no doubt about it — the winters in Missoula aren’t quite as frosty as elsewhere in the state. And, as Norman Maclean observed in his novella A River Runs Through It, “The world is full of bastards, the number increasing rapidly the further one gets from Missoula, Montana.”

Elsewhere in the book, Maclean wrote something about life, and fly-fishing, which actually closely pertains to investing in renewable chemicals: “All there is to thinking is seeing something noticeable which makes you see something you weren’t noticing which makes you see something that isn’t even visible.”

Which is to say, that Gene Petersen and Todd Werpy’s masterpiece on biobased chemicals, though it lacks the Thoreau-like cadences of A River Runs Through It, was entirely something noticeable, that made a lot of people see something they weren’t noticing, which is to say the awesome opportunities in chemicals. Which made them see something that wasn’t even visible — that chemicals offer a pretty good route to building good small companies even if they lack the massive addressable markets associated with fuels.

The Journey from 2004 to now

It’s been a long journey since 2004 — growing renewable technologies, it turns out, is much more like raising an orchard than growing a crop, it may take years to get the first fruits. We’re just now seeing companies reaching commercial-scale making the molecules outlined in that foundational report.

But it’s been a learning curve in terms of company formation and development. Back in the 1990s, the field was dominated by major institutions of learning, and corporate titans like Cargill, Dow, ADM, Monsanto, Bunge, Dreyfus and DuPont. Then along came the venture period — when it seemed like companies were popping up faster than you could say “Series A”.

First it was ethanol that would save the world, then it was biodiesel, then algae took the stage, then drop-in jet fuel and hybrid electric cars. Now, along have come cheap natural gas, tight oil and renewable chemicals to save us. Perhaps they will.

One hopes we have learned something on the long journey, one that takes in Minneapolis San Francisco, and Missoula.

In chronicling a journey from Minneapolis to San Francisco that passed through Missoula, Robert Pirsig, in Zen and the Art of Motorcyle Maintenance, had this to say about the nature of journeys:

“You look at where you’re going and where you are and it never makes sense, but then you look back at where you’ve been and a pattern seems to emerge.”

Reaction from Rivertop and the investors

“This major financing milestone allows us to scale our platform technology and provide a whole new set of products to customers seeking a competitive advantage in the marketplace,” said Mike Knauf, CEO of Rivertop. “Our novel chemicals will enable our customers and partners to innovate within their own product lines with new functionality, cost-performance advantages and sustainability.”

“Rivertop’s technology opens new opportunities in the renewable carbon value-chain by unleashing a platform technology with broad applicability,” said Doug Cameron, Co-President and Director of First Green Partners.   We’re seeing increased demand for bio-based chemicals amongst the major consumer products companies, and Rivertop is well-positioned to take advantage of this trend.”

“Cargill’s investment in Rivertop is strategic given the compatibility of our expertise and resources in multiple feedstocks, worldwide facilities and access to key industries,” said Brian Silvey, Vice President of Corn Milling North America at Cargill. “We are impressed by the broad applicability of the Rivertop platform to address multiple billion dollar market segments.”

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