VentureBeat

Genomatica creates renewable chemical from sugar water — While most chemicals are petroleum-based, several startups are trying to create new alternatives. One of the first to succeed is Genomatica, which says it has a cheap process to make 1,4-butanediol, a component chemical of many common materials, from sugar and water, potentially disrupting a $4 billion industry. More on Genomatica’s process here.

Gaming becoming ubiquitous — A national survey showed that almost all teens play games.

MySpace Music may get another delay — The launch of MySpace’s online music store will likely be pushed back a week or more, yet again. For a laugh, check out our coverage from way back in April, when this launch was expected to happen within five days.

Windows 7 coming along — Microsoft, on the other hand, is shattering expectations by actually hitting its deadlines. Development of Windows 7, the replacement for the unfortunate affair known as Vista, is reportedly humming along, with a potential delivery date as soon as the end of 2009.

Lehman’s venture arm may live — Failed investment bank Lehman Brothers may not drag its venture unit to the grave with it, according to peHUB.

New game advertising startup launches — Worlds and Games, a stealth-mode San Francisco startup by two gaming veterans, is launching today with a focus on advertising in and around games. GameDaily has an interview.

Houses approves cleantech credits, offshore drilling — A bill allowing both offshore drilling and an extension of the Federal cleantech investment credit has passed the House of Representatives. However, it still has to pass muster in Senate, an undertaking similar bills have failed before.

Khosla talks down fashion-based cleantech — The cleantech investor disparaged some of today’s most popular alternative energy icons at a recent talk, including solar panels, the Pickens Plan, and the Prius.

Adobe profits down, but not out — The software giant’s quarterly profits fell seven percent, yet beat the Street’s expectations. Acrobat and LiveCycle drove profits, according to the company.

WebMD buys QualityHealth owner for $50M — Online health firm WebMD has shelled out $50 million for Marketing Technology Solutions, a venture-backed company that owns health information portal QualityHealth.com.

The chemicals business has gone through massive shifts in the past, and it’s high time for another one, according to Christopher Gann, the CEO of Genomatica, who recently left a cushy position at industry giant Dow Chemical for the startup. Chemical manufacturing is perched atop the much larger fossil fuel market, thus suffering from the same high prices the rest of the world does — but, says Gann, it can be weaned off hydrocarbons.

Shifting away from oil and gas is one of the most common stories in cleantech, with numerous companies claiming that they can make transportation fuels from renewable sources like corn, sugar and grasses. By contrast, chemical manufacturing has received relatively little attention, despite the fact that most chemical manufacturing is also based on crude oil and natural gas, going through stepped processes to reach the desired end product.

Part of the reason is that there are tens of thousands of products to deal with, though some, like polyethylene, account for billions in sales yearly. However, Genomatica claims to have the scientific chops to simplify the problem, and produce the needed compounds on demand, and has raised $20.4 million in a second round, according to VentureWire.

The company was started by a team of biotech researchers from the University of California at San Diego, who started out working with E. Coli genes. Several years ago, they realized that their expertise could be more profitably applied to organisms for other industrial uses. Similar to startups like Amyris, LS9 and Synthetic Genomics, they decided to begin custom-making organisms to produce specific substances.

However, their combination of lab experience and modeling ability provided other opportunities, and the group decided to move in on the chemical industry. To create specific chemicals, the team identifies pathways in organisms with computational modeling techniques, then tests their theories out in the lab. The combination of modeling ability and lab technology in a single company is rare, says Gann, and provides a significant advantage.

Genomatica is currently testing out organisms for several chemicals, with plans to move on to pilot plants to prove the processes. However, after the pilot tests, the company again diverges from biofuels startups. It has no plans to make its own full-scale plants, instead adding what Gann calls “bolt-on” facilities to existing, multi-billion dollar plants owned by larger companies.

The feedstocks Genomatica can use vary widely. Syngas byproducts from biofuel manufacture can be used, as well as carbon dioxide, the culprit behind global warming. And the company can make use of “a very broad array of plant matter,” says Gann, exceeding the reach of biofuel makers, who need plants that are highly cost-effective. Cleanup after the processes should also be simpler, only requiring cleanup of the fermentation matter and dead cells.

Genomatica isn’t entirely alone in its plans. Novomer wants to revolutionize plastics manufacturing, although it will rely on chemistry, rather than biological processes. Another startup, Segetis, appears to plan on using biological feedstocks, but again, will use chemical processes; the company was backed last year by Khosla Ventures.

Of those companies, Genomatica has raised the most funding to date, about $24 million including its first funding. The backers in this round were led by Mohr Davidow Ventures, with participation from Draper Fisher Jurvetson and Alloy Ventures. The company is based in San Diego, Calif.