Bill Gates Goes For Algae, Invests in Biofuel Maker Sapphire Energy

Russell Gold reports:

Bill Gates is plunging his hands into pond scum.

Cascades Investments LLC, Mr. Gates’ personal investment vehicle, is backing Sapphire Energy, a start up working towards a commercial-scale facility to produce oil from algae. And by all indications, he is not trying to save the world from its petroaddiction. He’s trying to make some money. Little known outside of green-energy circles, Sapphire Energy is at the forefront of an effort to use single-celled organisms to turn out refinery-ready oil that can be either mixed with conventional crude or turned directly into gasoline, diesel and jet fuel.


There is still significant skepticism that Sapphire, or any of its competitors, can overcome fundamental problems of mass-producing a competitive fuel from algae. These problems include: finding the right algae strain and showing it can mass produce oil that can compete on cost with crude oil. Still, the San Diego based company is attracting some impressive investors. These include two of the world’s most famous wealthy families. In addition to Mr. Gates and kin, the Rockefeller family’s venture capital vehicle Venrock was an early backer. The other two financial backers are Arch Venture Partners and Wellcome Trust. Each has contributed roughly equal amounts of the $100 million Sapphire has raised to date, according to chief executive Jason Pyle. (The investment by Cascade, which didn’t return a call for comment, is new. Sapphire had previously disclosed backing from other firms.) Next step, says Mr. Pyle, is work towards a 10,000-barrel-a-day algae-derived oil facility.

The addition of Cascade puts Sapphire in an enviable position amongst clean-fuel start ups: It has its financial backing in place and can focus on lowering its production costs and clearing engineering hurdles. The current investors “have indicated they will internally finance the company to commercial production,” says Mr. Pyle. For Mr. Gates, the investment in Sapphire marks a shift in his clean-fuel strategy and perhaps a sign of a broader interest in alternative energy.

An early investor in Pacific Ethanol Inc., Cascade sold its stake earlier this year, according to market data from Thomson Financial. Could another well-known ethanol investor be far behind? Vinod Khosla, a Silicon Valley billionaire whose personal investment vehicle has backed numerous ethanol-related companies, is scheduled to give the keynote address next month at the Algae Biomass Summit. This has led to speculation that he might be looking at algae for investment opportunities. “We keep looking at algae. We’ve looked at one to two dozen plants, haven’t yet found economics that work but still believe there is room for innovation to work and will keep looking,” Mr. Khosla told us in a statement.

Permalink | Trackback URL: http://blogs.wsj.com/environmentalcapital/2008/09/17/bill-gates-goes-for-algae-invests-in-biofuel-maker-sapphire-energy/trackback/
Save & Share: wsj:http://blogs.wsj.com/environmentalcapital/2008/09/17/bill-gates-goes-for-algae-invests-in-biofuel-maker-sapphire-energy/

====================================================================================================


=============================================================================================================