[Posted on September 24, 2007 - 5:10 PM]
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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 Carlsen
See story from TheDeal.com
For more on GreatPoint, see Xconomy and Venture Beat
