VentureBeat

Hayward, Calif.’s Mendel Biotechnology, an agricultural biotech, raised an undisclosed sum in a fourth round of funding, VentureWire reports (subscription required). The funding accompanied a development deal with the U.K. energy giant BP; Monsanto, a major developer of genetically modified seeds and a longtime Mendel partner, also participated.

The BP deal centers on the development of new genetically modified strains of grass that could be used to produce cellulosic ethanol. The production of ethanol from grasses and similar cellulosic sources should theoretically be more efficient than existing corn-based derivations, since the process utilizes the entire plant and not just its grains.

Synthetic Genomics, the company started by controversial human genome entrepreneur Craig Venter, has raised financing at a whopper valuation even before it has produced its first viable product.

The company, based in Rockville, Md. is using Venter’s background as an expert in sequencing genes and applying it to finding new kinds of alternative energy sources.

The company announced last week that it had raised an undisclosed second round of financing from a group strategic investors, including the oil giant BP. That company’s value after the investment is about “$300 million,” chief executive Venter told VentureWire (sub required).

We first wrote about the company two years ago, when it raised $30 million from Draper Fisher Jurvetson, DFJ Frontier, Biotechonomy and individual investor Alfonso Romo.

Last week, BP and Synthetic Genomics also announced a deal to research the sequence of genes in microbes that live within underground hydrocarbons such as oil, natural gas, coal and shale — the goal being to to find an organism that can make better alternative fuels. One way would be to covert coal to natural gas, which would avoid having to burn coal (a dirty process). Synthetic Genomics is seeking a patent for a “minimal genome,” a type of synthetic biology aimed at creating life forms (our coverage here).

BP has been increasing its investments in alternative energy sources, including cellulosic ethanol, widely expected to be a cleaner and more efficient source of auto fuel than existing sources.