Blog Post

Algae to Biodiesel: Aurora Biofuels Raises $20M

Aurora Biofuels, an algae-to-biodiesel startup we profiled in our 15 Algae Startups list, said this morning that it’s raised a second round of funding of $20 million; Oak Investment Partners, Gabriel Venture Partners and Noventi were included in the round.

Developed at the University of California at Berkeley, the company was founded in 2006 and uses genetically modified algae to create biodiesel. Now based in Alameda, Calif., Aurora claims the technology, developed by microbial biology professor Tasios Melis, can create biodiesel fuel with yields that are 125 times higher and have 50 percent lower costs than current production methods. A large part of that cost reduction comes from swapping out increasingly expensive soy oil, the biodiesel feedstock of choice, and substituting what is supposed to be much cheaper and plentiful algae.

Update: We just chatted with Aurora CEO Matt Caspari who said that the company raised this latest round to scale up production of its algae systems. So far the company has been working in the labs and at pilot scale. Caspari says Aurora intends to be “the lowest cost producers” of algae for biofuels.

In algae production there’s essentially two methods — open and closed pond systems — and each have their pros and cons. Aurora uses an open pond system to grow its algae, which is less expensive than the “closed system,” but keeping out “weed” organisms is difficult. Closed pond systems, on the other hand, work more like greenhouses. They are expensive to construct but it’s much easier to regulate the growing conditions.

Aurora says it is actually ahead of schedule, but has said little about when it will reach commercialization. Meanwhile startups developing technology to convert plant waste and energy crops into ethanol are all racing to scale up well into the tens of millions of gallons per year range, which we’ll hopefully start seeing moving into production by 2009. We’re hoping to start seeing some aggressive timelines from the more than a dozen algae to biofuel companies out there.