Draths Corp., a promising start-up developing chemicals used in bio-based plastics, has shut down its Plymouth facility and moved its headquarters to Michigan, which offered a $5.2 million tax credit.
Founders John Frost and Karen Draths, both former professors at Michigan State University, wanted the company to return to their home state, said Doug Cameron, a former Draths board member.
"I was disappointed," said Cameron, now chief science adviser at Piper Jaffray & Co. "They were working on some good stuff. But these things happen."
Cameron, who had previously worked for Khosla Ventures, helped persuade the prominent Silicon Valley clean-tech venture capital firm to back Draths.
Sources say the founders feuded with former CEO Jim Millis and fired him last spring just as the company raised $7.9 million from investors CMEA Capital and TPG Growth. Draths did not return a phone call seeking comment. Millis declined to comment.
Draths' departure deals a big blow to Minnesota just as the state showed signs of developing a vibrant biomaterials industry.
Segetis Inc. of Golden Valley is developing agricultural feedstocks as substitutes for plastics and specialty chemicals made from petroleum. The company recently opened a pilot production plant that will produce 250,000 pounds per year of chemicals and chemical building blocks from renewable resources.
AlwaysOn, an online technology magazine, this week named Segetis and Draths as two of the country's top 100 green technology companies.
The state is also home to NatureWorks of Minnetonka, a joint venture between Cargill Inc. and Teijin Limited of Japan. The venture makes a biopolymer from natural plant sugars.
Dale Wahlstrom, CEO of the BioBusiness Alliance of Minnesota, said the state tried to keep Draths but could not compete with Michigan's offer. The Michigan Economic Development Corp. recently approved a state tax credit valued at $5.2 million over 10 years "to help convince the company to expand in Michigan over a competing site in Minnesota," the agency said in a statement.
Draths will use that money to build a new headquarters that will house a research facility and pilot plant. Michigan estimates the company will generate 200 new jobs.
"I see this as a significant loss to the state," Wahlstrom said. "We certainly had a significant lead in developing companies that made chemistry from renewable materials. There is no question [Draths] was going to be a major player here."
Thomas Lee • 612-673-7744
