Solazyme takes lead in race for commercialized algal oil; raises $52M for algal fuel expansion

In California, Solazyme, which was ranked #1 in the 2009-10 “50 Hottest Companies in Bioenergy” by Biofuels Digest readers and selectors, announced that it has raised $52 million in its Series D financing round.

Braemar Energy Ventures and new investor Morgan Stanley which includes Lightspeed Venture Partners, The Roda Group, Harris and Harris Group, VantagePoint Venture Partners and Zygote Ventures, the venture capital arm of Chevron Technology Ventures, and San-Ei Gen, a major Japanese manufacturer and distributor of food ingredients. All investors from previous rounds continued with the company.

The technology. The algal pioneer ferments heterotrophic algae, grown in the dark using supplements of inexpensive cellulosic sugars and sorbitol, to produce renewable oil for fuels, chemicals, for ingredients and nutraceuticals. In June, Digest readers named Solazyme one of the “30 Most Transformative Technologies” in the industry in a competition that focused solely on technological strength. The company was also named one of the Biofuels Digest “companies of the year” for 2009-10 in recognition of its contributions to the development of aviation biofuels, along with Sapphire Energy, Terasol, Rentech, Honeywell’s UOP, and Sustainable Oils.

The industrial model. In addition to its unique technology, the company has become increasingly noted for the success of its industrial model, in terms of partnerships signed for fuel delivery with the Navy, and its R&D agreement signed in March with Unilever to develop oil derived from algae for use in soaps and other personal care products. The agreement follows the culmination of a yearlong collaboration between Solazyme and Unilever, in which Solazyme’s renewable algal oils were tested successfully in Unilever product formulations.

Another unique aspect of its industrial model: it’s capital-light approach, in which the company leases local industrial fermenter time for its production runs.

The company has been acquiring sugars from, among others, Bluefire Ethanol, and has been most recently tapped to provide 1500 gallons of algal jet fuel to the US Navy for testing and certification, in a partnership with Honeywell’s UOP, an order delivered last month.

The Digest’s take: Interesting to note that Morgan Stanley has joined among the financial investors, the appearance of Japanese food ingredient manufacturer San-Ei Gen as a strategic investor, and that Chevron has stepped more into prominence (generally, in the past, Chevron has been content to be described as a “development partner”). Greentech Media’s Michael Kanellos has reported that a hesitation among oil companies in picking their biofuel partners is one cause of the biofuels slow-down. If so, Chevron is becoming more notably committed in terms of shaping up its roster of investments, a sign that the algal industry is moving into a new stage.

For sure, with the new funding, and its partnerships with the Navy and Unilver, Solazyme has taken the commanding lead in the race to commercialize algal oil production.”

Solazyme’s take: “Our technology and commercialization plans are progressing rapidly. We are executing against multiple partnerships with global industry leaders and the U.S. Department of Defense on a rapid path to commercialization,” said Jonathan Wolfson, CEO of Solazyme. “The strong support from our current investors in the Series D is indicative of our ability to exceed milestones, including the production of renewable oil for multiple applications at large scale.”

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