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An Early Harvest of Biofuels News

Here it is, the second day of September, and I’ve got a small pile of releases here about goings-on in the biofuels industry. Venture Capital maven and biofuels booster Vinod Khosla’s Khosla Ventures is backing the first three companies in this roundup.

Renewable Crude by KiOR, Credit: KiOR

First I need to go back in time a little bit (to Aug. 17) and commend Range Fuels on getting its commerical cellulosic biofuels plant up and running near Soperton, GA. Range Fuels uses thermochemical processes (heat, pressure and steam) to convert woody biomass to synthesis gas (often called syngas). The gas is passed over a catalyst to produce mixed alcohols. The current product of the Soperton plant is methanol, which will be used to produce biodiesel. The plant will also have ethanol output beginning in the third quarter, according to the company.

Its been a long road for Range. (Though the commerical-scale biofuel road will be even longer for most other firms, as commercial facilities are as rare as ice in the Sahara [or you can insert your own lame metaphor]) Continue reading →

Raising money for algae

Credit: Solazyme

This week two algae-to-fuels firms took different pathways to raise new capital while they work out how to commericialize their technologies. The hundreds of start-ups looking to cash in on the little green organisms are likely watching closely.

San Francisco-based Solazyme has raised an impressive $52 million in its fourth round of venture capital funding. Unfortunately for the algae industry, the round does not signify that new investors are flocking to this corner of cleantech – there was only one new investor, Morgan Stanley, participating. Oil company Chevron has stayed on as a strategic investor through its venture capital arm.

Continue reading →

Codexis – An example of “integrated innovation”?

I’m at the Lux Research Executive Summit today. You can follow my twitter stream from the conference.

Lux Research Director Michael Holman (who also happens to be a PhD chemist) just gave a presentation discussing the shortcomings of the venture capital model for bringing innovations in physical sciences to market (especially in materials science, energy, and the environment). VC investments worked well for tech companies like Google, which raised a mere $25 million of venture funds before going public.

Another problem is that scientists with lab-discovered innovations do not always pick the right markets and applications for their discoveries. Holman suggests that physical sciences start-ups would be better off partnering in their early stages with the venture and partnership arms of larger corporations.

Corporate partners have a clear understanding about where new technologies are most needed, and they know a great deal about the potential market sizes. Still, most early-stage start-ups are very concerned about being taken over or co-opted by corporations that might not care about the smaller firm’s health and possible future. Holman suggests that agreements that include particular financial incentives can help smooth the way.

One company that Holman says successfully partnered with corporate ventures is Codexis, a biocatalysis firm targeting renewable fuels, pharmaceuticals and chemicals. Codexis went public last week and raised $78 million, a strong result in a fragile economy. (Though Codexis originally hoped to raise a cool $100 million). Though the firm did raise some venture money, it partnered early and widely with firms like Chevron, GE, Pfizer, and Shell. Holman says firms like Codexis benefit from the insights of corporate partners and can even speed up their time to market for their products or to exits like IPOs.

Longing for Venture Capital

This item was contributed by my C&EN colleague Marc Reisch

Startup bio-based chemical producers in the U.S. are having a difficult time snagging the funds they need to propel their businesses forward, says Brent Erickson, executive vice president of U.S. trade group Biotechnology Industry Organization.

Speaking at a meeting of the education group Société de Chimie Industrielle in New York City on March 24, Erickson said that before the economic slowdown, bio-based chemical startup firms could access funding from the venture capital community, but lately that money source has dried up.

U.S. government loan guarantees meant to fill the gap as part of the economic stimulus package aren’t helping, Erickson noted. Instead, under rules now in place, the guarantees are going to wind and solar energy start-ups that can show they have contracts to supply power to customers over a defined contract period. But startup bio-based chemical producers are losing out, Erickson said. They don’t generally operate like utilities and so they don’t sign 20-year supply agreements.

No immediate fix for the funding dilemma appears to be in sight. “A recovery of the venture capital community would be a help,” Erickson said.

Genomatica Raises $15 million

Bio-based chemical start-up Genomatica announced today that it has raised $15 million in a third-round of venture funding, led by new investor TPG Biotech. Genomatica will use the money to construct a demonstration-scale (about 30,000 liters a year) facility to make 1,4 butanediol (BDO). BDO is used to make high-performance polymers, solvents and fine chemicals for use in clothing, cars and electronics.

Bio-based – and so-called sustainable chemical firms – are grabbing some of the spotlight from their more well-publicized renewable fuels cousins. Proponents point out that chemical feedstocks bring in higher margins than fuels, and say that there is a ready market of eager chemical company customers that are looking to source their operations in a way that avoids swings in petroleum prices.

Christophe Schilling, Genomatica’s CEO, says that while the company works to design and construct the demo facility, it will also continue working on the throughput of the BDO made by its sugar-consuming organism. He tells C&EN the microbial workforce can make BDO at 99.7% purity and says by the time the demo facility is ready to house the process, that Genomatica will have a technology to make the feedstock cost competitive to the petroleum-based alternative.

Cleantech: Patent, Publications, and Money

Two cleantech start-ups recently covered by C&EN have milestones to report. And another is appearing at the ACS Spring National Meeting this week.

Cellulosic ethanol firm Qteros, with technology from the UMass lab of microbiologist Susan Leschine now has a patent on its Q microbe. The microbe can break down the polysaccharides in plant cellulose into simple sugars and then ferment the sugars into ethanol. The company says this is a money and time saver, as it reduces the number of processing steps and eliminates the need for separate enzymes. C&EN recently wrote about Qteros’ new CEO John McCarthy, and his efforts to scale-up the business (subscription required).

And the New York Times DealBook blog has reported that low-carbon cement start-up Calera will get $15 million in funding from Peabody Energy, a coal company. Calera claims to have the ability to bubble CO2 emissions from power plants into high-mineral content groundwater to create a cement-like product. According to the company, the process locks in the CO2 from the power plant and also saves on CO2 emissions that would normally be used to create the cement. You can read about Calera and three other low-CO2 cement firms in C&EN (subscription required).

Out in San Francisco, agricultural biotech firm Agrivida, which is developing specialized non-food crops that can be turned into chemicals and fuels, will be presenting research at the ACS meeting. Agrivida will explain how it has developed a “platform [that] allows for expression of cell wall-hydrolyzing enzymes within a plant’s growing cell wall without the occurrence of detrimental phenotypes that may impact yield.” Basically, like Qteros, the trick is to get a head start on conversion from cellulose by picking the right biological systems. My colleague Sue Morrissey mentioned Agrivida in her story about recent ARPA-E funding awardees.

If any ACS meeting attendees have a chance to see Agrivida’s presentation, I would love to hear from you.

As much as I love San Francisco, I am writing this post from Munich, Germany, where I am preparing to visit Wacker Chemie this week. You’ll hear more about this soon.