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Updated: Next-gen biofuel company KiOR, an important company for Khosla Ventures, announced in its earnings report on Tuesday that it will start up its factory in Columbus, Mississippi next month, and by the fourth quarter of this year will start churning out its diesel and gasoline, made from biomass (wood chips, plant waste, etc).
The news caused the company’s stock to jump up temporarily. In morning trading KiOR bounced up to $9 per share, and is now falling back down closer to $7.50 — $7.50 is about half of the price of KiOR’s stock at its IPO debut at $15 in June 2011.
KiOR started building the Columbus facility in the first quarter of 2011. KiOR also has plans for a larger commercial production facility in
Newton Natchez, Mississippi (KiOR recently switched this plant from Newton to Natchez).
Scaling up these two plans is really capital intensive, particularly because the company has no revenues coming in. KiOR reported a net loss of $22.97 million for the second quarter, on no revenues. In January KiOR announced it’d raised a $75 million loan from existing investors Alberta Investment Management, a fund that manages billions on behalf of the province of Alberta, Canada, and Khosla Ventures.
KiOR is slowly attempting to cross what investors and entrepreneurs call “the Valley of death.” Basically when a company tries to scale up a technology that looks good but isn’t yet being produced at a commercial scale. The risks are high, but if the company can achieve what it’s promised, it could make its shareholders Khosla Ventures, Artis Capital and Alberta Investment Management very wealthy. If it works.
Check out my (long) essay on KiOR here: The perils of cleantech investing: KiOR & the long term high risk view.
I’ll listen to the playback of the earnings call shortly, and update this if need be.