Solugen CEO promises 'aggressive investment' in Houston after $214M loan

After landing a federal loan that will fund the completion of a sprawling facility in Minnesota, Solugen Inc. CEO Gaurab Chakrabarti promised “aggressive investment” from the company in Houston.

That loan, which is currently a conditional commitment from the Department of Energy’s Loan Programs Office, amounts to $213.6 million. It will fund the completion of Solugen’s 500,000-square-foot biomanufacturing facility, which the Houston-based company is creating in collaboration with Chicago-based food processing giant Archer-Daniels-Midland Co. (NYSE: ADM). The plant is scheduled to be completed in early 2025.

But Chakrabarti has his sights set on further growth in the Bayou City, where Solugen completed construction of a factory in 2020. At the time, Chakrabarti co-founder Sean Hunt said the Houston mini-mill's production capacity was expected to ramp up to over 10,000 tons of its bio-based chemicals per year.

“[Our investment in Houston] will be comparable, if not more than the Minnesota plant,” Chakrabarti told the Houston Business Journal in an interview. “Our goal is to basically create a campus where we can continuously launch products every 18 months in Houston. And then we can decide if we want to go scale it up in Marshall or scale it up in Houston. Houston is the proving ground of everything.”

The BioForge facility in Minnesota will utilize dextrose — a sugar similar to glucose — provided by ADM to scale Solugen's existing line of lower-carbon organic acids and develop new, innovative molecules to replace existing fossil fuel-based materials. According to Chakrabarti, Minnesota was chosen to host the facility due to its greater access to the feedstock Solugen needs: corn.

“The reason this loan is so exciting is because it puts biomanufacturing on the same level as lithium-ion batteries, critical minerals, the things that everyone talks about when they talk about the energy transition, but the thing is, the energy transition isn't just those things,” Chakrabarti said. “And this is the first time in the history of the Department of Energy that they're acknowledging that chemicals and chemicals production is just as important as electric vehicles and lithium.”

Chakrabarti said that while Solugen has raised significant funding through private venture rounds, the company still needed firmer credibility to get the financing needed for larger projects. The DOE said the commitment is the largest single investment in bioindustrial manufacturing since President Joe Biden signed a September 2022 executive order advancing biomanufacturing in the U.S.

If the loan goes through, Chakrabarti said it will be a signal for a different type of investor or lender — those looking for infrastructure projects that can drive a return.

“Venture [investing] is betting on the growth of the business, but it's also betting on the technology, the [research and development] piece of it,” Chakrabarti said. “The VC world is looking for massive upside, which is great, but the loan world, they just want to return their capital. So, their risk aversion is much higher. And so, if you can pass their risk assessment, it gives you credence that like you've got something real in your hands.”

Solugen's most recent venture round was completed in 2022 to the tune of $200 million, with investors including Refactor Capital, Kinnevik and Lowercarbon Capital. In 2021, Solugen's $350 million Series C round elevated the company to unicorn status, meaning it reached a value of over $1 billion.

The company’s growth in recent years has been touted as a sign of Houston’s growing deep technology investment scene, referring to a category of companies commercializing products based on scientific discoveries and engineering. Houston investors Paul Sheng and Eric Bielke cited Solugen as one of several Houston companies in growing years that spurred them to bring their $100 million Fathom Fund out of stealth earlier in 2024.

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