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07/19/07. (From Red Herring)
Thursday, Khosla Ventures and Virgin Fuels, the venture capital arm of Richard Branson's Virgin Group, announced that they invested an undisclosed amount in Gevo, a startup in Pasadena, California, that develops advanced biofuels, including butanol.
The company was founded two years ago by researchers at the California Institute of Technology, together with Khosla Ventures, which also provided the initial funding.
"Butanol is the primary focus right now, but they [Gevo] have other molecules that they are working on," said Samir Kaul, general partner at Khosla Ventures.
Compared with ethanol, butanol is more similar to gasoline and has higher energy content-meaning more miles per gallon. It's also less corrosive and can be transported in existing pipelines and used directly in gas tanks without being blended with gasoline. And it can be produced from biomass. All these factors make it a promising alternative fuel. The problem is that the micro-organisms that are used to turn biomass into butanol have had a low yield, resulting in high production costs.
The researchers at Caltech, led by chemical engineering and biochemistry professor Frances Arnold, have genetically modified micro-organisms to make them produce butanol and other new biofuels more efficiently. Gevo, which currently has 33 employees, is now developing the technology and the production processes.
According to the newly appointed CEO, Patrick Gruber-who previously founded and served as CTO for the first commercially successful bioplastics company, Cargill Dow/NatureWorks-the biofuels Gevo develops can be used not only in automobiles but also in trucks and airplanes. (The use of cleaner jet fuels is a goal of Virgin Atlantic, which earlier this year announced a joint biofuel demonstration with Boeing, Virgin Fuels, and engine maker GE Aviation.)
Mr. Gruber won't disclose any details on the company's future products. A pilot plant will be built shortly, but a first commercial-scale plant lies some years ahead.
"Big capital assets take time to build," Mr. Gruber said.
Last month DuPont and British Petroleum announced that they will build what they claim will be the first biobutanol demonstration facility in the U.K., but according to Mr. Gruber, Gevo uses a different approach.
The fact that butanol is coming up as a new alternative fuel candidate doesn't mean Khosla Ventures doesn't believe in ethanol. After all, Khosla has invested in a number of ethanol companies, such as Mascoma, Range Fuels, and Cilion.
"I think you have to think about this as a trajectory," Khosla's Mr. Kaul said. "Beyond ethanol you have other molecules like butanol, diesel, and gasoline molecules that come from renewable resources. I think you are going to have a whole suite of biofuel molecules in five or 10 years, and there are going to be different uses for all of them."
According to VentureWire, the round was in the $10 million range.
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Technology
Developing an organic process for the manufacturing of butanol from biomass.
Using an enzyme process, developed at Caltech, that converts biomass to next-gen biofuels like butanol. Can be used in the existing petroleum supply chain. Advanced biofuels like iso-butanol and butanol can also address many challenges that first-generation biofuels such as ethanol have faced on their path to market: energy efficiency, transport and the need to modify existing engines.
In contrast, butanol:
* Has a higher energy content per gallon than many first generation biofuels
* Does not absorb water and can be transported through the existing oil and gas distribution infrastructure.
* Can be used in gas-powered vehicles without modification or blending, which eliminates our dependency on fossil fuels.
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