Jonathan Wolfson

Gee whiz, algae!

September 12, 2010

Big institutions can make mistakes, as we’ve learned, painfully, lately. (See BP, Lehman Brothers, Merrill Lynch, etc.) But when big corporations like Unilever, Chevron and Bunge  invest in a algae company that is also in business with the U.S. Navy, well, that’s a good reason to take notice.

The algae company is called Solazyme and, if nothing else, it’s notable for the range of products that its algae are able to produce: They include jet fuel, diesel fuel, super-healthy vegetable oils and other algal oils that become ingredients in soap, lotions, ice cream, cookies and mayonnaise.

Jonathan Wolfson, with algaeIn March, I met Jonathan Wolfson, Solazyme’s CEO, and came away impressed with his passion and smarts. (See Solazyme’s Amazing Algae.) So I called him again last week to talk a bit about the company’s latest round of investment and its backers. Besides Unilever, Bunge and Chevron, Sir Richard Branson and a big Japanese food-ingredient company called San-Ei Gen also invested.

“What you’re seeing with these investors is a very diversified set of partners,” Jonathan told me. “You start to see blue-chip investors who are validating the breadth of our technology platform.”

Solazyme raised about $60 million in its latest round of investment, Series D. It has raised about $150 million in equity, which is substantial but not as much as some competitors. Last year, for example, ExxonMobil said it was investing about $300 million in Synthetic Genomics, a startup led by scientist Craig Venter. Bill Gates has invested in Sapphire Energy, another algae startup.

But no algae company has put together as impressive a list of backers as Solazyme.  The Wall Street Journal reported that Unilever spent months testing Solazyme’s algal oil as a possible substitute for palm oil, which is controversial, in such products as Lux soap. It concluded that Solazyme can product algal oil at sufficient scale to become a viable supplier, the Journal said:

“This isn’t just a niche application,” says Phil Giesler, director of innovation for a Unilever unit that invests in new technologies. “This is something which we believe has tremendous capability.”

Bunge, meanwhile, is a huge agricultural firm,  a major producer of sugar cane and a distributor of vegetable oils. Solazyme’s algae can turn sugar cane into vegetable oils. “We’ve already produced oils using bagasse,” Wolfson said. (Bagasse is residue that remains after sugar is extracted from sugarcane stalks.)

For its part, Chevron invested in Solazyme last year, and put it more money this summer, presumably because it likes what it sees. Chevron wants to understand if algae can be an efficient way to produce transporation fuels, such as diesel and jet fuel.

Based in South San Francisco, Solazyme was founded in 2003 by Wolfson and Hamilton Dillon, a college friend. Its technology differs from most algae startups. Instead of growing algae in ponds using sunlight as an input, the company feeds cheap sources of biomass such as sugar cane or switchgrass to its algae and grows them in big tanks, most of them in a rented facility in rural Pennsylvania.

The company is getting substantial government as well as private-sector backing. The U.S. Department of Energy has given Solazyme a $22 million grant to expand production, and the Navy awarded the company an $8.5 million contract buy marine fuel.

Solazyme may have more news this week, Jonathan told me. If so, I’ll update this post or add a new one. This company is worth watching.

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Solazyme’s amazing algae

March 18, 2010

reef3216Algae are so good at producing oil from sunlight and carbon dioxide that there are, by some accounts, as many as 200 companies trying to make biofuels from algae. Some are obscure, little more than a couple of guys playing around with pond scum. Others are attention-grabbing, like Synthetic Genomics, the company led by pioneering scientist Craig Venter that  joined forces with ExxonMobil in a $300 million research program.

Solazyme, a private company based in South San Francisco, stands out from the algae crowd, for a number of reasons.

First, there’s the sheer variety of its products. Solazyme makes fuel for  the U.S. Navy. It makes a heart-healthy, vegetarian, protein-rich microalgae power that goes into Garden of Life supplements and vitamins sold at stores like Whole Foods. And it recently announced a deal with Unilever to use algal oil in renewable,  sustainable personal care products like soap. Its algae are multi-talented.

Then, there’s the fact that Solazyme, unlike other startups, is “producing large volumes of oils and fuels, and we have been for a while,” says its CEO, Jonathan Wolfson. What’s large volumes? An annual rate of tens of thousands of gallons, including a little over 20,000 gallons of shipboard fuel during the first half of this year for the Navy,  part of an $8.5 million contract signed last year.

Finally, Solazyme raised a Series C financing round of about $57 million during the credit crunch, much of it from existing investors including Braemar Energy Ventures, Lightspeed Venture Partners, the Roda Group and Jerry Fiddler, the firm’s chairman–all of whom stuck by Solazyme through some  early stumbles. [click to continue…]

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