About this time a year ago, biofuel and biochemical startups were aggressively seeking to go public. Amyris, Gevo, Solazyme and KiOR were all able to have public debuts within the past two years. But these companies’ stocks, and their long timelines for delivering their biochemicals and biofuel products, have mostly disappointed. KiOR is trading at $7.19, down from its IPO debut of $15 per share; Amyris is trading at $3.31, down from a debut price $16 per share.

While Genomatica announced its new funding on Thursday, it also filed a withdrawal form, removing its planned IPO. Genomatica filed for a potentially $100 million IPO a year ago. In the filing Genomatica sited “current market conditions” as the reason for withdrawing the IPO.

Genomatica’s new funding comes from Alloy Ventures, Draper Fisher Jurvetson, Mohr Davidow Ventures, TPG Biotech, VantagePoint Capital Partners and Waste Management (disclosure: Alloy Ventures is also an investor in GigaOM). Genomatica has now raised at least $125.7 million.

Solix BioSystem’s new funding was led by I2BF Global Ventures, and previous investors include Shanghai Alliance Investment Ltd., or SAIL, Valero Energy, Southern Ute Alternative Energy, which manages clean power investments for the Southern Ute Indian Tribe, Bohemian Investments and Infield Capital.

According to the Cleantech Group biofuels and biochemicals received 14 percent of venture funding for cleantech in the second quarter of this year. New biofuel companies are barely getting any funds, but more established firms continue to be able to draw down capital. Algae company Sapphire Energy closed $144 million in the second quarter of this year, while waste and biogas company Harvest Power closed $112 million.

Genomatica creates organisms that can turn sugar or synthesis gas into a variety of products, from chemicals for plastic to transportation fuels. The sugar or syngas comes from plants, wood chips or trash rather than the more traditional method of using crude oil or natural gas. Genomatica’s first product is 1,4-butanediol, or BDO, which is made from using sugar-eating E. coli, and is used for making things like spandex, running shoes and plastic auto parts.

Solix BioSystems has developed bioreactors that grow algae to turn it into fuels and chemical feedstocks, and more recently it decided to also commercially grow the algae. Solix says it will use the funds to start producing and selling its product commercially.

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Salzman, who gave his outlook for the cleantech market for 2012 and beyond during a talk at the SolarTech conference in San Jose on Thursday, said that three of his portfolio companies have filed to go public during a time when the IPO market is dim. BrightSource Energy, which builds large solar power plants, filed its S-1 last April; green chemical-developer Genomatica filed for an IPO last August; and biofuel developer Mascoma did the same but in September.

“We are really waiting for an attitude change,” Salzman said, adding, “It’s not changing any time soon.”

Speculation that the IPO market might be tanking for cleantech IPOs began to swirl last summer when the stock markets began to crumble as the U.S. credit rating fell and the sovereign debt crisis took hold in Europe. Just before that, the investor community saw some successful cleantech IPOs, including the exits of Tesla Motors and several biofuel companies. Salzman said Tesla was a big success story for his investment firm.

But shares of many public companies, from solar to biofuel, have plummeted over the past year. The Solyndra bankruptcy last September has poisoned political discussions, as some lawmakers, notably Republicans, now use the solar panel maker’s struggles to attack President Obama’s clean power policy and funding decisions. The debates over the government’s role in supporting technology development by private companies have come at a time when the cleantech industry is still in its infancy and relies on government subsidies to grow.

That reliance also means the upcoming election for the presidency and seats in Congress could have a major impact on cleantech development and investments. Salzman believes Congress will remain as divided between the two parties as it is now. He prefers Obama over any of the Republican candidates, and he received applause from the audience at SolarTech when he quipped, “I personally have trouble with the idea that we have somebody running for the highest office who doesn’t even know science.”

But there are forces beyond politics that still make cleantech a good investment category, he said. Even though the fossil fuel industry overall remains an opponent to the cleantech industry, there’s been growing interest by some oil and natural gas firms to investigate and invest in technologies that deliver a smaller carbon footprint. What this means for startups is that they should work harder to line up investment and other business opportunities with these industry giants. That has certainly been an important strategy for VantagePoint’s portfolio companies, Salzman said.

The strategy is certainly something that is being pursued actively by one VantagePoint-backed startup, MiaSole, a thin-film solar manufacturer who earlier this week announced it had raised $55 million in equity. The company needs the money to boost its sales staff and keep churning out solar panels, but it won’t be able to grow much if it doesn’t line up one or more partners who can provide money and market experience.

“Embracing incumbents and finding the enlightened ones is essential (for startups) to scale,” said Salzman.

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The public companies

Amyris.  Amyris is a company that uses genetic engineering to turn biomass into chemicals and fuels, and its first product turns sugarcane syrup into Biofene, a form of the industrial chemical farnesene, which is a fragrant hydrocarbon that’s used to make cosmetics, lubricants and other materials. Amyris held its third quarter earnings on Nov. 1, and announced for the three months ended Sept. 30, 2011 that the company generated $36.28 million in revenue, up from $24.23 million in revenue from the same quarter in 2010. Amyris also announced a net loss of $43.92 million for the third quarter 2011, which was a larger net loss than in the same quarter in 2010, when Amyris lost $20.61 million for the quarter.

As of Monday morning, Amyris is trading under $12 (last time I looked at $11.76), which is a 52-week low according to The Street, and the company’s shares are down 53 percent year-to-date. Amyris priced its IPO in September 2010 at $16 per share, below its anticipated range of $18 to $20 per share.

Gevo.  Gevo’s business model is based on converting corn ethanol plants to enable them to turn cellulosic feedstocks like agriculture waste into a bio-based isobutanol, a fuel additive and a precursor to manufacturing plastics and other products. Gevo filed its third quarter earnings report Nov. 1, and reported a quarter revenue of $17.51 million, up from third-quarter revenues in 2010 of $1.50 million. Gevo lost $12.31 million for the 2011 quarter, a smaller loss than the $17.31 million it lost in the third quarter 2010.

As of Monday morning, Gevo is trading at $7.51, down over a three-month period. Gevo went public in February of this year, on a per-share price of $15 — priced at the high end of its range — and raised $95.7 million after offering expenses.

KiOR.  KiOR’s technology allows it to convert wood chips into a substitute for crude oil. KiOR posted its second earnings statement as a public company last week on Nov. 10. The company reported a net loss of $14.8 million, compared to $10.6 million for the third quarter of 2010 and did not recognize revenue during the third quarter of 2011. The company doesn’t expect to generate revenue until at least mid-2012.

KiOR spent $53.4 million on building its facility in Columbus, and KiOR told shareholders in its latest report that it will start finish building its Columbus, Miss. facility in second half in 2012 and its next facility in Newton, Miss. potentially at the end of 2012. KiOR is currently looking into raising funding for its Newton facility,  and said it will see a bit higher capital costs for its Columbus plant than previously expected.

KiOR is one of the only biofuel/biochemical companies which hasn’t seen a substantial share drop. As of Monday morning, KiOR’s shares were trading at $15.40. KiOR went public this summer and priced its IPO at $15 per share, under its estimated pricing of $19 to $21 per share.

Solazyme.  Solazyme engineers efficient algal strains and grows its designer algae in fermentation tanks without sunlight by feeding it sugar. Then, using existing industrial equipment, it extracts the oil. The company reported its third quarter earnings last week on Nov. 7, and reported revenues of $8.94 million, up from revenues of $4.63 million. Solazyme reported a net loss of $14.09 million for the quarter, a bigger net loss than the $8.92 million it reported in 2010.

Solazyme’s shares have been down over the three-month period, and as of Monday morning, its shares were trading at $11.16.

Biochemical and biofuel startups that have filed for IPOs:

• Genomatica
• Fulcrum BioEnergy
• Mascoma
• BioAmber
• Renewable Energy Group

Image courtesy of eXtension Ag Energy.

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Codexis vs Gevo

Solazyme vs Amyris

Kior

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The San Diego company engineers organisms to convert sugar or synthesis gas into chemicals for making a variety of products, from clothing to auto parts. Genomatica has developed its first product, called BDO, and conducted pilot and demonstration projects over the past year. It now needs to work on producing it in large-scale plants. Here are more details from Genomatica’s S-1 filing with the U.S. Securities and Exchange Commission about its IPO:

Business model. Genomatica plans to focus on developing organisms for making green chemicals and forming joint ventures or license its technology to manufacturers to produce the chemical compounds. The company expects the first commercial-scale production to take place in Europe by the end of 2012. That plant, owned by Novamont, should be able to churn out 40 million pounds of BDO per year. Other manufacturing partners include Tate & Lyle and Waste Management. By the end of 2014, Genomatica hopes to see plants producing 100-130 millions of its green chemicals per year.

Private equity raised. It has raised $84.2 million since inception, the year of which could be 1998 (according to the S-1) or 2000 (according to the company’s press releases).

Revenues/Losses. The company has yet to make money from selling its chemicals. Payments have come from government grants, joint development agreements and software licensing to research institutions. Genomatica reported $14 million in net losses on $726,000 in revenues for 2010, compared with $9 million in net losses on $887,000 in revenues for 2009. For the first six months of this year, the company posted $9 million in net losses on $1.9 million in revenues.

Risks. Building commercial plants can take more money and time than anticipated. This has been true for other green chemical and biofuel makers, and could hold true for Genomatica, whose technology requires a series of steps including “fermentation, cell separation, salt separation, water evaporation and purification.” The company competes with businesses that make chemicals from crude oil and natural gas, so whether Genomatica’s chemicals will carry attractive price tags will depend partly on the fluctuating prices of fossil fuels.

Competitors. Chief rivals include BASF, Dairen Chemical Corp, ISP, INVISTA, LyondellBasell, Formosa Petrochemical, Shell Chemical and TPC Group.

Employee count. The number of the company’s full-time employees has grown from 33 on Jan. 1, 2010 to 69 on June 30 this year.

Patents and such. Genomatica owns or licenses the use of 23 patents, including 15 in the U.S. and eight outside of it. The company has 206 pending patent applications around the world.

IPO proceeds. Genomatica, which tentatively set the IPO size at $100 million, plans to use the money on research and development, manufacturing and other corporate expenses.

Who will do well in the IPO. TPG Biotechnology Partners owns 19.1 percent. Mohr Davidow Ventures owns 17.3 percent. VantagePoint Venture Partners owns 12.6 percent. Alloy Ventures owns 10.4 percent. Batios Holdings owns 7.4 percent. Draper Fisher Jurevetson owns 7 percent. Waste Management owns 6.9 percent. Iceland Genomic Ventures owns 5.5 percent.

Image courtesy of Genomatica

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The IPO filing isn’t surprising considering the company’s chief executive, Christophe Schilling, has talked about turning to the public market to raise more money and biofuel makers have flocked to the public markets in the first half of 2011. The funding will likely go toward helping Genomatica reach commercialization of its technology.

According to the S-1 filing (often the first look at a company’s financials),  Genomatica hasn’t generated revenues from the sale of its chemicals. Instead, revenues have largely come from payments from joint development agreements, software licensing to research institutions and government grants, the company said. The company also hasn’t made a profit and recorded $14 million in net losses on $726,000 in revenues for 2010.

IPO market open?

Genomatica is planning to go public at a time when the economy still feels shaky. The stock market has swung widely in recent weeks, and the green IPO market even seemed to have slammed shut for a while. Investors have been hoping 2011 would be a strong year for cleantech exits — in particular, IPOs. Companies that received funding more than five to seven years ago are maturing, and the venture capitalists that invested in them are eager to get returns out.

The IPO window appeared wide open in the first half of 2011. Biofuel maker Gevo started trading in February; Zipcar  started trading in April, algae maker Solzayme  started trading in May; and biofuel company KiOR started trading in June.

In addition, companies that have filed papers for IPOs (but not yet traded) include solar equipment developer Enphase Energy, smart grid tech company Silver Spring Networks, biodiesel producer Renewable Energy Group, and solar power plant developer BrightSource Energy. VentureWire reported that electric car company Fisker Automotive had also hired bankers to investigate the IPO process.

Greener chemicals

Genomatica engineers organisms that can turn sugar or synthesis gas into a variety of products, from chemicals for plastic to transportation fuels. The sugar or syngas can come from renewable sources such as plants and wood chips rather than crude oil or natural gas. Syngas also can be produced using trash, which accounts for why Waste Management decided to invest in Genomatica and a host of other startups.

Genomatic’s first product is 1,4-butanediol, or BDO, which is made from using sugar-eating E. coli. BDO can be used for making spandex, running shoes and plastic auto parts. The company began pilot production in Michigan last summer. Earlier this year, the company said it was able to demonstrate a larger-scale production of BDO in Illinois. The second product will be butadiene for making tires and latex products, the company said.

The San Diego company has raised $84.2 million in private equity since its inception in 1998, including a $45 million round announced in March of this year that came from investors including Waste Management, VantagePoint Venture Partners, Alloy Ventures and Draper Fisher Jurvetson.

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Enerkem gasifies various forms of waste — everything from old telephone poles to mixed municipal garbage — and then turns that syngas into various fuels including methanol and ethanol. Valero is on one side of Enerkem’s supply chain, and could work with Enerkem on commercial relationships to process and sell the fuels. Waste Management is on the other side of Enerkem’s supply chain, and we could envision Enerkem working with Waste Management’s trash supply.

Enerkem has a couple of facilities in the works. One in Westbury, Quebec, which at one point was expected to produce about 1.5 million gallons per year of methanol from old telephone poles, with ethanol next on the list of biofuels to produce. Another plant, which is expected to cost $70 million and could crank out about 10 million gallons of ethanol per year, is being planned with Greenfield Ethanol, Canada’s largest ethanol producer, right next to an Edmonton, Alberta municipal composting facility. And there’s also a 10 to 20 million gallon per year, $200 million plant, in the works in Pontotoc, Miss., adjacent to a municipal waste dump, which Enerkem expects to break ground on this year.

Enerkem has received significant U.S. government support for that last Mississippi plant. In January, the USDA awarded Enerkem a conditional commitment for an $80 million loan guarantee to build it, which also followed on a $50 million Department of Energy grant. With this latest funding, Enerkem has raised about $130 million in equity funding, and received $130 million (combo of grant and loan guarantee) from the U.S. government. Trash to fuel technology seems to have gotten more attention in 2011, compared to making cellulosic ethanol from energy crops and agriculture waste.

However, even with this bright funding spot, the next-generation of biofuel production has been creeping forward. There have been three biofuel IPOs in the last 12 months — Gevo, Amyris and Solazyme — but these three companies are not yet producing biofuels at scale, and are instead making sales either off of specialty bio products like cosmetics, or reselling standard corn-based ethanol.

It will ultimately be the giants like Valero and Waste Management that will be able to get these biofuel products to scale. Both Valero and Waste Management are investing in quite a few biofuel and waste product companies. Valero has backed Mascoma, and has also taken stakes in algae fuel maker Solix Biofuels, and cellulosic ethanol maker ZeaChem.

Waste Management strategically invested in German company Agnion Energy, which invented a waste gasification process based on something called the heatpipe-reformer design. Waste management has backed startup Agilyx, which has developed technology that can turn plastic otherwise headed for the landfill, into a synthetic crude oil. And earlier this year, Waste Management announced a partnership with Genomatica, a San Diego, Calif.-based startup with a platform to create genetically modified organisms to turn biogas into a variety of industrial chemicals.

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Waste Management says it has made a “strategic investment” in Agnion, a bit of jargon that means Waste Management thinks one day it could use Agnion’s biomass-to-synthesis gas process to find a second life for the trash it collects. The Houston company isn’t divulging the size of the investment.

What does Agnion have to offer? It has invented its own gasification technology using something called the heatpipe-reformer design. A heatpipe is a bit of equipment that apparently can transfer heat efficiently into the gasification chamber to eviscerate biomass in a high temperature and turn it into syngas. Syngas, rich in hydrogen and carbon monoxide, can run combined heat and power generation equipment, or can be further processed to become a natural gas substitute or a liquid transportation fuel.

Syngas is quite popular among biofuel and chemical producers. Genomatica, which also counts Waste Management as an investor, is developing organisms that will consume syngas instead of sugar – sugar is the more expensive feedstock Genomatica currently uses – and turn the syngas into chemicals. Fulcrum BioEnergy has signed a 15-year deal to buy trash from Waste Management and use it for producing syngas and then fuel.

Agnion’s technology can produce syngas at a smaller scale that is suitable for locations such as universities, factories, hotels and hospitals, the company said. Founded in 2007, the company is currently building its first commercial gasification plant in Grassau, Germany. Agnion announced the plant construction last December, and Germany’s Ministry of the Environment is kicking in €850,000 ($1.21 million USD) to help fund the project. The startup also has received undisclosed investments from Kleiner Perkins, Munich Venture Partners and Wellington Partners.

Waste Management has been a keen investor in companies that can make use of garbage for a variety of products. Its portfolio include Enerkem, S4 Energy Solutions, Terrabon and Agilyx (here is our list of more Waste Management’s cleantech investments).

Agilyx is another more recent investment. The company, which turns plastic that would otherwise head for the landfill into synthetic crude oil, said in March it had raised $22 million from Waste Management and investors such as Kleiner Perkins and Total (the French oil and gas giant).

Photo courtesy of Nancy Qian via Flickr

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The undisclosed round will fund the Carlsbad, Calif.-based startup’s operations through the next two years, as well as help it build two pilot plants to churn out both ethanol and adipic acid, a precursor to nylon and other polymers, CEO William Radany said last week. Previous investors Monitor Ventures and OVP Venture Partners also took part in the new round.

As for projects and partnerships with BP and DSM, Radany wouldn’t get into too many specifics, but said Verdezyne was looking at “additional relationships” that could fit into both companies’ broader green fuels and chemicals efforts. “The companies’ technologies seem to be very complimentary,” he said.

A lot of biofuel and biochemical startups are inking partnerships with oil, chemical and consumer products giants, which have deep pockets and a broad distribution channel that can help bring these still expensive and hard-to-make products to market. Amyris has a deal with Procter & Gamble  to produce chemicals for consumer products and is working with Brazil-based sugarcane ethanol and electricity company Paraiso Bioenergia. Codexis is working with Shell  and Brazilian ethanol giant Cosan  on a $12 billion sugarcane-to-biofuel project.

Other such partnerships include Exxon’s $600 million partnership with Craig Venter’s Synthetic Genomics to genetically engineer algae for biofuel, as well as agricultural products giant Cargill’s partnership with Gevo, the Khosla Ventures-backed cellulosic ethanol company that went public in February.

Verdezyne was founded in 2005 as CODA Genomics, a University of California at Irvine spinout that used computational technology to design genes for the research world. Three years ago, the company hired Radany and shifted to the idea of making their own biofuel and biochemicals. The company has raised at least $15 million in a round it began in 2009, and raised a second undisclosed round in November.

Verdezyne has been able to design yeasts that eat both sugars such as glucose and ribose Radany said. Verdezyne has a deal with big yeast maker Lallemand to put Verdezyne’s ethanol-making yeasts into use in a pilot project expected to start later this year. This year will also see the start of another pilot project using yeasts that make adipic acid, which he said the company can do at costs lower than traditional methods using petroleum as a feedstock.

Verdezyne will still need help with breaking down cellulosic (and hemi-cellulosic) materials into the sugars it needs to eat to tackle converting grass, straw, sugar cane stalks and other such tough plant material into chemicals. Interestingly, one of BP’s other big moves into biofuels came in January with its $98 million purchase of Verenium, a startup that makes enzymes that break down cellulosic biomass into sugars — a technology that could be quite complimentary to what Verdezyne can do with sugar feedstocks.

Verdezyne isn’t the only startup with deep expertise in genetic engineering research to seek biofuel and biochemical markets. Genomatica, another startup that started out as a genetic engineering software and technology provider, just landed $45 million to develop microorganisms to convert sugar into chemicals like BDO, and is also working on bugs to turn syngas into chemicals.

Image courtesy of jurvetson via Creative Commons license.

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The Series B investment was led by Kleiner Perkins and joined by new investor, French oil giant Total, as well as previous investors Chrysalix Energy, Saffron Hill Ventures and Reference Capita. Agylix says it’s ready to scale up its patented technology, which has already churned out about 120,000 gallons of a crude oil-like substance from about 1 million pounds of shredded plastic at a Portland, Ore. pilot plant.

A 1,000-pound bag can yield about a gallon of the crude oil substitute, and Agylix says its system can process about 10 tons of plastic into about 2,400 gallons, or 60 barrels, per day. It uses an “anaerobic thermal reclamation process” — that is, heat in the absence of oxygen — to turn the plastic into a gas, which is then condensed into the crude oil product

That product, in turn, can be fed into existing refineries for conversion into a variety of fuels and products, the company says. That’s different from most biofuel startups, which seek to make liquids as close to fuel-ready as possible, though Texas startup KiOR is also working on creating bio-crude from plant waste like wood chips and straw.

Waste Management has been making a ton of green investments, with interests ranging from organic soil and compost makers to solar-powered trash compactors. But trash-to-energy and trash-to-chemicals technologies have been its primary focus, with investments in waste-to-ethanol startup Enerkem, and fermentation-based biofuel startup Terrabon,

In February, Waste Management announced a partnership with Genomatica, a San Diego, Calif.-based startup with a platform to create genetically modified organisms to turn biogas into a variety of industrial chemicals. That’s a smaller market than the holy grail of fuel production, but it can be easier to tackle for startups, if they can produce replacements for the often fossil fuel-derived chemicals at a high enough quality and low enough price.

Notably, Agilyx says it turns shredded plastic into a gas before condensing it into crude oil. It’s not clear, however, whether the startup’s gas is the same as the syngas that Genomatica CTO Mark Burk works with. I wonder if Genomatica can help Agylix build new bugs to make different chemicals out of its product, via the help of their common big corporate brothers?

Image courtesy of World Resource Institute via Creative Commons license.

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