Waste Management bets on turning trash into sugars

Waste Management (s WM) has been a particularly active venture capital investor in the trash-to-energy space, and that focus has prompted it to invest in Renmatix, which turns biomass, such as agricultural wastes, into sugars for making fuels and other chemicals.

Renmatix increased its most recent round of investment from $50 million to $75 million and now counts the trash hauling giant as both an investor and a research and development partner, reported VentureWire Wednesday. Waste Management wants to use Renmatix’s technology to convert trash into sugars to replace petroleum for making plastics and other products.

Pennsylvania-based Renmatix announced the $50 million round in January this year and noted that German chemical giant BASF put $30 million into that round. Kleiner Perkins Caufield & Byers also is an investor.

Sugar is a key ingredient for biofuels and other chemical products. Its market potential has attracted more investors in recent years mainly because the government is spending billions of dollars to build a market for alternative fuels. Early on, many biofuel producers had to figure out their own processes for breaking down the tough cell walls of plants and other biomass to make cellulosic sugars and then converting the sugars into fuels.

In fact, there were hardly any companies that focused only on making only cellulosic sugars back in 2008, when an investment banker told me thenthat producing those sugars alone could be a great opportunity for entrepreneurs and investors. By the way, these sugars aren’t the same stuff that sweetens coffee or powder donuts.

Other companies in the cellulosic sugar market include Virdia, which announced a $20 million venture capital investment from Khosla Ventures and others earlier this year and a package of $75 million in loans and up to $155 million in tax breaks from Mississippi to build a processing plant there.

Renmatix’s technology uses “supercritical hydrolysis” to produce sugars, a process the company says is cheaper and faster than some of the other technologies. The company has been running a demonstration plant in Georgia.

For Waste Management, Renmatix becomes one of a now long list of companies that it backs (check out our post about Waste Management’s investment strategy) so that it could find new and profitable uses for the trash it collects.