The financing will enable the Raleigh-based firm to scale commercial production of its products, which – unlike the petrochemical-fueled diaper materials currently dominating an $8 billion market, are manufactured from starches and renewable feedstocks.
Late last year, Bolin said Tethis was up for a major contract with a brand-name diaper manufacturer – but to get enough samples to the company, it would need to make more of its material, and quickly. And cost was a barrier. Just one test could mean a six-figure bill, he said at the time.
The new funder is what will help Tethis take advantage of that opportunity, fueling the buildout of the company's pilot manufacturing plant in Zebulon, he says. It’s expected to come online this spring, in time to start delivering preliminary samples to major industry players this summer.
The demand has been “tremendous,” Bolin says, noting that the prototype plant won’t be able to keep up.
“It will allow us to get samples in the market to customers who are interested, but we have more interest than we expected,” he says of the plant. “It will help us gauge interest for a full-scale plant … and teach us what we need to know.”
With the funder, Tethis secures support from Chapel Hill-based Blue Hill Group, which includes founder and managing partner Steve Lerner (founding principal of FGI Cellular, Capstrat, Piedmont Community Bank, Data Decision Group), alongside managing partners Ron Bernstein, CEO of Liggett, and Jonathan Hornaday, a serial banking executive.
Lerner, who has invested in the firm before, saw last year that Tethis was at an inflection point.
“They needed capital, not just for development, but for production – and that’s the purpose of this, to move them to the next stage,” Lerner says. As Tethis is both disruptive and IP-protected, it's a potential "holy grail invention" for investors, he adds.
Blue Hill is joined in the round by new investments from local university angel organizations: The Wolfpack Investor Network from N.C. State University and Carolina Angel Network from UNC-Chapel Hill (chaired by Lerner). This is the largest funding round for either group to-date, according to a press release. Existing backers also participated, the release said.
But a Dec. 28 securities disclosure for a $16 million fund, filed by Hornaday on behalf of “Blue Hill Group Tethis LP,” points to Blue Hill as the dominant investor by far.
Tethis, according to securities filings, had previously raised more than $5.5 million, through six funders – primarily debt raises.
Tethis has a history of rolling with the punches. Founded in 2012 by graduate students at N.C. State, Tethis first envisioned its technology in the fracking space. The salt-sucking material it had created would clean water used in the fracking process.
But Bolin soon saw the opportunity in using its absorbent material in diapers – where, a new dad himself, Bolin would find few eco-friendly options.
In addition to diapers, Tethis is exploring products and partnerships in other industries.
Bolin declined to be specific about those opportunities, saying it’s “nothing I can discuss yet,” but notes there are a lot of different applications for the compound, including in the paper and building materials industries.
In the meantime, Tethis has 16 employees and is in the process of hiring several more, he says.