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Monsanto Backs Algae Startup Sapphire Energy

Agriculture and genetics giant Monsanto (s mon) has made its bet on algae. On Tuesday Monsanto announced that it has made an equity investment in, and developed a partnership with, algae startup Sapphire Energy.

Founded in 2007, Sapphire Energy uses synthetic biology to make a green crude out of algae that can be turned into gas, diesel or jet fuel. Monsanto wants access to Sapphire’s genetic research technology to use it for its own agricultural development. Using Sapphire’s genetic technology, Monsanto can isolate traits in algae (like high yields and stress traits) that could be used to tweak other crops. Monsanto’s CTO Robb Fraley said in a release that algae is an “excellent discovery tool,” for agricultural genetic research.

Monsanto didn’t disclose the size of the equity investment.

Sapphire Energy is one of a dozen algae fuel companies that has ambitious plans, but has yet to reach commercial production. In the release, the companies say the partnership could help “accelerate Sapphire’s road to commercializing algae as a renewable energy crop.”

Sapphire previously had plans to ramp up its production to 1 million gallons of algae-based diesel and jet fuel per year by 2011, 100 million gallons per year by 2018, and 1 billion gallons per year by 2025. Yep, those are some big claims. Sapphire has raised more than $100 million from the likes of Bill Gates’ investment firm Cascade Investment, as well as ARCH Venture Partners, Wellcome Trust and Venrock.

Jet fuel might be the most willing market to accept algae fuel right now. Sapphire Energy has tested its fuel with two commercial airlines: Continental (s Ual) and JAL.

The deal between Monsanto and Sapphire is also another example of how corporate investors, particularly in the biofuel sector, will be crucial to helping startups scale and reach commercialization. Other biofuel companies are connecting with big oil, and Codexis has linked up with Shell, and Synthetic Genomics with Exxon (s xom).

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