Cathie Anderson

West Sacramento startup secures $40 million investment, plus alliance with Nestlé, Danone

West Sacramento start-up Origin Materials is working on producing bottles made completely from renewable materials.
West Sacramento start-up Origin Materials is working on producing bottles made completely from renewable materials. Bigstock

A West Sacramento-based startup working on producing renewable water bottles recently closed a second round of venture capital financing that raised $40 million and brought on European multinationals Nestlé and Danone as not only investors but also strategic partners.

Origin Materials, formerly known as Micromidas, has been working on a promising, patented technology to produce a so-called PET bottle from completely sustainable, renewable materials such as cardboard and sawdust. While bottles made from PET, polyethylene terephthalate, are recyclable, their petroleum-based source materials are not renewable.

“The PET market, in loose numbers, is 50 million metric tons per year,” said John Bissell, co-founder and CEO of Origin Materials. “That’s an enormous amount of material. A rail car, for example … is 100 metric tons, so 50 million metric tons means 500,000 rail cars of PET are made every year.”

Bottle producers have been working for some time to integrate renewable organic materials into PET bottles, achieving as much as 30 percent. Bissell said he’s aiming to produce a 100 percent bio-based bottle at commercial scale. In tests at Origin’s pilot plant in West Sacramento, the company has made bottles with 80 percent renewable materials.

“We’ve been running the pilot plant for about 3.5 years now, and it’s been running the process we intend to scale up,” Bissell said. “The challenge is not everything behaves exactly the same way at every single scale, so what we’re going to do now is build a steppingstone plant.”

The $40 million capital infusion will help make that plant a reality, and Nestlé and Danone will lend their expertise as partners with Origin in the NaturALL Bottle Alliance. Origin Materials licensed its technology from the University of California, Davis.

“Our goal is to establish a circular economy for packaging by sourcing sustainable materials and creating a second life for all plastics,” said Frederic Jouin, head of R&D for plastic materials at Danone. “We believe it’s possible to replace traditional fossil materials with bio-based packaging materials. By teaming up and bringing together our complementary expertise and resources, the Alliance can move faster in developing 100 percent renewable (bottles) at commercial scale.”

This switch is a crucial one for beverage producers such as Danone, Nestlé, Pepsi, Coca-Cola and others whose products are packaged in PET bottles, Bissell said. The price of petrochemical materials can swing widely, wreaking havoc on earnings, so it behooves water and beverage producers to find alternatives with more stable price points.

Yet, it’s no easy task for a tiny startup such as Origin to get the attention and ultimately support from an industry titan. In 2016, Nestlé’s revenue totaled nearly $90 billion; Danone’s, $23.4 billion.

“With big companies like this, the process of building a relationship where there’s real trust in a company our size is relatively long,” Bissell said. “You’ve got to show them what you’re going to do. There has to be a lot of transparency, which we have done. … We’ve been running our pilot plant. We’ve been showing that we have the right process numbers. We’ve been hitting our milestones. We’ve been making product and validating the product in small scale.”

Bissell said the Alliance has identified two potential sites for its “steppingstone,” or pioneer, plant. He declined to name the locations until a final decision is made but said that neither is in California. He’s negotiating terms now, he said, and construction is expected to begin later this year.

The initial goal for 2018 production at the pioneer plant is 5,000 metric tons of bio-based PET bottles made from 60 percent-plus biomass ingredients, the companies stated in a news release. They would step up to 75 percent bio-based PET in 2020 and 95 percent in 2022. The long-term objective is 100 percent.

Origin Materials was publicly known as Micromidas until earlier this month, when Bissell announced the name change. People often misspelled the company’s old name, he said, and it wasn’t easily understood. Since the clean-tech startup was founded in 2008, it has secured $80 million in venture financing.

Cathie Anderson: 916-321-1193, @CathieA_SacBee