BP and George Soros's investment fund. The company in question is Qteros, formerly called SunEthanol, a little-known startup placing big bets on a plucky microbe.
Qteros is one of a large group of companies trying to engineer a microorganism to cheaply break down woody matter, including everything from corn husks and grass to actual wood, into fuels. The general tack of these companies is to find a naturally occurring microbe and change its genes until it becomes a perfect production unit.
But Qteros claims to have a vital difference, saying that its proprietary organism, the Q Microbe, was nearly perfect for the job in nature, with an unusual ability to dynamically adjusts to the type of organic matter it's processing. So instead of trying to patch together "Frankenbugs" incorporating the useful parts of different organisms, as Battery Ventures investor Jason Matlof put it to me, the company is only engaged in "classical genetic engineering", which basically means selective breeding.
The Qteros bug requires about a year of development work, in which time the company will build its own pilot facility. However, that pilot will likely be the last facility Qteros builds on its own, possibly forever. Unlike rivals like Coskata and Mascoma, Qteros primary plans involve licensing its technology out.
If the pilot facility proves the Q Microbe works as expected at scale, first-gen ethanol makers could line up to sign deals. The Q Microbe could be useful to those companies because in the ethanol making process, the parts of the feedstock that have cellulosic matter -- like corn husks and bagasse, or left over sugar cane husks -- are often wasted or underutilized.
Employing a cellulose-eating microbe, then, would give such companies access to more of the plant's energy. Existing plants could tap into an additional profit source by using microbes, thus pushing up the returns of an industry that has often has razor-thin margins, or outright loses money.
For Qteros, if all goes according to plan, the company's growth should explode as it signs contracts. Unlike other startups that build their own plants, Qteros only needs to secure a deal with an engineering firm that can nail down a design and help deploy it, Matlof says: "After that, it's cookie cutter." This approach isn't totally innovative, by the way; green chemical manufacturer Genomatica also plans to develop "bolt-on" facilities for larger companies.
Licensing its technology for bolt-ons and entire cellulosic ethanol facilities should also let Qteros slip by with much less funding than its rivals, according to Matlof, who says the company will only need $30 to $50 million to reach its objectives. With this funding and its previous $3.6 million round, the company has taken almost $29 million to date.
Venrock led this round, with previous investors Battery Ventures, Long River Ventures and Camros Capital joining. BP and Soros Fund Management are new investors. Qteros is based in Hadley, Mass.