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Algae Start-Up Sapphire Energy Grows $144 Million Series C

April 2, 2012

As gas prices continue to rise, oil alternatives will once again find themselves the darling of investors. The latest beneficiary from the spike in gas prices is San Diego, California’s Sapphire Energy who announced today they have closed a $144 million Series C round. The algae-based green crude oil producer has now raised over $300 million in funding.

Taking part in the Series C round are Arrowpoint Partners, agricultural conglomerate Monsanto, and other unnamed investors. The latest round will help develop the company’s commercial algae demonstration plant in Luna County, New Mexico. Some of the money raised from the previous close of the Series C round is funding continuing operations of the company.

While the $144 million Series C and $300 million in total funding are amounts that most start-ups would covet, in the biofuel industry there are several companies that have received similar amounts but have yet to take the next step into large-scale production.

The most notable of these is Amyris (AMRS :NASDAQ). Also having raised over $300 million in venture capital (about $363 million to be precise), Amyris started off with a high-flying IPO that created a stir amongst investors. But reality set in for the company as they have yet to deliver its fossil fuel substitute to the masses. Their CFO has been replaced and the days of $30 per share are a fleeting memory as their share price continues to slide under $5.

But Sapphire might be in a better position than Amirs as they have received a $50 million grant from the Department of Energy and a $54 million loan guarantee from the Department of Agriculture.

And unlike Amyris, Sapphire’s green crude oil is not dependent on food stocks and is not limited to being used as biodiesel.

While Sapphire Energy will need a lot more money to enter into commercial production and sales, the potential for success definitely seems to be in place as long as investors will fund it. 

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