Khosla’s Latest Biofuel Bet: KiOR

We were wondering when Vinod Khosla would divulge information about his latest biofuel play, KiOR. The first time we heard about the company was when the venture capitalist briefly mentioned the company’s name during a speech earlier this month. At that time he described the startup as working with a catalyst to produce biocrude that can be processed in a regular oil refinery. This morning, Khosla Ventures and Netherlands-based biofuel startup BIOeCON said they have formed KiOR as a joint venture.

Khosla Ventures says it will provide (an undisclosed amount) of Series A funding and BIOeCON will provide intellectual property for its “biomass catalytic cracking process” — a thermochemical process that produces biocrude from grass, wood and plant waste that can then be refined. According to Chemistry World, BIOeCON’s catalyst-based system can convert biomass directly to oils, at lower temperatures and with a more simple apparatus than required for gasification, making it less expensive.

Update: We just chatted with KiOR CEO Rob Van Der Meij who said that the benefits of KiOR’s technology is the lower capital costs compared with other biomass conversion technologies. Van Der Meij said that the company hopes to prove its economics and process on the pilot plant scale in 2008. Ultimately the hope is to license the technology to customers like oil refineries and feedstock owners.

Khosla now has at least a dozen investments in biofuel startups, (Check out 10 here). He’s betting on a variety of technologies — using enzymes, thermochemistry and synthetic biology — in a quest to find the most effective way to convert biomass into a fuel that will have a price that is competitive with both gasoline and corn-based ethanol. “My real love is cellulosic biofuels,” Khosla said in his lecture earlier this month.

Khosla’s biofuel portfolio also includes another thermochemical startup RangeFuels, uses a thermochemical process to turn biomass into synthetic gas and then fuel. We interviewed RangeFuel’s CEO in August.