Wednesday, April 4, 2012

"Bill Gates-Backed Sapphire Harvests $144M To Convert Algae To Oil"

From Dow Jones' Venture Wure:
Sapphire Energy Inc., a start-up that's growing and harvesting algae to convert into crude oil, completed a rare feat, closing one of the largest clean-technology venture capital deals in the past 12 months at $144 million.

The deal included new investors, but existing backers set the terms, VentureWire has learned.
"Renewable liquid fuels is one of the biggest business opportunities that ever existed," Steve Goldby, a partner at Venrock, one of the backers of the company, said about the reasons for reinvesting. The biggest advantages of Sapphire, said Goldby, are that the company uses non-arable land and saltwater, therefore relying on readily available resources that are not otherwise used.

San Diego-based Sapphire, which is at a stage of demonstrating its technology, but not of commercializing it for a number of years, raised the Series C capital from all of its 2008 Series B investors, who had previously committed about $100 million in equity. These include Venrock, Bill Gates's investment firm Cascade Investment, ARCH Venture Partners and Wellcome Trust. Several new investors also came in, including hedge fund Arrowpoint Partners and Monsanto Co.

New investors often set the terms of the deal, but not in this case. "The Series C pricing was set by the Series B investors. And then other investors participated on the same terms," said Goldby. "I think it had to do with the scale of the investment."

The deal is the eighth largest clean-technology venture financing since January 1, 2011, according to Dow Jones VentureSource. It also ranks as the 24th largest venture deal in the same period.

Sapphire, founded in 2007, is currently building and preparing for operations its demonstration facility in New Mexico.

Its cost is $135 million, of which $50 million comes via a federal grant and $54.4 million in a loan from Sillion Valley Bank that's guaranteed by the Department of Energy. "The rest is from our private equity," said Tim Zenk, vice president of corporate affairs.