Game change, name change: Solix raises $16M, changes name, focus

March 29, 2011 |

Solix raises $16M, some key investors are back in, others have not yet re-upped; as the company changes its name and management team, where is it heading?

In Colorado, Solix Biofuels announced it has secured more than $16 million from Bohemian Ventures, The Southern Ute Alternative Energy Fund and I2BF Global Ventures, as the first part of its Series B financing round. The new funding will drive the commercialization of Solix’s industrial algae growth system, utilizing Solix’s proprietary, high-productivity photobioreactors.

“This new round of financing from current investors demonstrates their continued excitement and support for our progress,” said Joel Butler, Solix’s Chief Executive Officer. “Solix is poised to launch its first commercial AGS product into the market. With our focus on providing customers with algae production systems, Solix BioSystems better reflects the Company’s objectives.”

In conjunction with the financing, Solix is changing its name to Solix BioSystems to better reflect its role as a leading provider of algae production systems.

Transition game

The announcements mark a cap to a period of transition at Solix, which was one of the very hottest companies in algal biofuels during the gold-rush, 2008-09 “summer of algae” period, but had fallen out of the news in the past year as it struggled to keep its investment group growing.

The slowdown in the pace of investment in Solix had led, by this past January, to the replacement of CEO Doug Henston and CFO David Maytubby, who “resigned to pursue other opportunities”, with CTO Joel Butler taking Henston’s place as CEO. Butler had been at Accenture as a founding member
of their supply chain strategy practice and been CTO of SwiftRivers, an analytical software optimization firm.

The most recent major development news at Solix had been last September, when BASF and Solix Biofuels inked an agreement to investigate the use of algae to produce certain chemicals for BASF. It had been the first known commitment by the chemicals giant to the algal platform.

At the time, Harald Lauke, President of Specialty Chemicals Research at BASF, said “Algae represent a fascinating addition to BASF’s technology portfolio, as they offer the potential to produce a number of exciting specialty products. After surveying the algae industry, we chose to work with Solix based on its knowledge of algal biology and the strength of its AGS.”

Earlier in 2010, Solix had joined the National Alliance for Advanced Biofuels and Bioproducts consortium, which received a $44 million grant from the Department of Energy in a consortia approach to solving technical challenges such as outlined in the Algal Biomass Roadmap process, commenced in late 2008.

High times in the Summer of Algae

2009 had really been the last year when Solix was rocking along at a fast pace. In November 2009, the raised an additional $3 million from investors — listing Bohemian Asset Management, i2BF Venture Capital, Southern Ute Alternative Energy, and Valero Energy on its filing but not offering more specific details on the structure or breakdown of investment except that it is in the form of convertible notes and warrants.

The company had that summer commenced production of algal oil at its Coyote Gulch Demonstration Facility, on two acres near  Durango, on Southern Ute tribal land.

To fund the demonstration of its Algal Growth System, Solix Biofuels raised $16.8 million in Series A funds that included Shanghai Alliance Investment, I2BF Venture Capital, Bohemian Investments, Southern Ute Alternative Energy LLC, Valero Energy Corp., and Infield Capital as investors.

At the time, COO Dr. Bryan Willson said at the time that the company was currently at around 2500 gallons per acre, and was on track to achieve cost parity with $80 oil in 3-4 years. The company had launched, in 2009 a third-generation of its bioreactors, a 20-meter system that integrates CO2 delivery and increase surface area. At the time, Greentech Media had reported that Solix was producing algal-based biofuels at $32.81 per gallon, but that it could reduce the cost to $5.50 per gallon by eliminating external power consumed in drying its algae and powering the bioreactors, and reducing it further to $3.50 per gallon through sales of algae-based byproducts including proteins.

The name changers

The name change by Solix Biofuels to Solix Biosystems is another of a series as companies broaden their brands.  In the past year, BlueFire Ethanol became BlueFire Renewables, Joule Biotechnologies became Joule Unlimited, Cobalt Biofuels returned to its original identity as Cobalt Technologies, Aurora Biofuels became AUrora Algae, and Amyris Biotechnologies became Amyris. The trend was first noticed back when Sun Ethanol became Qteros, and the Broin Companies became POET.

Who’s in, who’s not in – the Solix investor group

Notable in the Series B announcement to date – the absence of Valero, Shanghai Alliance Investment and Infield Capital on the announced list of Series B investors. The news from Solix emphasized “so far” in the Series B round, so companies not appearing should not be counted out, but insiders generally are rarely missing or announced late unless there are perceived problems in meeting the timelines and commercialization milestones, or other conflicts within the group. That may have been related to the departure of CEO Henston and CFO Maytubby at the beginning of the year.

But it continues a theme in algal closed photobioreactor development — projects can get close to commercialization timelines and goals, but never blow through them (to date). Back in 2009, Solix indicated that it understood the path to $3.50 biofuels by eliminating external power and broadening the product portfolio to include byproducts such as protein. $3.50 per gallon algal biofuels would be state-of-the-art right now – those are the kinds of targets that Solazyme is looking at for what is shaping up as a storied IPO.

So we suspect that either Solix has not been able to maintain continuous production at the 2500-3000 gallon per year rates in its Coyote Gulch demonstration, or it has not been yet able to eliminate the external power needs that often bedevil closed system photobioreactor projects.

Not yet does not mean “not ever,” and COO Bryan Wilson was looking at 2013-14 timelines back in 2009 when they raised the Series A.  The appearance of BASF, the name change, and the absence of Valero (to date) in the Series B, are all suggestive of a strategy which will abandon fuels for chemicals and other specialty products, at least for now.

We will stand by, as the company completes its Series B, to see how its strategy will officially evolve.

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Category: Fuels

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