Industrial biobased ventures raise $364M in Q3 2013; 5-Minute Guide to the bioinvesting landscape

October 22, 2013 |

5-Minute-Guide-logoBiobased investing continues surging, both direct and via strategics.

The Digest has the data and the scoop in our 5-Minute Guide.

In Florida, Biofuels Digest reports that 9 biobased ventures raised $363.8 million in new capital in 2013, compared to $435 million in Q2, and $434 million in Q4 2012 and Q1 2013. Overall, the industry raised $1.23 billion in new capiutal in the past 12 months.

The capital raising activity

Here’s the deal detail, as tracked at

KiOR – $70M July, August, September
Heliae — $28.4M July
Coskata – $3.0M August
Intrexon – $160M August

Lyxia — $1.6M August
Amyris – $60M August
Triton Algae — $5M September
CoolPlanet – $19.4M September
Fermentalg — $16.4M September

TOTAL – $435.1M Q2

The KiOR deal

Yesterday, KiOR announced the execution of $100 million in committed equity related financing in two separate private placement transactions to support the Company’s recently announced expansion of production capacity in Columbus, Mississippi, called  the Columbus II Project. Once completed with the planned technology enhancements for both Columbus facilities, the Columbus II Project is expected to achieve overall positive cash flow from operations for KiOR.

In the first private placement, KiOR has received $85 million of committed equity related financing from Khosla Ventures III, and various other Khosla entities. This financing consists of the immediate issuance of $42.5 million of Senior Secured Mandatorily Convertible Note plus the conversion of $53,197,308 of the Company’s existing senior debt held by the Khosla entities. The Notes will convert into Class A Common Stock at a price of $2.897 per share. Also, another $42.5 million later.

In the second private placement, KiOR has received $15 million of committed equity financing from new investor Gates Ventures, LLC, an affiliate of Bill Gates. $7.5 million now, $7.5 million later.

In both cases, future equity related commitments are contingent upon, among other things, the Company fully funding the Columbus II Project.

Raymond James energy analyst Pavel Molchanov writes:

“Gates is the latest big name to join the investor list: In conjunction with the Khosla financing, KiOR is also raising $7.5 million in equity from Gates Ventures, an affiliate of Bill Gates. This financing, which represents 3.24 million shares issued at $2.32 per share, adds another level of backing beyond the already significant investment from Vinod Khosla. Khosla and Gates have also pledged, in aggregate, to invest another $50 million in the future.)

“We view the selloff (nearly 50% from the August 8 earnings release) in the shares as excessive, and today’s news of the completed equity financing should ease market fears about dilution. While the stock may remain choppy until the Columbus plant approaches steady-state production, this should not overshadow the big picture: (1) KiOR’s early-mover advantage as North America’s first-ever commercial-scale producer of cellulosic biofuels; and (2) the technology’s proprietary value as a source of drop-in fuels (gasoline and diesel – not ethanol) with cash production costs that are cost-competitive with petroleum, even at lower oil prices vs. current levels.

“The next step is a high-yield debt financing, which we think will be in the range of $100-200 million. Alongside the new equity, this will cover the $225 million of expected capital outlays for the next production plant (Columbus II) along with near-term corporate costs. Valuation: $5.84 per share.”

Deal Flow

In July, Heliae announced a raise of $28.4 million in funding from existing and new investors. Existing investors include select members of the Mars family and the ASEAN-based global conglomerate Salim Group, through one of its subsidiaries, Agri Investments Pte Ltd. The funding will be used to support the operation and expansion of Heliae’s first commercial facility in Gilbert, Ariz. The facility will be operational in September of 2013, supplying high-value personal care and nutraceutical products to existing customers.

in August, Intrexon Corporation announced the pricing of its initial public offering of 9,999,999 shares of common stock at a public offering price of $16.00 per share, before underwriting discounts and offering expenses.The shares  began trading on the New York Stock Exchange on Thursday, August 8, 2013, under the symbol “XON.” Intrexon Corporation is a biotechnology company focused on collaborating with companies in Health, Food, Energy, and the Environment to create biologically based products that improve the quality of life and health of the planet.

In August, Amyris announced it entered into agreement for the sale of convertible notes in a private placement for up to $60 million in cash proceeds. Under the terms of the agreement, one of Amyris’s largest stockholders, Temasek, agreed to purchase $35 million of the notes in an initial tranche and, at Amyris’s election, up to $25 million in a second tranche. Both tranches are subject to Amyris’s satisfaction of closing conditions, including stockholder approval of the transaction at an upcoming special meeting of stockholders.

In August, UCLA MAE Ph.D. student Wei Yu raised $1.6 million series A venture capital for Lyxia Corporation, a biofuel startup based on research from UCLA MAE Professor Chih-Ming Ho’s Micro System Laboratories. Preceeding this, in July 2012, Lyxia Corporation was founded by Wei, and acquired exclusive rights to use new UCLA technology that increases the harvest of microalgae-derived biofuels.

In August, Coskata raised $3.0M in a Reg D private placement. More details were not available.

In September, Triton Algae Innovations announced the completion of its Series-A equity financing of $5 million. The investment was made by Heliae Technology Holdings, Inc. This funding round will be used to support Triton’s ongoing research and development programs, expansion of Triton’s PhycoLogix platform, and commercialization of Triton’s first product, PhycoShield.

In September, Ecotechnologies Fund led a $16.4m funding round for Fermentalg. According to an article on New Energy World Network, this was the third round, and included the existing investors, ACE Management, Demeter Partners, Emertec Gestion, and Picoty Algo. Joining in the round were IRDI and Viveris. Fermentalg will reportedly use the funds for an industrial scale up and commercialization of its microalgae production for use in animal feed, biofuels, cosmetics, food, health, and specialty chemicals.

In September, Cool Planet Energy Systems announced that it had raised $19.4 Million in the second close of a “D round” equity raise, after closing on more than $29.9 Million in June of 2013, bringing the total raised to more than $60 Million, including the remaining commitments from existing investors. The round added investors from Hong Kong, Singapore, the United Arab Emirates (UAE), and Mexico to a marquee existing investor base, including North Bridge Venture Partners, Shea Ventures, BP, Google Ventures, Energy Technology Ventures (GE, ConocoPhillips, NRG Energy), and the Constellation division of Exelon.

Individual and family investors of note in the bioeconomy

Paul Allen (US): Imperium Renewables

Bill Gates (US): Sapphire Energy, KiOR

Vinod Khosla (US): Amyris, Gevo, KiOR, LanzaTech, Aemetis

John Doerr (US): Renmatix

Sir Richard Branson (UK): Gevo, LanzaTech, Aemetis

Mars Family (US), Selim family (Indonesia): Heliae

Rockefeller Family Office (US): Sapphire Energy

Gradin Family (Brazil): GranBio

Strategic investors of note in the bioeconomy

Oil companies

Investments: Virent, Codexis, Iogen, Cosan
Why a major player: Shell has been a major investor in the space since investing with Iogen in the early 2000s. Investments in Codexis, Virent and Cellana (eventually discontinued) followed at regular intervals as the company expanded into drop-in fuels and the world of algae. Shell’s crowning achievement, the formation of the $12B Brazilian joint venture with Cosan, called Raizen, closed just this week.

Investments: Vivergo, Vercipia, Chromatin, Tropical Bioenergia, Butamax, Verdezyne, Qteros, CNAA, Cool Planet
Why a major player: Like Shell, an early and steady investor in the space – though like Shell, its earliest investments in D1 Oils and a joint venture with Verenium, eventually were unwound into a divestiture and take-over, respectively. Joint venture has been the typical method for BP – partnering with Dupont in the biobutanol venture Butamax; Dupont and British Sugar in the wheat ethanol Vivergo project.

A takeover of Brazil’s CNAA reflected BP’s growing confidence that, through its Tropical Bioenergia venture, it has learned the ropes in the key market of Brazil. An early investor in Sun Ethanol (now Qteros), the company has also lately invested in early-stage renewable chemicals pure-play Verdezyne,

Investments: O&O assets, Enerkem, Solix, Qteros, Mascoma, Diamond Green Diesel
Why a major player: Valero arrived with its checkbook much later than BP and Shell, but has become increasingly aggressive since a celebrated fire-sale acquisition of 700 million gallons in ethanol capacity from VeraSun resulted in the company’s best performing division. With BP, the company is an investor in consolidated bioprocessing pioneer Qteros; it also made an early investment in Solix but did not participate in the latest round.

In two investments the company paired with Waste Management: with Terrabon and Enerkem Management, it will provide the offtake side as well as capital for waste-based ventures – with Enerkem focused on ethanol and chemicals intermediates, and Terrabon aiming from drop-in fuels.

In January, Valero Energy  became an investor in Mascoma, potentially investing up to $50 million of the equity required to finance the project through Mascoma subsidiary Frontier Renewable Resources; an LOI called for Valero to enter into an off-take agreement for the project’s ethanol production, provide project development and construction oversight services.

But perhaps its most intriguing investment to date is the renewable diesel JV with Darling International known as Diamond Green Diesel. The partners originally stated that they would not proceed without a DOE loan guarantee – but having secured a conditional commitment from the DOE, the partners recently announced they were pulling out of the process, and that Valero would finance the project off the balance sheet of a subsidiary.

Investments: Amyris, Gevo, Elevance
Why a major player: If its stunning $133 million pre-IPO investment in Amyris, which made it the largest investor in the synth bio pioneer, wasn’t enough, the company also invested in and hit paydirt with an investment in Gevo. The French oil major has been aggressively focused on expanding operations in Brazil and Europe through its Amyris association, but with Gevo has aimed at the US market.

Flint Hills Resources (division of Koch Industries)
Investments: O&O assets, SG Biofuels, Benefuel, Edeniq
Why a major player: Charles Koch wrote in the Wall Street Journal that the company was forced to enter the US ethanol business because of mandates (which it does not favor), but the company has expanded its purview from first-generation ethanol to embrace advanced fuels via SG Biofuels (jatropha).

Investments: Solazyme, LS9, Catchlight Energy
Why a major player: Well, Solazyme, right? But the company’s investment in Catchlight Energy is even more central, though the company has focused more on the feedstock side (Catchlight is a Chevron JV with Weyerhaeuser) of late than the fuels technology side. In April, thr Bloomberg investigative team of Ben Elgin & Peter Waldman published an expose on Chevron trying to undercut California’s low-carbon fuel standard. “They say they’re pushing back against the California rule because it demands technology that may not be available for years,” the team wrote, as they detail the derailing of a technology that would have been available at commercial scale as soon as next year, according to the company’s own internal documentation.

Reliance Industries
Investments: Algenol
Why a major player: A Credit Suisse report on the company, (see page eight of the report, downloadable here), revealed that Reliance had invested a total of $116 million (Rs6.2 billion). $93.5 million (Rs5.0 billion) in Algenol and 22.5 million (Rs1.2 billion) in Aurora Algae, through October 2012.

Marathon Oil
Investments: Qteros, Mascoma, The Andersons (minority stakes in 3 ethanol plants)
Why a major player: Thjough not heard from in a while as an investor, Marathon stepped it up recently. In August, Marathon acquired from Mitsui & Co. its interests in three ethanol companies for $75 million in cash. Under the agreement MPC acquired an additional 24 percent interest in The Andersons Clymers Ethanol LLC, a 34 percent interest in The Andersons Ethanol Investment LLC, and a 40 percent interest in The Andersons Albion Ethanol LLC.

Feedstock players

Waste Management
Investments: Harvest Power, Agnion, Terrabon, Enerkem, S4, Renmatix
Why a major player: Waste management had been, like Valero, a latecomer to the space. It looks for companies that can utilize some (as yet) untapped WM-controlled waste stream. Paired with Valero as a strategic investor in Enerkem; also investing in Harvest Power, Agnion, and S4, which offer niche solutions in biopower and bio-based products. The investment in Renmatix, alongside BASF, was a significant expansion of its interests.

Investments: O&O assets, NatureWorks, USJ, BioAmber
Why a major player: If its ethanol and biodiesel assets were not enough to complement a massive (and longstanding) investment in biomaterials pioneer NatureWorkls (a former JV with Dow which was unwound several years ago), its massive JV with USJ in Brazilian sugarcane, ethanol and power – announced this month – should convince any doubters. The company has also joined as a strategic investor in BioAmber.

Investments: O&O sugar ethanol assets, Solazyme-Bunge (JV), Cobalt
Why a major player: The Solazyme relationship — not to mention the stake in Cobalt — has taken Bunge from a typical Brazilian sugarcane ethanol play to a unique and dynamic venturist looking to connect its sugar and oil trading operations, through biotech that converts low-cost, renewable sugars into tailored, high-value renewable oils.

Chemicals, Industrial Biotech

Investments: DDCE, Danisco/Genencor, BAL-Dupont, Butamax, Vivergo
Why a major player: A veteran investor by now, the company has essentially staked its reputation on opportunities in industrial biotech, and a series of JVs has kept it in the thick of first-generaiton and advanced biofuels in the US and Europe. It made two investments with BP – as part of the group forming the UK wheat ethanol venture, Vivergo – and as a co-parent of the biobutanol venture Butamax.

JVs with BAL in a macroalgae to fuels/chems venure, and a co-investment with Danisco in Dupont Danisco Celulosic Ethanol have been highlights among other high-profile investments in the space. For sure, its stunning $6.8B takeover of Danisco, which gives it control of Danisco subsidiary Genencor, takes the company’s involvement in industrial biotech to the next level.

Investments: Martek, Verdezyne, POET-DSM (JV)
Why a major player: Aside from the company’s established industrial enzyme business, DSM took it to the next level in forming the massive POET-DSM JV to deploy cellulosic ethanol technology, initially within the large POET network. Before POET-DSM, the company stunned the industry by acquiring algal biomaterials pioneer Martek for more than $1B. A follow-up early-stage investment in renewable chems pioneer Verdezyne confirmed that the company interests in the space range far afield from Martek’s lauded algae technologies.

Investments: Beta Renewables
Why a major player: Along with Novozymes and TPG, globale PET production giant M&G (through its Chemtex unit) has been pouring capital, people, and focus into Beta renewables. Result? To date, the world’s largest cellulosic biofuels biorefinery in Crescentino, Italy — and an impressive amount of dealflow in the Brazil, Asiaa and the US.

Life Technologies
Investments: SG Biofuels
Why a major player: The company has made just one signature investment, to date, in the industry, jatropha pioneer SG Biofuels — but the implications are large. Jatropha, if it ultimately realizes its potential, could become a major global crop commodity, and through that vehicle Life would have acquired some of the kind of position and strength that companies like Momsanto and DuPont have with corn. According to SGB, all that was needed was a strong foundation in genetics and breeding — there, you see the potential showcase value of Life’s investment.

Investments: Genomatica, Renmatix, Succinity (JV with Purac)
Why a major player: Later than some to the biobased chemicals party, but making up for any lack of pace then, with pace now. While its Renmatix investment is perhaps the most intriguing — Genomatica’s progress has been stunning in BDO, in which BASF is the major global player.

Consumer Products

Investments: Virent, Avantium, Gevo
Why a major player: Three investments, with one goal: the production of renewable paraxylene to make possible a 100% renewable sourced plastic Plant Bottle. Make no mistake, Coke and Pepsi have heard from their customers, loud and clear, that sustainability is a component in their refreshment selection — and Coke’s put its money down in the search for renewable PET, where biobased paraxylene has been the missing ingredient.

Investments: Chromatin
Why a major player: The company has made just one signature investment, to date, in Chromatin. But like Life Technologies’ investment in SG Biofuels — there’s a whole new crop opportunity with grain sorghum, and Chromatin is all over it with its genetics and breeding programs. Biobased energy and materials opportunities are there for the winners, as grain sorghum gains traction — and Unilever has thrown down its marker in the search for renewable alternatives, for sure.

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