Chromatin Raises Cash to Move Into Biofuel Market

Chromatin, a company that uses genetics to enhance crops, announced today that it raised $12.4 million in funding and plans to use the new cash to enter the biofuel feedstock industry.

This is the third round of financing for Chicago-based Chromatin, which pulled in the cash from Quantitative Financial Strategies, the Malaysian Life Sciences Capital Fund, Burrill & Co., Venture Investors, Foragen Technology Ventures, Illinois Ventures and Unilever Technology Ventures — part of the Unilever group (s UN), a major player in the consumer foods market.

Chromatin, which gets its name from the substance in the nucleus of a cell that condenses to form chromosomes during cell division, initially developed its “mini-chromosome” technology to enable quick improvement of crops and feedstocks for the agriculture industry. With this fresh round of funding, Chromatin said it plans to team up with companies in the biofuel industry to provide distribution channels for its genetic products, but has yet to name any potential partners for the move.

The company was founded in 2000 based on technology developed at the University of Chicago. Chromatin said its mini-chromosome technology makes it possible to introduce multiple genes, or gene stacks, simultaneously into any plant cell, with applications in crops such as corn and soybeans. The company plans to develop feedstocks with the gene stacks needed to boost yields and cut the costs of producing fermentable sugars for the burgeoning cellulosic ethanol industry.

Chromatin hasn’t said which properties it’s looking to enhance in biofuel feedstocks, but for its agricultural products the company said its technology could lead to crops with properties such as resistance to disease, greater salt and drought tolerance, and more nutritional value. The company also said its mini-chromosome process could cut the time it takes to to get those new crop traits to market by half and increase crop yields by 25 percent.

Earlier this year, Missouri-based Monsanto (s MON), which is working with Chromatin on gene stacking technology, announced plans of its own to double corn, cotton and soybean crop yields by 2030. Monsanto and Chromatin signed a collaborative agreement in 2007 to carry out a three-year joint research program on corn, cotton, soybeans, and canola.

But the use of genetically modified crops continues to be a controversial issue, with opposition keeping most genetically modified crops out of Europe and Japan, and slowing their introduction in the U.S. Last year, protesters rallied against the creation of a research institute at the University of California Berkeley, that would look at using genetic engineering to increase biofuel yields.