The round follows a more traditional July 2006 Series A round of $5.5 million from Santa Monica, Calif.-based Rustic Canyon Ventures that supported expansion of manufacturing of a handful of initial products and technology development in new markets. (Rustic Canyon Ventures is an investor in The Deal LLC.)

The new round will fund construction of as many as three large manufacturing plants to produce construction drywall materials. The company has developed proprietary processes for manufacturing panels it expects will be cost competitive with existing gypsum drywall materials but produce vastly lower amounts of carbon dioxide in their production.

Serious Materials CEO Kevin Surace said founders and investors expect the materials to be attractive to developers constructing so-called green buildings in line with Leadership in Energy and Environmental Design, or LEED, standards touted by environmentally friendly developers and increasingly required or encouraged by local jurisdictions. Part of the LEED standards program involves evaluating the amount of carbon dioxide emission that goes into building materials, and century-old techniques for manufacturing drywall require intense heat to remove embedded water in a process called calcining.

Serious Materials has developed a process for creating drywall products using unnamed materials that essentially cook the water out in an internal chemical process. It will begin selling the materials under the EcoRock name in 2008. Surace said calcining processes in the production of existing lines of drywall materials produce 25 billion pounds of carbon dioxide annually, comparable to the greenhouse gas emissions of cars and trucks.

Serious Materials was founded in 2002 by Silicon Valley hardware and software veterans specifically aiming to develop new construction materials to conform to emerging clean technology standards. The company developed a line of insulated windows and acoustic panels with both improved energy efficiency and soundproofing properties that enable greater housing density in environmentally attractive urban infill settings.

John Babcock, a partner with Rustic Canyon, said the company developed a healthy business in those markets while demonstrating manufacturing competence and building a distribution network, but that the aim was always to leverage that into the much larger drywall market as it completed development of EcoRock and raised additional financing.

Like many biofuel startups that have raised large equity rounds to build manufacturing plants in the absence of project finance availability, Serious Materials' business model is based on the thesis that the market is large enough to support development of many more plants using project finance and debt later on, after establishing the soundness of its original technology. The company expects that once it demonstrates it can effectively manufacture and distribute products competitive with existing materials, but with the additional cachet of a lower carbon footprint, it can then grow rapidly with relatively cheaper financing.

Paul Holland, a general partner with Foundation Capital, said the firm has invested about $150 million in cleantech deals over the last few years. He added that business models often stray from traditional venture investments in terms of taking on capital-intensive technology risk, while aiming at huge industrial markets with huge potential rewards.

"Serious Materials is very much on strategy for us in terms of a company that has a very, very large market opportunity selling into a $10 billion construction materials sector, with what we believe is sort of the killer-app as a next generation product that is both cost-effective, energy-efficient and green in terms of conforming to all the standards associated with clean buildings," Holland said. "It fits very nicely on the demand side of cleantech, where lowering the amount of embedded energy in traditional processes will yield superior return."

Surace said Serious Materials currently has a pilot production plant for EcoRock in Sunnyvale and is in discussion with various jurisdictions in California and New York for locating its first large-scale plants. The company takes the environmental impact of transportation of its products into account in terms of LEED standards, so it expects to scale and locate plants for the greatest return in terms of local construction markets, but it also is seeking tax breaks and other incentives in identifying plant sites.

Forest Baskett, a general partner with NEA, said the round is expected to be the last private equity round for the company. Despite a large initial investment, he added, the company will avoid additional dilution with debt and project finance in the future. He also said the opportunity is large enough that the company could support a large amount of additional development with a public stock offering in the near future.

Serious Materials did not use an outside financial adviser in putting the round together. It had legal work on the deal from Mike Danaher of Wilson Sonsini Goodrich & Rosati PC in Palo Alto, Calif. Investors were represented by Ryan Naftulin of Cooley Godward Kronish LLP.