Gates Invests In KiOR, Elevance Coming to U.S.

Bill Gates (yes, that Bill Gates), through a fund called Gates Ventures, is investing $15 million in advanced biofuels firm KiOR. Gates is not a huge cleantech investor generally (though he has backed other firms such as the young MIT spin-off Liquid Metal Battery). So it’s rather interesting that he’s decided to invest in KiOR, which is not at all an “early stage” tech firm – in fact, it is a public company.

Vinod Khosla, a tech pioneer who is much more well known as a cleantech investor with deep pockets, has committed to putting in another $85 million to KiOR in debt and stock. Khosla was instrumental in the founding of the company and has been an unusually loyal and generous benefactor.

With this $100 million infusion, KiOR says it will be able to build out its capacity-doubling project at its Columbus, Miss. facility (see Khosla, Kior Double Down).

If we go back in time a bit to the end of the second quarter, we see that KiOR had started shipping its drop-in fuels (gasoline, diesel, heating oil) made from wood. But the amount of production was behind schedule, and its cash position was delicate, to say the least. At the time, analysts suggested that the firm should bring in a corporate partner such as a refining company. But that’s not what happened.

It is clearly good news for KiOR that it has a few friends who are willing to keep dipping in to their own pockets to make sure its first facility can reach the point where it generates enough cash to fund operations – and presumably prove out that KiOR’s next commercial facility (planned for Natchez, Miss.) will be profitable.

And its only fair to note that the same analysts who suggested KiOR get an additional large investor are also very bullish on the company. So what is there to like about KiOR?

  • KiOR has significantly increased uptime at the Columbus facility
  • It has produced and shipped actual product
  • Yields are rising
  • Drop-in biofuel is considered a much more desirable product than ethanol
  • KiOR’s technology can accommodate cheap feedstocks (the expansion will use waste railroad ties)

The main negative, in fact, was the near-term need for additional capital. And even back in August – before both recent investment announcements – analysts at Credit Suisse and Raymond James had an outperform rating on KiOR’s stock.

Does all of this mean that KiOR is a guaranteed win? No, of course not. But I find it interesting how far KiOR is poised to go with the help of a few true believers.

Elevance comes to the U.S.

Elevance is another cleantech firm that is expanding its commercial operations. The company makes specialty chemical intermediates – functionalized esters and the like – for use in downstream products for personal care, coatings, lubricants and additives. Its feedstock is vegetable oil, which it processes using olefin metathesis.

The company did not have an IPO, as KiOR did, but chose instead to raise private capital. Its first plant, in Gresik, Indonesia is a large one, at 180,000 metric tons per year. Elevance says that its output there is all spoken for, and it is now proceeding with plans to build a second plant, also in Natchez, Miss. That facility is expected to come online in 2016.

 

 

 

 

 

Author: Melody Bomgardner

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