06 Sep $21 million round reaffirms investor interest in Virent Energy Systems
Madison, Wis. – The $21 million round of venture capital announced today by Virent Energy Systems provides further affirmation of investor interest in the company’s process for producing renewable forms of gasoline, interest that could someday be expressed in the form of an initial public offering of stock.
Virent has closed on a $21 million second round of venture financing, which was led by Stark Investments of St. Francis and Venture Investors of Madison. Cargill Ventures, which was the lead investor in an earlier round, continued its support of Virent in this round.
Since its founding in 2002, Virent now has raised a total of $40 million in grants and venture funding.
Investors John Neis, co-founder and managing director of Venture Investors, and Paul Bieganski, managing director and chief technical officer for Cargill Ventures, said their continued interest in Virent is based on the company’s BioForming process, which is exclusively licensed from the Wisconsin Alumni Research Foundation.
The technology, which enables Virent to make gasoline from sugar and other biomass, is considered a more cost and energy efficient way to produce renewable gasoline, diesel, and jet fuels.
Investors noted that Virent’s products have the same characteristics as petroleum-based fuel, they are compatible with car engines, fuel pumps, and distribution pipelines, they can be produced from a variety of feedstocks, and they represent a different path to renewable fuels.
Neis said global economic growth will only increase energy demand, and concern about greenhouse gases will ensure that carbon-neutral sources of energy will increasingly be part of the mix.
“This is obviously meaningful financing for a company that we believe has breakthrough technology in a rapidly growing, emerging market,” Neis said. “They have consistently met their business objectives and demonstrated the applicability of their technology.”
Bieganski said in a release that Virent’s technology has “tremendous potential” to transform the global energy market.
Pieces to the puzzle
Virent will use the funding to accelerate commercialization of its technology for liquid fuels, hydrogen, and propylene glycol. In recent years, Virent has been adding commercialization expertise to its staff, which now stands at 54 employees and counting, and it has entered into collaborations with major industrial companies.
The most recent example is a joint agreement with Shell Hydrogen, a subsidiary of Shell Oil Co., to produce hydrogen from renewable glycerol and sugar-based products. The objective of this collaboration is to provide an alternative to hydrogen that is produced with fossil fuels like natural gas and coal, which have higher CO2 emissions.
In what Virent CEO Eric Apfelbach called a “stealth project” that will remain confidential, the company is working with another large collaborator on the production of liquid fuel.
Apfelbach said Virent’s fuels are considered to be environmentally friendly or “green” because of their smaller carbon footprint, and because they require less energy to produce.
Whereas most biofuel companies either use microbes to ferment biogas or use a high capital, energy-consuming gasification process to make alternative fuels, Virent is one of the few companies that makes gasoline from biomass and does it with a catalytic process that Neis said is more compatible and consistent with what refineries and chemical manufacturers are accustomed to.
Unlike ethanol production, Apfelbach said Virent’s process does not does not require the distillation of water, another process that consumes more energy and generates higher CO2 emissions. Virent directly produces gasoline, which separates from water on its own.
“Our net energy balance is much better, and our over all costs will be lower because of that,” Apfelbach said.
In conjunction with the funding, Neis will join the Virent Energy Board, replacing Venture Investors’ colleague Scott Button.
Neis said the company will likely consider going public at the appropriate time, especially with the public financial markets enthusiastic about companies that are working to produce alternative fuels.
“Clearly, investors seem to understand the merits of what they [Virent] have done,” Neis said.
• Venture Investors’ early-stage fund grows to $115 million
• Chemical-petroleum executive joins Virent Energy board
• Virent enters agreement with Shell Oil unit to make hydrogen with biomass
• Kettner to leave WARF, join Virent Energy Systems
• Virent lands $2M grant for chemical production