GM's New Biofuel Bet: Mascoma

Looks like Coskata will have to share its automotive sugar daddy with another biofuel firm. General Motors announced a new strategic relationship with ethanol startup Mascoma, along with an undisclosed equity investment in the company, this morning. GM’s partnership and investment could help Mascoma get closer to building the nation’s first swtichgrass biorefinery.

Mascoma’s technology centers on what it calls “consolidated bioprocessing,” which is basically a fancy way of saying “converting cellulosic biomass directly into ethanol in one, simple, cheap and energy efficient step, using engineered organisms and enzymes.” At least, that’s the idea. Mascoma’s lead scientist, Lee Lynd, has been working on this problem since the 1970s.

Headquartered in Boston, Mascoma has a lab in Lebanon, N.H., near Dartmouth College, where Lynd is a professor. The company is currently building a pilot plant in Rome, N.Y., and has partnered with the University of Tennessee to develop a switchgrass-to-ethanol pilot facility near Knoxville, Tenn.

Mascoma, like Coskata, is backed by Khosla Ventures, making for two shared investors. Mascoma has raised almost $90 million to date from a number of investors: Khosla, Flagship Ventures, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Vantage Point Venture Partners, Atlas Venture and Pinnacle Ventures.

It’s no surprise that GM is investing more in biofuels. The company says it already has 3 million flex-fuel vehicles on the road in America, and by investing in biofuel startups GM is outsourcing the development of future fuels that will power its vehicles. The costs for this strategy are also attractive: When we visited Coskata for its grand opening, GM reps explained that investments in biofuels take significantly less capital than investments in electric vehicles.

So now the race is really on. And the teams are getting the same sponsors. Coskata’s CEO Bill Roe explained to us at the E2T offices that the startup is now in a speed game to get to market first. Coskata and Mascoma are both speeding to build their pilot plants, and GM stands to win either way.


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