Bill Gates, Vinod Khosla Back Efficient Engine Startup EcoMotors

Bill Gates and Vinod Khosla have just turbo charged diesel engine startup EcoMotors International with a “substantial” amount of second-round financing. EcoMotors announced Monday morning that Khosla’s venture capital firm Khosla Ventures and Gates are the “two exclusive investors” in a Series B funding round that will allow the 2-year-old company to complete engineering and testing of its efficient engine tech.

Khosla Ventures has previously invested in Troy, Mich.-based EcoMotors, and earlier this year Gates invested $20 million in the VC firm’s green technology fund, partly to get exposure to the “great entrepreneurs” that Khosla is backing, Gates told CNET in January. But an EcoMotors spokesperson told us this morning that Gates’ participation in EcoMotors Series B round did not come through the Khosla fund.

The spokesperson described this latest EcoMotors deal (which comes on the heels of Khosla Ventures, Gates and others investing $35 million in the traveling wave nuclear power startup TerraPower) as a three-way private transaction between Khosla Ventures, Bill Gates and EcoMotors.

EcoMotors is one of a slew of startups competing to deliver technology for more efficient, lower emission versions of the old internal combustion engine vehicle (see 7 Startups Building Green Car Tech for a Pre-Electric World). The company’s engine design includes stackable modules, one of which can be shut off when it isn’t needed. Focusing on developing markets, the company has been working to deliver a diesel engine by 2011 that can deliver 100 MPG for highway driving in a 5-passenger car.

This past spring EcoMotors struck a deal with automotive supplier Zhongding Holding (Group) Co. and engineering services firm Global Optima, with China-based Zhongding and its Michigan-based commercial partner Global Optima agreeing to invest up to $18 million to develop EcoMotors engines and work toward commercialization.

Eventually, the startup hopes to see its engines deployed in cars, light trucks, marine and agricultural applications, and in stationary generators — “essentially anywhere conventional gas or diesel power is utilized.”

EcoMotors and other venture-backed companies in this sector may have a tough climb to get their technology into the lineups of major automakers, however. John Viera, Director of Sustainable Business Strategies for Ford Motor told us recently, a technology that promises to deliver fuel savings of at least 1 MPG is “large enough to get our attention,” (EcoMotors says its so-called “opoc” engine can improve fuel efficiency by 50 percent), but the automaker rarely bets on an unproven supplier.

With software and apps built on the automaker’s Sync platform (developed by Microsoft) however, it’s a different ball game. According to Viera, “Software — that’s where you’ll see outsiders come in.”

Image courtesy of EcoMotors

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