The corn ethanol industry may be struggling, but there’s still some money going into the biofuels biz. Glycos Biotechnologies said today that it’s raised $5 million in funding for technology that could help ethanol and biodiesel makers turn their waste or low-quality feedstocks into cash. The Series A round of funding was led by Draper Fisher Jurvetson and its affiliate DFJ Mercury.

Houston-based Glycos said its bio-processing system can turn leftovers from the ethanol and biodiesel biorefining process as well as low-quality feedstocks into higher-value substances. Those bioproducts can then be used to make goods like bioplastics and surfactants, as well as fuels.

Glycos’s system, rather than employing a petroleum-based chemical process, makes the biofuel substances using bacteria and fermentation technologies. Cutting petroleum out of the loop may not be the only benefit; the company claims that the fermentation performance of its technology “far surpasses” theoretical yields of sugars at a lower cost.

The technology was originally developed at Rice University, in Professor Ramon Gonzalez’s Chemical and Biomolecular Engineering Lab, with backing from the Department of Agriculture and the National Science Foundation. As Gonzalez noted last year, biodiesel producers used to sell their leftover glycerin — the main byproduct of biodiesel production — but an increase in biodiesel production means they’ve had to start paying to get rid of it. He said the lab’s technology, licensed by Glycos, could help raise the value of that waste. At the time, Glycos said it planned to open its first demonstration facility within 12 months.

Along with the funding, Steve Jurvetson of Draper Fisher Jurvetson and Dan Watkins of DFJ Mercury will serve as directors on the Glycos board, with DFJ Mercury’s Richard Cilento taking the chairman post.