In the past, plant biotechnologists concentrated on crops used primarily for animal feed. Lately, though, the genetic engineers have turned to creating crops for biofuels.

Startups in the field have worked largely on behalf of agricultural chemical giants. Monsanto Co., Dow AgroSciences LLC, the DuPont Agriculture & Nutrition division of E.I. du Pont de Nemours and Co. and Syngenta AG have all gradually shifted their legacy fertilizer businesses into plant trait technology. Through partnerships and direct investment, those companies have supported biotech developers in much the same way that the pharma industry has.

Most development still focuses on improving crop yields, and even as developers shift focus from the food, textile and timber industries to address biofuels, yield remains a principal concern. But developers and their backers also see opportunities for creating crops with greater heat content and characteristics for easier conversion to fuels.

Ceres Inc. announced in September that it had raised $75 million in an investment round led by Warburg Pincus to refocus a decade of development in pest and disease-resistant animal feed crops. The new objective: developing specialized cellulosic crops for biofuels. A key partner was Monsanto, which first made an equity investment in the company in 2002. Ceres CEO Richard Hamilton says the company is Monsanto's largest external supplier of plant biotechnology and that work it had done on behalf of Monsanto and others will now be used to expand research in genetically modified and selectively bred woody crops for transportation fuels.

Targeted Growth Inc., which raised $22.3 million in a new round co-led by asset management giant AllianceBernstein LP and green technology specialist Capricorn Management LLC, got support in that deal from Barkley AG Enterprises LLP, an investment affiliate of Barkley Seed Inc.

Targeted Growth CEO Thomas Todaro says that while the company was formed to develop technologies to improve yield in commodity food crops such as corn, soybeans and canola, he began to recognize about four years ago that its research would provide even greater breakthroughs for the use of those crops as fuels. The shift in focus did not change the company's research mission, but Todaro says investor interest in biofuels will allow the company to accelerate research and explore new development areas.

Mendel Biotechnology Inc. got investments from Monsanto and Capricorn in an October Series D investment round of undisclosed size. The money will enable Mendel to expand seed development (focused on corn and soy crops for the last decade) to cellulosic biomass for fuels. Mendel also got an investment in June from oil and chemical giant BP plc.

CellFor Inc., which works on conifers for the timber industry, has a partnership with DuPont that typifies how large companies have positioned themselves. DuPont participated in a $32 million venture round in October 2004 to finance development of better breeding and propagation tools, but also to keep a hand in an area that could prove valuable for cellulosic fuel products.

CellFor still concentrates on research for the timber industry, but CEO Tom Urban says foresters are looking at trees as a potential fuel feedstock. - Clifford Carlsen

A different kind of burn rate
Venture-backed companies working in biofuel
Company, Location		Area of focus	Investors
	Targeted Growth Inc. Seattle	Corn, soybeans and canola for feed and oil, cellulosic crops for fuel	AllianceBernstein LP, Capricorn Management, Barkley Seed Inc., Victoria Park Capital, GrowthWorks Ltd.
	Ceres Inc. Thousand Oaks, Calif.	Feed crops including corn and soybeans, cellulosic crops for fuel	Warburg Pincus, Ambergate Trust, Artal Luxembourg SA, GIMV NV, H&Q Capital Management, KBC Bank & Insurance Group, Oppenheimer International Growth Fund, QuestMark Partners LP, Soros Private Equity Partners, Monsanto Co.
	Mendel Biotechnology Inc. Hayward, Calif.	Corn and soybeans for feed, and cellulosic crops for fuel	ZBI Ventures, BP plc, Capricorn Investment Group, Comprehensive Financial Management, Monsanto Co., Biotechnology Value Fund
	CellFor Inc. Vancouver, B.C.	Cellulosic crops for the timber industry and potentially for fuels	E.I. duPont de Nemours & Co., ATP Capital, CSFB Private Equity, GrowthWorks BDC Venture Capital
Source: VCDeal.com

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