Golden Valley firm lands new president, venture funds

A Golden Valley-based company with a promising technology that substitutes plant-based material for petroleum used in nylon stockings, car seats and plastic bottles will announce Thursday what is believed to be the largest investment ever in a fledgling Minnesota "green-tech" concern.

Segetis has secured $17 million in venture capital, bringing its total to $27 million, from three venerable outfits.

The company, which last year finished a pilot plant on its campus, said it has enough money to bring some promising products to market.

This second round of financing was led by the Malaysian Life Sciences Capital Fund, co-managed by Burrill & Company, and includes investments from Holland's DSM Venturing and Khosla Ventures of California, which led the initial round of financing in 2007.

"The global need for sustainable solutions ... represents a huge market opportunity and Segetis has the team and technology to make a real impact in this market," said Roger Wyse, Burrill's managing director. "In addition, Malaysia can be a cost-effective location for Segetis to access renewable feed stocks and a beachhead for Asian markets."

Babette Pettersen, vice president of new business development for DSM's "performance materials" cluster, said the Segetis technology platform "fits our vision to increase functionality of materials through sustainable chemistry. We look forward to combining the knowledge of both companies to develop materials that offer functionality and reduced carbon footprint."

Separately, Segetis announced the retirement of CEO Jim Stoppert, who was brought out of retirement by Khosla to run the company for a couple of critical years.

"[Segetis] has demonstrated the viability of its technology and is now actively engaging the marketplace to commercialize our materials," Thakrar said. "Demand for green chemicals continues to grow in many market segments, and our unique bio-based monomers and products deliver both compelling performance and strong environmental benefits."

Minnesota, a state rooted in the agriculture and food processing businesses, is a leader in genetically engineered crops and a growing hotspot for substituting plant sugars, carbohydrates and waste oils for petroleum-based fuels and products. Product development is underway by dozens of companies that range from farmer-owned ethanol producers to NatureWorks, a joint venture between Cargill and Teijin Ltd. of Japan, which makes biopolymers from plant sugars that go into shirts and other products.

"The green chemistry news at Segetis is great for Minnesota and I think the $17 million is the biggest venture financing round for a Minnesota clean-tech company to date," said Dan Carr, CEO of the Collaborative, a forum for Minnesota entrepreneurs and financiers.

"Much more capital has been invested in Minnesota ethanol, water, wind and agricultural efforts by larger companies. The fact that capital from Malaysia and Silicon Valley is backing a Minnesota firm that also just recruited a Boston executive to run the company is testament to Minnesota's opportunity to thrive in the clean-tech cluster," Carr said.

Segetis, which has about 30 employees, is rooted in research performed at the University of Minnesota. Stoppert said last year, when the pilot plant was built, that it would give customers a chance to see that the company can produce "barrels" of material, not just bottles in a lab.