Biobased investment triples, to $391M for Q1; Biofuels Digest’s 5-Minute Guide to the investment landscape

April 2, 2014 |

benjaminsbioenergy1-125x125Biobased investing continues to rise, 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 $391 million in new capital in Q1 2014, while 8 biobased ventures raised $128.6 million in Q4 2013. This compares to $363.8M million in Q2, $435M in Q2, and $434M in Q4 2012 and Q1 2013.

Overall, the industry raised $1.318 billion in new capital in the past 12 months, up from $1.23 billion for the Q4 2012-Q3 2013 period

The capital raising activity

Here’s the deal detail, as tracked at biofuelsdigest.com.

Q1 2014

KiOR – $25M March
Solazyme — $158M March
LanzaTech – $60M March
Ceres — $20M March
Genomatica – $6.8M March
Rennovia – $25M February
Renewable Energy Group – $26.2M February
Chromatin — $36M January
Amyris — $34M January

TOTAL – $391.0M Q1

Q4 2013

Amyris — $51.8M October
Coskata – $3.3M December
Gevo — $25M – December
Green Biologics — $25M December
Cobalt Technologies – $4.1M December
Z-Trim – $1.4M December
Ennovor — $12M November
Verdezyne – $6.0M November

TOTAL – $128.6M Q4

Deal Flow of note: Q4 2013

In November 2013, Black Pearl Capital Partners led a $12 million capital raise for Ennovor Group, who will invest the proceeds of the financing during the fourth quarter of 2013 to fund capacity growth at its Bromborough Facility and to expand its European tolling program. Ennovor Group is a sustainable fuels company and is part of the Black Pearl Capital Group with a current production capacity of 100,000MT/year.

In November 2013, Z Trim Holdings announced that it completed a registered public offering of 1,86M shares of common stock at a price per share of $0.75 and warrants to purchase 1.4M shares of common stock at an exercise price of $1.00 per share, representing gross proceeds to Z Trim of $1.4M. Z Trim Holdings, Inc. is a bio-technology company that owns existing, and has developed new, products and processes to make use of biomass for uses in the food and industrial markets.

In December 2013, Green Biologics announced the closing of a $25 million Series B round led by Sofinnova Partners with strategic participation by Swire Pacific Limited. Follow on investments were also made by Capricorn Venture Partners, Oxford Capital Partners, Morningside Ventures and Convergince Holdings LLC. Green Biologics also noted that following on from the announcement on July 2nd, an asset purchase agreement has been executed and approved by Central MN Ethanol Co-op shareholders last week. The aim is to retrofit the 23 Mgy plant to produce renewable n-butanol and acetone in 2016.

In December, Gevo announced the closing of its previously announced public offering of 18,525,000 common stock units, at a price to the public of $1.35 per unit. Overall, the company raised $25 million. Each common stock unit consists of one share of common stock and a warrant to purchase one share of common stock, which are immediately separable and were issued separately. Gevo also issued warrants to purchase an additional 2,778,750 shares.

Also in Q4, there were capital raises by Genomatica (SEC filing here) , Verdezyne (SEC filing here),  Cobalt Technologies (SEC filing here), Coskata (SEC filing here), and Amyris (SEC filings here).

Deal Flow of note: Q1 2014

In January 2014, Chromatin announced the first closing of its Series E financing round, expected to total $36 million. Wood Creek Capital Management, an investment manager focused on investing in real assets and intellectual property, including agricultural resources, led the round. Other participants included GE Capital, Equity, as well as funds that had participated in earlier rounds of financing: BP Alternative Energy, IllinoisVentures, the State of Wisconsin Investment Board, and Adventures IV, LLC.

In February 2014, Archer Daniels Midland Company and Rennovia announced  that ADM has committed to a $25 million equity investment in the privately held company, which develops catalysts and processes for the cost-advantaged production of chemical products from renewable feedstocks. The company’s first products are nylon intermediates adipic acid and hexamethylenediamine (HMD). ADM’s investment will be used for research and development programs and continuing operations.

In February 2014, Ceres announced the pricing of an underwritten public offering of 20,000,000 shares of common stock at a public offering price of $1.00 per share. Ceres expects to receive approximately $20 million in gross proceeds.  Back in January, Ceres announced a net loss for its Q1 of the 2014 FY (the company is on a September fiscal) of $8.2 million on revenues of $0.8 million. Product sales remained relatively unchanged compared to the first quarter of 2012.

In March 2014, LanzaTech announced that it has raised $60M in a first close of its series D investment round. Led by Mitsui & Co. with a $20M investment, the $60M round includes new investors Siemens via its Venture Capital unit, CICC Growth Capital Fund I and existing investors: Khosla Ventures, Qiming Venture Partners, K1W1 and the Malaysian Life Sciences Capital Fund. Existing investors Soft Bank Capital, PETRONAS Technology Ventures, and Dialog Group were not among the announced investors in this first close.

In March, Solazyme announced its intent to offer $100M in aggregate principal notes due in 2019 and 5M shares of common stock. SZYM will also grant the underwriters a 30-day option to purchase up to $15M in notes and 750k shares of common stock. “We expect the deal to be completed by the end of the week,” said RW Baird analysts Ben Kallo and Tyler Frank. “Although initially dilutive, it should provide sufficient capital to ramp production at its facilities and fund further R&D.”

In March 2014, Cool Planet announced that it had closed on its $100 million Series D financing. North Bridge Venture Partners and Concord Energy were the lead investors for the round. 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.

In March 2014, KiOR announced a 2014 Note Purchase Agreement that contemplates multiple tranches of financing of up to $25 million. The tranches are contingent provided that in each preceding month the Company satisfactorily achieves each of the milestones set forth in the Agreement.  The SEC filing on that capital raise is here.

Also in the quarter was a capital raise by Amyris (SEC filing here) .

An additional deal worth noting

In October 2013, Abengoa announced that the underwriters of the Offering of 250,000,000 Class B Shares (either in the form of shares or American Depositary Shares) have exercised in full their over-allotment option to purchase an additional 37,500,000 Class B Shares from Abengoa. Including the exercise of the over-allotment option, Abengoa’s offering amounts to a total of 287,500,000 Class B shares, either in the form of Class B shares or ADSs, which represents a total capital increase of € 517,500,000. Abengoa reaffirmed that the offering will be used to repay corporate debt maturities due in 2013 and 2014.

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

Shell
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.

BP
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,

Valero
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.

Petronas
Investments: LanzaTech
Why a major player: Asia-Pac is key to much of the future of the sector, not the least because it is home to huge populations, growing demands, and so much chemical production capacity.

Total
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).

Chevron
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: Though 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.

ConocoPhillips
Investments:
Cool Planet
Why a major player: Been stand-offish on advanced biofuels, but has participated in a pair of rounds with Cool Planet, and Phillips 66 signed a development agreement with Sapphire Energy. It’s substantial refining holdings in the US make it a major player in any conversation.

Feedstock players

Waste Management
Investments: Harvest Power, Agnion, 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.

Cargill
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.

Bunge
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.

ADM
Investments:
Rennovia, working with Solazyme
Why a major player: The Solazyme tolling relationship aside, the investment in Rennovia suggests that the company is taking on renewable chemicals again after a disappoitment with Metabolix.

Monsanto
Investments:
Sapphire Energy
Why a major player: In addition to understanding the added value that energy can bring to crops, Monsanto remains interested in seeking new traits (perhaps gleaned from algae) from advanced or novel that can be applied to commodity crops like corn and soybeans.

Chemicals, Industrial Biotech

Dupont
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.

DSM
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.

M&G
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.

BASF
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

Coca-Cola
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.

Unilever
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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