Billionaire and Microsoft (s MSFT) co-founder Bill Gates continues to step in and fund a variety of cleantech startups backed by investor Vinod Khosla. The latest is a company that Khosla incubated from the beginning, and which has hit some hurdles as of late: next-gen biofuel company Kior (s KIOR). On Monday Kior announced that it’s gotten commitments for $100 million in equity from Khosla’s venture fund as well as from an affiliate fund of Bill Gates to expand its factory in Columbus, Mississippi.
A couple months ago Kior announced that it had missed its biofuel production targets by 75 percent and as a result saw its stock price plummet. It was also hit with an investor lawsuit and described its operations as a going concern in its financial filings. Shortly after that Kior said it planned to build another biofuel facility adjacent to its already completed large biofuel plant, which it says would enable it to produce its biofuel at a larger scale and become cash flow positive from operations in 2015.
This new plant is estimated to cost $225 million to build, and this is all of the equity that Kior says it needs. Presumably it now needs debt financing to get the project off the ground. The company also says it still intends to build a factory in Natchez, Mississippi.
The hiccups shouldn’t come as a surprise to anyone that has watched the world of next-gen biofuels. The industry has been setting and missing targets for years — it has just proven to be very difficult to scale advanced biofuels (not made from corn) to reach a low enough price point to compete with gasoline.
Kior has developed technology that allows it to convert biomass (plants and bio waste) into a bio substitute for crude oil. The company emerged in late 2007 as a joint venture between Khosla Ventures and Netherlands-based biofuel startup BIOeCON. Khosla Ventures provided the early rounds of funding and BIOeCON provided the intellectual property for its “biomass catalytic cracking process,” a thermochemical process that’s been used in the oil industry for decades and which turns out can also produce biocrude from grass, wood and plant waste.
Wall Street reacted modestly to the news. Shares were up less than one percent and trading around $2.62 per share. The company went public at $15 per share in June 2011. Here’s a long piece I wrote on Kior back in January 2012.