It takes a lot of cash to build a next-generation ethanol plant. Range Fuels, the startup that is racing to be the first cellulosic ethanol producer in the U.S., has just raised a massive round of $100 million in funding, according to Venture Wire and PEhub.com. The report says that the round was led by $25 million from an undisclosed energy investor, and that existing investor Khosla Ventures chipped in another $25 million.
In November, Range Fuels officially “broke ground” on a plant in Soperton, Ga., which it hopes will be the nation’s first commercial cellulosic ethanol plant. Range Fuels plans to produce over 100 million gallons of ethanol a year there from wood waste out of Georgia’s pine forests. Construction of the first 20 million-gallon-per-year phase of the plant is expected to be finished sometime this year.
Plants of this size can cost hundreds of millions of dollars to build, and Range Fuel’s CEO Mitch Mandich previously told us that the company would be aggressively raising funds throughout 2007 and 2008. Mandich also told us that Range Fuels was considering an IPO sometime in 2008. We’re not sure if this funding changes that schedule, but we emailed the company and are waiting to hear back on that.
Range Fuels previously received a $75 million grant from the Department of Energy and an undisclosed amount of funding from Khosla Ventures. To meet its goal of building the first phase of its next-gen cellulosic ethanol plant by the end of this year, the startup needed funding of this size.
It’s clear from this funding that Khosla Ventures still supports the startup’s cellulosic ethanol plans, regardless of the fact that Khosla has made many other investments in similar technologies since it funded Range Fuels. (See photo, Khosla with a shovel, front and center). Range Fuels uses a thermochemical process to turn biomass into synthetic gas and then fuel. Khosla has also backed Coskata, which is using a combination of a thermochemical synthetic gas process and microorganisms to create cellulosic ethanol.
It will be interesting to see two similar firms with the same original backer competing with each other. While the companies use different processes, perhaps consolidation could be somewhere in the cards. Both are racing to build plants and have been raising a lot of funds to get the job done.