15 Algae Fuel Startups, 2010 Edition

Two and a half years ago we put together this cheat sheet on 15 algae fuel startups you need to know, which turned into one of our most popular posts of all time. But boy have things changed since then. In early 2008 GreenFuel Technologies was still in business, Aurora Algae (then called Aurora Biofuels) was still focusing on fuel, Petro Algae hadn’t yet filed for an S-1, and it was unclear then that Craig Venter’s Synthetic Genomics was going to become a dark horse in the algae fuel world. Here’s our updated 2010 version of our original 15 algae fuel startups bringing pond scum to fuel tanks:

1). Solazyme: One of the leaders in the algae fuel industry, seven-year-old Solazyme has amassed more than $125 million in funding from high profile investors like oil company Chevron’s VC arm, investors Morgan Stanley, Virgin Group’s Richard Branson, and personal goods product producer Unilever. I toured the factory last year, and while the company isn’t producing commercial-scale algae fuel just yet, it’s currently selling its algae oil for applications like food (yum, algae milk) and products like lotions. Solazyme wants to commercialize its fuel technology in the 2012-2013 time frame, with a production cost target of $60 to $80 per barrel. To get there, it will have to build a commercial-scale algae plant, which can cost over $100 million.

2). Aurora Algae: Formerly called Aurora Biofuels, the newly christened Aurora Algae has been searching for commercial markets today in turning algae into nutrients and protein products, in contrast to the far out markets for algae fuel. That change is not exactly a vote of confidence for the short-term plans of algae-based biofuel startups to bring a cost-competitive replacement for fossil fuels to market. Originally developed at the University of California at Berkeley, the company is using genetics to isolate algae strains that can efficiently create biodiesel. Aurora claims the technology can create biodiesel fuel with yields that are 125 times higher and have 50 percent lower costs than current production methods

3). Synthetic Genomics: Synthetic Genomics — the brainchild of genomics guru Craig Venter — has scored the largest deal with an oil company of all of its competitors: a $600 million partnership with Exxon Mobil. As we put it last year, the deal was so big for the nascent algae fuel industry, it was basically algae’s big break. Synthetics Genomics and Exxon opened an algae test facility at Synthetic Genomic’s HQ in La Jolla, Calif. in June. The greenhouse facility is the first step in figuring out if Synthetic Genomic’s algae fuel can move beyond the lab environment and be produced economically at a larger scale. The next step will be an outdoor facility that the partners will build by 2011.

Synthetic Genomics also had a world-changing breakthrough in May, when Venter officially became God and his team successfully created the first synthetic bacterial cell — in other words, the first artificial life form. A synthetic life form could be uniquely suited to help fight climate change and aid in uncovering new energy sources because a designer organism could be developed to only perform certain tasks, like converting sugar to ethanol, which would result in a very efficient process. Natural microbes have other life priorities like, say, replication, but a synthetic organism can be created to perform one function only.

4). PetroAlgae: PetroAlgae currently trades on the trades on the OTC Bulletin Board under the symbol PALG, but in August filed an S-1 for an IPO. PetroAlgae describes its technology as a development of light and environmental management systems that enable algae to grow at four times its natural growth rates. The company says its “secret sauce” is in its software, which can manage algae harvesting density and sunlight exposure, as well as its remote sensing system that can measure the algae crop density.

However, the company’s business model (conveniently for them) is to have their customers pay “all upfront infrastructure costs as well as continued maintenance for their licensed facilities,” in addition to licensing fees for the first three years of a 20-year license, plus a royalty stream during the life of the license. I’m pretty skeptical of this company — it’s steadily lost money and has no revenues.

5). Sapphire Energy: Sapphire is another algae fuel heavyweight that hadn’t yet come onto our radar at the time of our original list. Founded in 2007, Sapphire Energy plans to ramp up its production to 1 million gallons of algae-based diesel and jet fuel per year by 2011. By 2018, Sapphire says it will crank out up to 100 million gallons per year, and by 2025, the company says that number will soar to 1 billion gallons per year, which would be about 3 percent of the U.S. renewable fuel standard. So yep, those are some big claims. Sapphire has raised more than $100 million from the likes of Bill Gates’ investment firm Cascade Investment, as well as ARCH Venture Partners, Wellcome Trust and Venrock, and so far it has tested its fuel with two commercial airlines: Continental and JAL.

6). Bioalgene: Outta Seattle University, Bioalgene is trying to speed up the process of algae production to an 8-day cycle. The company says three outdoor field tests in 2008 with Washington State University have proven its concepts, and Bioalgene plans to build pilot plant sites in Eastern Washington.

7). Phycal: Phycal came onto my radar when it won a $24.2 million federal research grant for its algae fuel technology. It’s parent company is Logos Energy, and its based in St. Louis Highland Heights, OH.

8). Live Fuels: Live Fuels has a slightly offbeat new approach to algae fuel, that it’s tweaked since our original list. “We cook ‘em and squeeze ‘em,” LiveFuel’s CEO Lissa Morgenthaler-Jones explained to us, describing her company’s process for turning algae-fed fish into oil for fuel using heat and high pressure. It’s a more gruesome way of harvesting pond scum than the mechanical equipment employed by other startups working on algal fuels. Founded in 2006, LiveFuels kicked off its pilot operations at a 45-acre open pond test facility in Brownsville, Texas, a year ago. The company raised $10 million in May 2007 from David Gelbaum’s quiet Quercus Trust.

9). Solix Biofuels: Solix says its technology is able to be massively scaled, which at the end of the day is the secret that will unlock algae fuel. Specifically Solix describes its technology as proprietary photobioreactors that are ten times more productive than open pond systems. Partners include Valero, Los Alamos National Labs, Colorado State University, and Shanghai Alliance Investment.

10). Aquaflow: The New Zealand company’s goal is to become “the first company in the world to economically produce biofuel from wild algae harvested from open-air environments.” The company is unusual in that it harvests algae from polluted waters and produces biofuels from that harvested algae. So revenue streams can be cleaning up water, and producing biofuels. The company has partnered with Honeywell’s (s HON) UOP.

11). Bionavitas: Four-year-old Bionavitas is still pretty much under the radar, but according to some reports (like this CNET one) the company uses long light rods to deliver more light to algae to stimulate growth and to cut the costs of algae farming.

12). Seambiotic: Seambiotic says it’s “the first company in the world that is utilizing flue gas from coal burning power stations for algae cultivation.” The company is seven-years-old and is based in Israel.

13). Bodega Algae: Like several of its competitors Bodega Algae uses closed bioreactors instead of open ponds to grow algae. But the company’s reactors are scalable and stackable, and are meant to be placed next to industrial and municipal waste streams to harvest the algae. Bodega has its roots out of MIT.

14). Algenol: Algenol says it grows hybrid algae to produce ethanol, and has assembled one of the largest collections of blue-green algae strains in the world. To date, the company says it has raised $70 million and it plans to build a pilot-scale biorefinery, and a 100 million to 1 billion gallon of ethanol per year refinery. Algenol says it has partned with Dow Chemical and Valero and has received a $25 million grant from the DOE.

15). General Atomics: OK, it’s not a startup, but San Diego-based nuclear power research company General Atomics has been working on algae fuel technology for the past couple of years and last year scored a $43 million contract with DARPA to create algae-based jet fuel.

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