This reactor in Houston, Texas, represents a whole new approach to chemical manufacturing. We make chemicals in a completely new way. We started off by making hydrogen peroxide. Now we sell products for water treatment, national defense, infrastructure, agriculture — you name it, we make a chemical for it.
The story of Solugen is as scrappy as it gets. It all started with this prototype built out of PVC pipes the founders bought from Home Depot.
In its heyday, this did 12,000 bucks a month in revenue. Fast forward to now, Solugen is a billion-dollar company shipping out tanker trucks of products that power critical US industries. So, how did they go from this single beaker of hydrogen peroxide to this full-scale manufacturing plant? I visited Solugen HQ in Houston, Texas, to find out.
What do you guys do here? What is Solugen?
We use biology to create chemicals that allow us to create smaller chemical plants and have a cleaner, safer, more environmentally friendly footprint. We've invented a process called chemoenzymatic processing where we take the specificity of biology by taking an enzyme and pairing it with a metal catalyst, which is what's traditionally used in industry. What we've done with these is by marrying these two, you can actually create more efficient reactions. So instead of having a 60% yield, you can have 96% yield, which is what we have at scale precisely because of these two catalysts.
Solugen is the first company to fuse biology and chemistry in this way, pulling enzymes from living cells — in this case, corn syrup — and pairing them with novel metal catalysts. The output is chemicals that can be used in everything from agriculture to skincare. Traditionally, chemical plants relied on fossil fuel feedstock, which has led to all kinds of unintended consequences. This new approach is cleaner, safer, and more efficient.
We receive rail cars of corn syrup, and then we run our utility system. We change the parameters of the plant, the way that the enzymes are reacting, the way that the metal catalysts are reacting to oxidize the corn syrup how we want. And then at the end, we evaporate water. We take the final products, we store them in finished good tanks, or we send them to a blend farm to get blended with other chemicals, and that's the process.
Solugen started with a true Eureka moment — the kind of freak invention that normally happens only in science fiction. Sean was working in the chemicals industry, and Gobi was in medical school studying pancreatic cancer.
I was working on this like skunk works project to try to do direct hydrogen peroxide synthesis where you react hydrogen and oxygen gas directly together over a metal catalyst. And like, you know, I was working on this project, and then Gobi was like, 'Oh yeah, no, like I found this like really crazy mechanism in pancreatic cancer where it's like locally 50% hydrogen peroxide concentration.' I was like, 'What? That's wild.'
It turned out that an obscure enzyme found in pancreatic cancer cells that Gobi was studying was the key to a new process for making industrial hydrogen peroxide.
So these pancreatic cancer cells, they put out peroxide. Peroxide creates almost like an invisibility cloak around the pancreatic cancer that makes it difficult for immune cells to come in. It was like, that's a very interesting discovery, but why? And so once we asked the question why, we found out the reason was an enzyme. It was just a mutated enzyme that's found only in pancreatic cancer. And so that's when we said, what if the two worlds could collide, right? What if enzymes and metal catalysts could coexist?
Here's how it works. Solugen feeds corn syrup to the enzymes — the same ones from the pancreatic cancer cells — which transform it into new compounds. They then use metal catalysts to further process those into the final chemicals that can be used to build all kinds of products we use in our everyday lives. In most chemical plants, the feedstock comes from oil and gas, which inevitably produces toxic byproducts. Solugen literally starts with sugar.
We have to suspend belief for a second. People believe that anything to do with biology and chemicals, it's just a bad mix because, oh, biology is too sensitive. It's going to break down, blah blah blah blah blah. But we said, let's just suspend that criticism for a second and just look at the numbers, and we say if we can make the enzyme last this long on stream and the product is this concentration, we can make a lot of money, and that's where we started.
This insight that organic enzymes could operate at industrial scale and efficiency was the company's first key breakthrough. Today, Solugen operates both a biology and metals lab where it produces its own enzymes and metal catalysts in-house.
These are actually enzymatic reactors. So what we do, we grow bugs, we break the bugs open, we take the enzymes and we put them in these reactors, and we can stress them out and figure out what they're capable of doing at scale. We have outfitted this with probably some of the best analytics that you can ever have for enzymes, which gives us a good insight into how things will scale.
Across from the biology lab is Solugen's metals lab.
We just went to the enzyme lab. Yeah. But basically now we pair that enzyme with the right metal, and so you can basically mix and match which metal and which enzyme you want to pair together.
Their next big insight was a commercial one. Previous startups that had tried to do something like this all started by raising a huge amount of funding and building a large-scale plant. Solugen took a different approach. They built their first reactor for just $10,000 and then started selling to customers almost immediately. Gradually, they scaled up to larger and larger plants. So you did this technoeconomic analysis and you're like, 'Wait a second. This could actually work.'
So May 2016, we got unofficial second place in the MIT 100K competition.
We lost gloriously, but we got 10,000 bucks.
$10,000. That doesn't seem like very much money.
I think capital constraint forces very creative thinking because, like, with 10 grand, like you have a very confined space of what you can afford to buy to try to make the product. And so ours ended up being PVC from a hardware store. You know, we couldn't even afford the metal catalyst parts. It was just the enzyme portion.
This was the very first Solugen reactor.
Yep. This is the first one, complete with Schedule 80 PVC from Home Depot. This is like a bubble column with a membrane. So you sparge air in to the bottom. Inside there's the liquid with the corn syrup and the enzyme, and it's kind of spinning in a loop. Then they're reacting, which makes the peroxide, and then this is a membrane, and so the membrane keeps the enzyme in the bubble column, and then the permeate on the membrane is the peroxide product.
Armed with just their $10,000 reactor but no customers, Sean and Gobi applied and were accepted into YC. But they deferred a few months and set out to first try and sell the tiny volumes of peroxide they could make.
We made our first product in like September 2016. We couldn't afford any controls, right? This is a total manual operation. We'd come in in the morning. We would try to get this reactor to a steady state. And then I'd go to work. He'd go to the hospital. He was in his last year of med school.
I was on surgery rotation.
And then in the evenings, go in and try to retune it to a steady state. And then our first three customers were float spa hot tub owners in Dallas. We discovered the supply chain dislocations because for these hot tub owners, they were buying 3% peroxide in the brown bottle on the store that went through multiple distributors, multiple downpackers, putting in little brown bottles, shipping it to the store, retail markup. It's like, oh, we only have 10 grand, but like we're actually manufacturing the chemical and we're like bypassing like huge distribution value chains. So on weekends, we would pour the chemicals in people's hot tubs. We looked at a bunch of markets to be like, what can we just like wedge ourselves into?
