A new $100 million
third round for catalytic gasification technology developer
GreatPoint Energy Inc. comes this week on the tail of last week's announcement from
Amyris Biotechnologies Inc.
that it raised a $70 million Series B round of funding,
demonstrating that equity investment remains strong for biofuel
development.
Although project finance and more specialized structures are
emerging in the industry, there is still appetite for ownership in the
promise of developing breakthrough technology. Both companies are
engaged in highly capital-intensive processing technologies to produce
what will quickly become commodity products. Yet both also are selling
investors on the possibility of evolving business models that could
play a long-term role in industries that are still fundamentally defining
themselves.
Amyris drew on a fairly
traditional venture lead in DAG Ventures. But previous backers Khosla
Ventures, Kleiner Perkins Caufield Byers and TPG Ventures Inc. are all
experienced in energy deals that accept investment
cycles and long-term business models considerably different than those
in traditional venture sectors. Khosla Ventures founder Vinod Khosla, the Pied Piper of alterna-fuels, has been explicit in
saying that some investment in early biofuels may do more to create
a viable industry market than to build sustainable companies. But for
the most part, investment in individual companies follows traditional
venture models.
By contrast, in drawing on Sustainable Development Investments, a unit of Citi Alternative Investments (a division of Citigroup Inc.), Dow Chemical Co., AES Corp., Suncor Energy Inc. and several
unnamed financial firms, GreatPoint is putting together a far different
beast than a traditional VC-backed startup. Khosla and Kleiner
Perkins are both also early investors in GreatPoint, but in
calling on large industrial companies focused on keeping technologies
viable for the long-term interests of entrenched industries, they are
making a different kind of bet.
Amyris certainly has more to offer
than a backyard distillery model for corn ethanol or seed-based
biodiesel, and it is exploring a variety of new types of fuel with the
prospect of engineering huge advantages over other technologies. Although the funding remains technically a venture capital transaction, and includes the same
Dow venture arm that puts money into small agricultural and chemical
startups, the industrial nature of GreatPoint's backing puts it in a
class by itself. And as regulatory and subsidy issues become a bigger
part of energy policy, that distinction is worth making.
- Clifford CarlsenSee story from TheDeal.comFor more on GreatPoint, see
Xconomy and
Venture Beat
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