# Algae Fuel Funding: Solazyme Hits $76M, Still Not Commercial Despite the slow demise of algae fuel company GreenFuel, investors are still pumping money into algae-based fuels. The latest recipient is Solazyme, which uses synthetic biology to produce algal-derived fuels in dark, closed fermentation tanks. The company said this morning that it has raised a total of$76 million, including $57 million in a Series C round. The news broke last August that Solazyme had raised a$45.4 million Series C, but the company now says that the C round was extended. The latest funding comes from Braemar Energy Ventures, Lightspeed Venture Partners, VantagePoint Venture Partners, The Roda Group and Harris and Harris Group. That’s the first time I’ve seen VantagePoint Venture Partners listed on Solazyme’s backer list. (VantagePoint has invested in capital-intensive companies like Better Place, BrightSource Energy and Tesla.)

Algae fuel is showing itself to be more expensive and further from commercial production than many investors had previously thought, though clearly some, like Solazyme’s backers, are still bullish. GreenFuel’s processes proved too costly (and there were management issues), and the company officially shut down, despite millions from Draper Fisher Jurvetson, Polaris Venture Partners and Access Private Equity. Robert Rapier, a skeptic of certain biofuels, writes an interesting critical review of this book, “Green Algae Strategy: End Oil Imports And Engineer Sustainable Food And Fuel,” this morning and points out that there are some serious technical hurdles for algae fuels that he doesn’t think will be necessarily solved.

Solazyme itself has been around for six years and hasn’t yet reached commercialization. The South San Francisco, Calif.-based company has said it hopes to build a commercial plant by 2010, and says all of the Series C will go towards commercializing the company’s algae fuel technology. Solazyme’s intellectual property resides in the DNA of the algal strains that the company engineers. It grows this designer algae in fermentation tanks without sunlight by feeding it sugar, and uses existing industrial equipment to extract the oil.

Solazyme has made some strides that could put it ahead of competitors. The company has a development deal with Chevron (s CVX) and says it was the first algae producer to be approved for the jet fuel standard of the American Society for Testing and Materials for its algae-based jet fuel. But a particularly tough competitor is algae gorilla Sapphire Energy, which was just founded in 2007, and says it is ramping up its production estimates to 1 million gallons of algae-based diesel and jet fuel per year by 2011 — just two to three years from now.