Go West, young biofuels entrepreneur

January 28, 2011 |

The newspaperman Horace Greeley spent quite a bit of time in his later years denying that he authored the phrase “Go West, Young Man,” and he himself said he got it from the editorialist J.B. Soule.

But Greeley liked the phrase and used it, for he saw, like so many, that the westward spread of agriculture, through the grants possible under the Homestead Act, would solve many of the problems of falling incomes, high deficits, and rising unemployment in the East.

Ah, the more things change, the more they remain the same.

The sectioned-out acres of Western cropland, the railroads that served them, and the fortunes in oil and minerals that were discovered there, still form the platform upon which any conversation will rest about the future of technology, agriculture and energy, and the convergence that is occurring today therein.

The West is a wide country, but as we examine the great technologies that are moving forward and the great technologies that have struggled for support, the difference between all too many of the winners and losers can be summed up in just three words: California postal address.

And so, though we admire our friends in the halls of academia and corporations around the country, love the fertile soils of the Great Plains and the great forests of the Southeast, and though we salute the intrepid investors of the Boston-Cambridge corridor: go west, young biofuels entrepreneur. Your fortune lies beyond the 110th meridian, where the old frontier still is home to the frontiers of imagination.

The California (bio)culture

But it is more than the history and legacy of the West that should attract every biofuels entrepreneur to California, or the money. It is the culture.

Though California appears to be financially prostrate, it will rise again, when real estate prices do their magic and the country lurches back towards fuller employment. But whether the state’s coffers are plentiful or exhausted, California remains the heartland of technological innovation and there is no place on earth where ideas go farther, faster, and find more support from academia, the science establishment, and venture capitalists.

(Let us not mix up development for deployment – for California is “no place to raise a biofuels [plant]”, as one of the Digesterati put it.)

Only Boston gives California a run for its money, and there are smaller groups in other states – St. Louis, Seattle, Denver – but they are but pale shadows next to the bright sunshine of California’s ability to identify, invest, incubate, iterate, and inexhaustibly support a venture based in ideas, intellectual property, and invention.

It should have been St. Louis, or Omaha, or Minneapolis, or Des Moines – so much closer to the land, and the farmers who deploy biofuels technologies every day. But something was missing in the way each of those cities and states approached the building of a platform for biotechnology and the new agriculture.

There are a dozen ways to support a venture, and its founders, that are as important as money – people, ideas, partners, inspiration, competition, systems, policy, grants, incentives, awards, recognition and patience form just a start of the list. It is a series of resources with which the Golden state finds itself unusually blessed. I hesitate to guess where Solazyme might be today without the board that surrounded and supported its founding entrepreneurs. Or how Jay Keasling would have ever developed or commercialized the technology that powers Amyris, without the network of scientists, grant support, and venture funding that hovers around a few breakthrough labs in the Bay Area.

Or how research in algal biofuels and bio-products would have proceeded without the integrated support, el abrazo fuerte, of San Diego’s biotech, financial and political leadership.

The Getting of Money, People, Support, Stuff

We are often asked, here at the Digest, by inventors and entrepreneurs, what steps they might take to get more attention, money, partners, people – just to name a few of the atoms that form the oxygen that early-stage companies require. Often, at the end of the day, we resist the temptation to slip into the editor’s easy chair and, instead, provide what we can from our rolodexes and memory.

But there’s a simpler path.

What steps might ye take? Start at the Statue of Liberty, face the setting sun, and walk that way. She faces southeast, does Liberty, but if you keep your eye on her, I think she sneaks a peek every so often over her right shoulder, and gazes towards the West.  As biotechnology, agriculture and energy converge, that is the heartland of where the story is developing.

For, in the end, with only a few exceptions, the companies that go forward will have at least one handful of California gold dust in their bank accounts. The blessings of California venture capitalists, however, are so far beyond the money, it is a joke. The value of the visibility, the credibility, the smarts, the savvy and the sense of timing that companies acquire from their California-laden boards is fairly incalculable.

The Valley of Life

For a long time, the valley has been known as a haven for digital technology and medical technology, until a series of venture capitalists started moving into biofuels in the early and mid-2000s when, after 9/11, emerging technologies and an emerging panic over energy security and climate coalesced to present material opportunities to bring new companies forward, particularly in solar and biofuels.

In terms of activity, only the Boston venture crowd, through companies like Flagship Ventures, have kept up any kind of competing pace. Khosla Ventures, Kleiner Perkins, Burrill, Battery Ventures, DFJ, and ARCH Venture Partners have been just a few of the venture capitalists behind some of the hottest companies in biofuels.

Look at the generation of technology companies they have brought forward. Amyris, Solazyme, LS9, Gevo, Coskata, Codexis, and Sapphire Energy, just to name seven of the top 10 companies currently resident on our 50 Hottest Companies in Bioenergy.

There is so much talk of the valley of death in Silicon Valley, but in so many ways it is the valley of life. Life, in the ancient Greek, is “bios”, and biology is quite literally the study of life. Those who seek the vibrancy of life in the biofuels fast lane – why, get thyself to California. Sure, companies like Virent, Mascoma, Coskata, Zeachem and Gevo – have found fine homes in Wisconsin, New Hampshire, Illinois, or Colorado – but the lifeline back to California remains a strong one.

CoolPlanet and Energy Technology Ventures

Case in point: What happens to certain Silicon Valley serial entrepreneurs when they decide to make the switch from the biomedical device field to biofuels? In the case of Mike Cheiky — cited by Forbes a few years back as one of its top 24 innovators list and a two-time honoree as a World Economic Forum Technology Pioneer at Davos — why GE, NRG Energy, and ConocoPhillips join forces to pour capital into your biofuels venture.

This week, the trio of companies announced plans to become “the premier investor and commercial collaboration partner for emerging and innovative energy technology companies,” and committed $300 million in capital to the new joint venture, Energy Technology Ventures, to fund approximately 30 venture- and growth-stage companies over the next four years. The first investments were to solar photovoltaic pioneer, Alta Devices, coal-to-methane developer Ciris Energy, and CoolPlanetBioFuels.

More about Energy Technology Ventures in a minute. Let’s divert for a sec to CoolPlanet Biofuels

More about Cool Planet

Cool Planet first came on the Digest radar last November, out of Silicon Valley, when GE Energy Financial Services joined a $8 million Series B funding round, led by North Bridge Venture Partners, for the early stage company, which was developing a technology that converts cellulosic plant material — such as grass and wood — into gasoline could create jobs in rural, agricultural areas as well as demand for non-food crops.

The company’s core technology: CoolPlanetBioFuels is developing a biomass fractionator, a thermal/mechanical processor which directly inputs raw biomass such as woodchips, crop residue, algae, etc. and produces multiple distinct gas streams. From there, the company is developing a range of simple one-step catalytic conversion processes which mate with the fractionator’s output gas streams to produce useful products such as eBTX (high octane gasoline), and synthetic diesel.

CoolPlanetBioFuels plans to package its proprietary biomass fractionator together with an “open architecture” chemical processing section in standard modular shipping containers which can each produce up to 1 million gallons of fuel per year. These modular fuel processors can be equipped with CoolPlanet’s catalytic conversion processes and a selection of dryers, separators, and catalytic processes.

More on the CoolPlanet.

More about  Energy Technology Ventures

The joint venture brings together three market-leading companies with complementary capabilities and significant strategic interests in the development of next-generation energy technology. This is the first corporate venture investment program by both NRG Energy – owner and operator of one of the country’s largest and most diverse power generation portfolios – and ConocoPhillips – the third-largest US integrated energy company. GE Capital – through its business units GE Energy Financial Services and GE Capital, Equity – is already among the world’s most active energy technology venture and growth capital investors.

Energy Technology Ventures will invest in, and offer commercial collaboration opportunities to, venture- and growth-stage energy technology companies in the renewable power generation, smart grid, energy efficiency, oil, natural gas, coal and nuclear energy, emission controls, water and biofuels sectors, primarily in North America, Europe and Israel. With their wide range of deep technical and financial expertise, relationships, services and products, the three companies behind Energy Technology Ventures intend to help start-ups develop next-generation energy technology.

More on Energy Technology Ventures.

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