Slater's Gross-Wen receives $6.5 million investment to grow algae-centric tech business

The water-cleaning technology developed by a Slater-based company has attracted the attention of a group of Iowa investors, who’ve poured $6.5 million into Gross-Wen Technologies.

Gross-Wen’s main draw is a patented process that uses algae to clean wastewater.

ISA Ventures and Iowa Farm Bureau’s Rural Vitality Fund led the investment in Gross-Wen, along with a half-dozen other venture capital entities.

Eric Engelmann, a general partner at ISA Ventures, said the group is proud to invest in a “groundbreaking company and its technology, led by an exceptional team, to accelerate Gross-Wen Technologies’ growth in Iowa.”

He said raising significant dollars for a company that is hitting its stride with the right technology at the right time is “big news for Iowa and for central Iowa’s startup ecosystem.”

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The investors believe the timing is right, in part, because many municipalities and companies are looking for less expensive, effective solutions to meet stricter federal and state water quality requirements.

Gross-Wen uses a process it calls revolving algal biofilm to cost-effectively meet new wastewater discharge permits.

The RAB system uses algae to recover nutrients such as nitrogen and phosphorus from wastewater in a more affordable manner than traditional methods. The algae consume carbon dioxide and generate oxygen, both of which are healthy processes to battle climate change.

The harvested algae are then turned into pellets that are rich in nitrogen and phosphorus and can be used as fertilizer or bioplastics.

The process has low costs for energy and operation, and it does not require costly carbon or chemical inputs.

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“There is a tremendous opportunity for sustainable water treatment technologies. This funding will provide GWT the capital to grow our existing presence in Iowa and the Midwest and provide us the resources to develop new markets across the U.S.,” Martin Gross, co-founder and president of Gross-Wen, said in a news release. “We are thrilled to add ISA Ventures, Rural Vitality Fund and Next Level Ventures as our newest shareholders at GWT. These firms represent the top venture capital firms in Iowa and we look forward to their guidance as we expand our business.”

Gross and his professor, Zhiyou Wen, created the patented process while Gross was a graduate student at Iowa State University. Gross and Wen co-founded the company in 2014. Wen continues as a technical expert.

Slater implemented Gross-Wen’s algae-based technology at a savings of $1 million as it improved its wastewater treatment facility to meet more stringent Department of Natural Resources requirements.

Gross credits the city and Mayor John Kahler for being forward-thinking in choosing Gross-Wen in December 2018.

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“Slater was considering a $6 million alternative,” Gross said. “However, I’m happy to say by using our system, the community saved over $1 million.”

In December 2019, Gross-Wen opened its headquarters on Slater’s Main Street.

The building at 404 Main St. was dilapidated when Gross-Wen bought it from the city for $1. A $100,000 Catalyst grant from Iowa in 2019, along with a facade grant from Story County, helped spruce up the building, creating an industrial feel with the use of metal and greenhouse glass like that used in Gross-Wen's algae-based nutrient recovery stations.

“We need investors who are willing to invest in small communities,” Engelmann said. “And we need companies who are willing to locate there. Certainly, Martin Gross has done some really cool work putting Gross-Wen right there on Main Street.”

Also involved in the funding of Gross-Wen are Next Level Ventures, Mid-American Angels, Ankeny Angels, Ag Startup Engine, Oman Ventures and 1330 Investments.

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The ISA Ventures fund was created during the COVID-19 pandemic, Engelmann said.

“The fund only invests in Iowa companies, and we chose Gross-Wen as one of the heavy hitters we really wanted to back,” he said.

ISA Ventures is set up to invest in companies early, when other venture funds tend to not want to play, Engelmann said.

Engelmann grew up in Davenport, graduated from the University of Iowa and got his first job in Cedar Rapids, where he lives.

“About one-third of our money is going to be invested extraordinarily early in companies — that’s not Gross-Wen, to be clear,” he said. “But I think that’s an interesting part about our model, because we tend to be the very first check you ever receive as a founder and then we continue to invest over time, bringing in bigger funds when you really hit it big.

“We plan an important role in the ecosystem of identifying high-potential founders early and helping them build their companies here in Iowa.”