Summary:

Algae could land on the Nasdaq some time this year. Late Friday algae company Solazyme filed for an IPO of up to $100 million. The move follows the company’s announcement that it had struck a deal with Dow Chemical to make a algae-based fluid for transformers.

Solazyme Oil

Algae could land on the Nasdaq some time this year! Late Friday algae company Solazyme filed for an IPO of up to $100 million. The move follows the company’s announcement earlier this week that it had struck a deal with Dow Chemical to make a algae-based fluid for transformers.

S-1′s are fun because they give a first look at companies real revenues and earnings. For the year ended December 31 2010, Solazyme generated revenues of $37.97 million and lost $16.28 million over the same period. That’s compared to generating revenues of $9.16 million, and losing $13.67 million for the year ended 2009. As of December 31, 2010, Solazyme had accumulated a deficit of $52.8 million.

Solazyme has raised at least $125 million throughout its eight years of existence, from investors including Chevron’s VC arm to Morgan Stanley to Richard Branson to food and personal product giant Unilever. Unilever wants to use algae to replace palm oil, because the harvesting of palm oil has led to deforestation in Indonesia and Malaysia and has drawn the criticism of environmentalists.

The first applications for Solzayme’s algae oil are food, lotions and industrial chemicals. When I visited Solazyme’s headquarters in  2009, I drank some of the company’s prototype algae milk (tastes like soy or rice milk), and checked out some of their oils and lotions under development in their labs (see photo above)

But ultimately, the company wants to scale up algae oil production to tackle the biofuel market: hence, why a company like Chevron is interested. The company is looking to commercialize its fuel technology in the 2013 time frame, with a production cost target of $60 to $80 per barrel. To get there, it will have to build a commercial-scale algae plant, which can cost over $100 million.

Unlike some algae fuel companies that grow algae in open ponds, Solazyme engineers efficient algal strains and grows its designer algae in fermentation tanks without sunlight by feeding it sugar, then using existing industrial equipment to extract the oil. Solazyme is a leader in the algae fuel space, but competes with Sapphire Energy, Craig Venter’s Synthetic Genomics, and a handful of other companies that are looking to scale up algae oil production.

Dillon told me in an interview this week that even though Solazyme is commercializing industrial chemicals, its biofuels are still on track.

According to its S-1, Solazyme has produced 500,000 liters of its algae oils between January 2010 and February 2011, which isn’t all that much, but the company will use funds from the IPO to scale up production.

Its S-1 also says that back in December Solazyme singed a non-binding letter of intent with “one of the largest sugarcane processing companies in Brazil to form a joint venture and co-locate oil production at one of more of their sugarcane mills.” More on the S-1 in a later post.

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