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Summary:

After cutting nearly half its staff in January, algae producer startup GreenFuel is closing up shop. GreenFuel investor Duncan McIntyre at Polaris Venture Partners tells Greentechmedia that the company is a victim of the economy and is shutting down. That’s despite Polaris, Access Private Equity and […]

After cutting nearly half its staff in January, algae producer startup GreenFuel is closing up shop. GreenFuel investor Duncan McIntyre at Polaris Venture Partners tells Greentechmedia that the company is a victim of the economy and is shutting down. That’s despite Polaris, Access Private Equity and Draper Fisher Jurvetson pumping more than $10 million into the company last year. Sounds like that ever-elusive Series C round, which was part of GreenFuel’s 7-step turnaround plan and was always presented as within reach, never got raised.

Producing algae at that scale — the company won a $92 million, 25,000 ton-per-year algae production deal with Spanish engineering firm Aurantia — just proved to be too expensive. And with the downturn, large amounts of financing for risky projects like algae plants are just not available anymore. The closure comes after a lengthy and much-publicized turnaround plan from ethernet inventor and Polaris partner Bob Metcalfe, who became interim CEO before former Dow Chemical executive Simon Upfill-Brown took the helm last year.

Even in light of the poor economy, GreenFuel seemed to be plagued with more problems than most cleantech firms. In numerous conversations I’ve had with execs at other competing algae firms as well as former employees, the topic of mismanagement has come up. A poorly run business, a nascent market, a new technology and now a crappy economy will pretty much deliver the same result (bye-bye) for any company, even if it starts with a good idea. Well, now that GreenFuel has passed on, look to the other algae startups (like Sapphire) to take advantage of the opening.

By Katie Fehrenbacher

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  1. Snide.

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  2. Thank God this turd collapsed.

    Where is accountability??

    Will Jennifer Fonstad be a man and step up and admit she f*5^ed up???? Does any LP take her seriously after this??

    Any LPs listining out there??? You DESERVE to lose your money with people like this. Just let me tell your investors….

    Be careful: soon we come after you and your poor (now VERY poor) investors. Calpers beware, you signed the check :0

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  3. I saw this on TV the other day & the breakdown of it seemed like it could have been such a great asset to the economy & ecology. I think this can still work. But it’s gotta be better organized with a multi-year business plan. There’s got to be even more research that needs to be done for this to be made on a much larger scale. The mini-successes of this technique could be perfected. But that’s where we get into that BIG $$$$ issue again. sigh We are so close to helping ourselves out of the major fossi fuel reliance we’ve been tapping for so long.

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  4. its true that greenfuel was mismanaged but that was only half the problem. the other half is that this technology DOESNT WORK AS ADVERTISED-its just way too expensive a method of making biodiesel. other companies are not going to take advantage of the opening because they are doing more or less the same thing. sapphire is just another greenfuel, the only difference is it got started later so it will finish later.

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  5. Eight new Executive offices, five new managers offices and a huge new lab stuck in an old warehouse is mismanagement. The Board and Managers built themselves new buildings instead of growing algae or focusing on a product. Modeling business and spreadsheets doesn’t grow algae. The top scientists left because of this inept management and no respect. Face facts Bob – it isn’t Smat not to call it as it is. Thanks for the $70 million dollar memory.

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  6. [...] commercial-scale production if the demonstration proves successful. Algae startup GreenFuel, which finally shut down last week after cutting almost half its staff in January, said last year that it would use up to [...]

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  7. SECRET IS OUT Thursday, June 4, 2009

    Holly Flesh, Wayne Hopkins, Simon Upfill-Brown and Bob Metcalf have a secret to sale “Algae that grows 30% faster” and a bunch of old equipment in a warehouse that is useless. Don’t buy the HYPE.

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  8. [...] by Katie Fehrenbacher No Comments Posted June 8th, 2009 at 10:17 am in Biofuels Despite the slow demise of algae fuel company GreenFuel, investors are still pumping money into algae-based fuels. The latest recipient is Solazyme, which [...]

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  9. [...] Of course, biofuel startups have been known to make aggressive claims about their growth trajectories, only to fall short once the realities of competitive fuel markets took hold. GreenFuel Technologies, a Cambridge, Mass.-based algal-derived fuel maker, had daring production estimates before it started struggling to raise funding. It went on to cut nearly half its staff and then finally closed down last month. [...]

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  10. Krassen Dimitrov Tuesday, June 23, 2009

    For the record, I am not average joe from May 14th. I just now saw this story.

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  11. [...] at the University of Queensland, who predicted the demise of algae fuel company GreenFuel (which went out of business earlier this year) also wrote a detailed report about M2E Power. In the report, Dimitrov says that M2E Power’s [...]

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  12. [...] far, we have seen some — but not many — venture capital-backed startups shut down in the recession. Brian [...]

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  13. [...] Written by Katie Fehrenbacher No Comments Posted June 29th, 2009 at 5:00 am in Automotive The demise of a well-funded algae fuel company earlier this year doesn’t seem to be deterring startups, as well as oil and plastics companies, from working on [...]

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  14. [...] isn’t the only startup taking the demise of a well-funded algae fuel company — GreenFuel Technologies — in [...]

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  15. Seems that this closure has perhaps not been the surprise event after all. Poor management is one thing but some of the above comments basically state that the products on offer did not perform. Not much chance for any business in any economy if that is going to be the case?

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  16. [...] seen a wealth of bankruptcies across several sectors (including dozens of ethanol firms, risk-taking algae players like GreenFuel, and very early stage technologies like the kinetic energy technology one from M2E [...]

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  17. [...] an unusual combination: a venture capitalist that was formerly a VP at since-shuttered algae fuel startup GreenFuel has joined the Federal Communications Commission, where he will focus on the smart grid. According [...]

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  18. [...] Keep in mind that algae’s a risky, crowded business. Sapphire Energy, a prominent competitor, got a $50 million DOE grant and a $54 million loan guarantee from the U.S. Department of Agriculture in January to expand its commercial-scale pond operation in New Mexico. Meanwhile, GreenFuel, another algae startup which raised venture money and signed a commercial production deal, shut down last year. [...]

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