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VCs still funding next-gen biofuel companies

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Despite continued struggles for next-gen biofuel makers, venture capitalists are still putting money into startups, particularly when it comes to follow-on rounds. On Wednesday EdeniQ, which was spun out of AltraBiofuels in 2008 to focus on cellulosic ethanol processing, announced that it has raised another round of more than $30 million in equity and debt from investors including Kleiner Perkins, Draper Fisher Jurvetson, and The Westly Group.

A large ethanol producer and subsidiary of Koch Industries, Flint Hills Resources Renewables, also joined EdeniQ’s round as a new investor. Comerica and ATEL Ventures provided the debt. Flint is interested in EdeniQ because the startup has technology that can help a corn ethanol producer transition to cellulosic biofuels, which are made from energy crops or waste and are widely considered the future of biofuels.

EdeniQ originally raised $30 million when it launched back in 2008, and later raised $12.4 million, so the company’s total investment is close to $75 million. AltraBiofuels was also backed by substantial money — some hundreds of millions of dollars.

Cellulosic ethanol is facing a really tough road in the U.S. Amyris (s AMRS), which was one of the leaders a few short years ago after it went public, has hit a wall and recently reorganized its management team. MIT Tech Review reported that Amyris was very far away from being able to produce biodiesel profitably, leading to the company getting out of the biofuel business for the time being. Amyris’ stock is trading at $1.96 per share, far below its $16 per share price debut.

Another charticle from the MIT Tech Review this week shows just how far away the U.S. is from meeting its (ridiculous) renewable fuel mandates, particularly because very little cellulosic ethanol is being produced. Biofuel exec, and blogger, Robert Rapier tweeted to me that he predicts that the actual amount of cellulosic ethanol production in 2012 will be less than 5 million gallons (and probably less than 2 million gallons). The EPA is predicting the industry will make 10 million gallons 2012, down from the amazingly-off prediction goal that the industry would make 500 million gallons of cellulosic ethanol in 2012.

One Response to “VCs still funding next-gen biofuel companies”

  1. Jim Mason

    GTL is a tough nut to crack. i’ve found other nuts to be much more available for immediate nutrition.

    without a firehose of VC money, or a mountain of govt loan guarantees, other endeavors operating under the biofuel radar are proving waste cellulosic biomass can in fact be meaningfully transformed into useful power and products. they are doing this via small scale gasification and pyrolysis, taking the machines to where the fuel already is, and the users already are (as opposed to attempting a replication of fossil fuel economy of scales, which the distributed nature of biomass resists at every step).

    imagine instead a personal scale waste-to-energy machine, a mr fusion that actually works, premised on old technology and mature industrial components, upgraded for the digital age and contemporary personal appliance use expectations. imagine a washing machine of individual scale energy- bad things in the top, good things out the bottom.

    shhhh . . . don’t tell anyone, but it already exists today in an early form. you can buy it now (not next year or next decade) for a little over $1/watt capital cost. see here for the details:

    the only thing depressing about the cellulosic biofuels today is our insistence on repeating well known failures routes. thermodynamics and chemistry are brutal taskmasters, and not easily fooled.

    maybe a black swan is flying in from another direction . . .

    jim mason
    ceo, all power labs