12 Jun New venture funds should accelerate Virent's work
Madison, Wis. – A $7.5 million round of venture capital should accelerate work into alternative fuel development at Madison’s Virent Energy Systems, a University of Wisconsin-Madison spinoff that is working on hydrogen energy sources, according CEO Eric Apfelbach.
The company, which is developing technology to convert plant sugars into hydrogen, propane, and other fuels, also will begin to lobby for a broader definition of alternative fuels that are eligible for state tax credits, Apfelbach said.
The bulk of the $7.5 million in venture capital is being provided by Cargill Ventures, which is leading the investment. Cargill is a wholly owned venture capital investment group of Cargill Corp., which produces and sells crop nutrients and feed ingredients to farmers.
As part of the burgeoning hydrogen economy, Virent is trying to develop a cost-effective way to generate hydrogen fuel directly from water and sugar in a one-step process as part of a car’s engine or an electrical generator. This could evade some of the problems of storing hydrogen, a highly explosive gas.
The process takes corn sugar and glycerol from soybean fats and converts it into hydrogen, methane, and propane, and has applications in electricity generation and powering cars and buses. The technology is licensed through the Wisconsin Alumni Research Foundation.
Contributing lesser amounts were Honda Strategic Ventures, which made a number of trips to Virent’s facility in Madison’s TEC incubator and is interested in generating hydrogen for small fuel cells, and Venture Investors, which targets problem-solving science.
The venture capital is “really for more of a continuation of what we are doing,” Apfelbach said. “This allows us to accelerate that and do some of this in a parallel way instead of in serial mode and on a shoestring budget.”
According to Apfelbach, the closest Virent is to commercializing a product is in the area of electricity generation. At the moment, the company is trying to get a beta site for its 10-kilowatt prototype system now running at Madison Gas & Electric. The beta site would be designed to generate hydrogen or feed fuel gas into a generator.
The company, which expects to add 10 people to its staff in the next year, also is starting to convert sugar into liquid fuel.
According to Apfelbach, using crops to make gas-based fuels does not add to the level of greenhouse gases that are linked to global warming. And although Virent already had received $9.5 million from investors and $4.5 million in federal grants, Apfelbach said it’s also important for government to support a greater variety of alternative fuels through tax credits.
The state’s Biofuels Initiative opens up funding to develop new fuel sources, such as ethanol from corn. “Right now, alternative fuels like ethanol and biodiesel get tax incentives, while propane doesn’t,” Apfelbach said. “We have to work on the policy side as well when we come up with new biofuels. We need to get the definition of biofuels extended to fuels made of sugar and other materials.”
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