Tech Startup: Gevo Inc.
INITIAL LIGHT BULB: A professor at the California Institute of Technology in Pasadena, Frances Arnold gave a presentation about her work with the biofuel butanol in 2005. Afterward, Vinod Khosla, honcho of Menlo Park, Calif.-based green energy fund Khosla Ventures, approached her about commercializing the technology. With Khosla’s Series A investment in hand, Arnold co-founded the company with colleagues Peter Meinhold and Matthew Peters, and James Liao from UCLA.
Now more than 50 employees strong, the company relocated to Colorado in early 2008 and last year was one of ColoradoBiz’s “50 Colorado Companies to Watch.” Brett Lund, vice president and general counsel, says the move to Colorado was based both on a dearth of good lab space in Los Angeles and an abundance of biofuel companies and talent in Colorado, as well as the presence of the National Renewable Energy Laboratory in Golden.
IN A NUTSHELL: In the wake of an ethanol bust, Lund says ethanol has three “major drawbacks”: It’s low-energy, it’s not compatible with traditional internal combustion engines, and it’s difficult to transport by pipeline. Conversely, Gevo’s flagship product biobutanol – which Lund labels “a second-generation biofuel” – is high-energy and compatible with existing engines and pipelines. “Nobody would produce ethanol when you could produce butanol,” Lund says.
The reason ethanol took off is because butanol production is “very difficult,” Lund says. “It’s the same process as brewing beer. The yeast eats the sugar and excretes alcohol.” But when that alcohol is strong butanol, its toxicity kills the yeast before it gets a chance to excrete very much. Gevo’s technology solves this problem through biotechnology – bioengineered butanol-resistant yeast – and engineering. Butanol is siphoned away as it is produced.
Gevo’s business plan calls for retrofitting existing ethanol plants to instead make butanol, a process that requires a two-week shutdown after about six months of work. After the retrofit, it is fairly easy to switch from butanol production to ethanol production and back again.
Lund says their technology can start with corn or sugar cane, or other sugar-rich materials. “We’re really flexible as to what inputs we use, and we’re also really flexible on our outputs,” he says citing biobutanol-based products ranging from biodegradable plastic water bottles to renewable jet fuel. The latter is in Tier 2 testing with the U.S. military; Sir Richard Branson, a Gevo investor through Virgin Fuels, is also interested in powering Virgin Airlines with biobutanol-based fuel.
After proving the concept at a pilot plant in Englewood, Gevo successfully launched a commercial demonstration facility in Missouri in September and concurrently launched a subsidiary, Gevo Development, to buy ethanol plants for retrofitting. It’s a buyer’s market, Lund says. “There are a lot of them that aren’t being used to capacity or at all. Many of them are in bankruptcy and can be had for pennies on the dollar.”
THE MARKET: “There are tons of different markets,” says Lund, including some immense multibillion and multitrillion-dollar ones like gasoline, jet fuel and plastics.
FINANCING: After a Series A with Khosla Ventures in 2005 and a Series B with Virgin Fuels and Khosla in 2007, Burrill & Co., the Malaysian Life Sciences Capital Fund, and Total also participated in Series C and D rounds. Financial details were not disclosed, but Lund says the company is well-financed to operate for the next two years.
WHERE: ENGLEWOOD | FOUNDED: 2005 | WWW.GEVO.COM
“WE’RE A LITTLE DIFFERENT THAN OTHER BIOFUEL COMPANIES. MOST COMPANIES ARE FOCUSED ON JUST ONE THING: BIOTECH OR ENGINEERING OR CHEMISTRY. WE’VE LEVERAGED ALL THREE OF THOSE SCIENTIFIC DISCIPLINES.”
– Gevo vice president and general counsel Brett Lund