GreenFuel Powers Through First Steps of Recovery Plan; Algae Thriving

1/28/08Follow @bbuderi

GreenFuel Technologies “completed, and in cases blew away” the first five steps of its seven-part recovery plan, interim CEO Bob Metcalfe reports. After successfully raising revenues while simultaneously lowering expenses, the Cambridge, MA-based renewable energy firm has pushed the end date for its so-called interim period, by which it needs to complete a new round of funding, “from December to March to now June,” Metcalfe reports. The two remaining, uncompleted steps are finding a permanent chief executive to replace Metcalfe and scale the company’s growth, and closing that new, Series C, financing round.

GreenFuel develops algae bioreactor systems that convert carbon dioxide emissions into renewable, clean-burning biofuels. As we reported at the end of June, just days after Xconomy’s launch, the company had been forced to shut down its third-generation algae greenhouse in Arizona, which had produced too much algae to handle properly. GreenFuel had also learned that its algae-harvesting system would cost twice as much as anticipated. The setbacks led to the layoffs of roughly half the company’s 50-person staff and the appointment of Metcalfe, the Ethernet inventor and Polaris Venture Partners general partner, as interim CEO. (Polaris and Draper Fisher Jurvetson are leading GreenFuel investors).

A few days after our initial report, we published a letter from Metcalfe, apparently aimed chiefly at investors and GreenFuel employees, outlining his plan for recovery. Its seven steps were:

— conserve cash and cut expenses
— raise interim cash in the next 30 days
— scale back, then restart, the firm’s third-generation algae greenhouse in Arizona and complete a long-planned algae growth demonstration there
— “accelerate the scale up of our fourth-generation algae greenhouse technology, now in early operation at a 550-megawatt coal power plant in ‘Asia.’ An engineering scale greenhouse must be completed at our Arizona facility by October.”
— “develop a project plan for a commercial scale algae greenhouse and sign by November at least one letter of intent with a compelling partner.” (Metcalfe disclosed at the time that GreenFuel was already talking with partners about projects ranging between $10M and $30M)
— hire a new CEO
— close GreenFuel’s next, expansion round of financing

Under that plan, the CEO was supposed to have been successfully recruited by November and the financing closed by year’s end. The success with the other five parts of the plan seems to have allowed some breathing room on those two fronts.

“We continue our search for a scaling CEO (to replace me) and due diligence toward the close of our C round of finance,” Metcalfe wrote Friday in an e-mailed update. “Our algae farming systems are increasing production, particularly in Cambridge, where our Winter days are growing longer and the Sun higher in the sky.”

More news should come soon, Metcalfe says.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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  • http://algae-thermodynamics.blogspot.com/2007/03/how-can-one-not-like-greenfuel.html Krassen Dimitrov

    Your implication here is that Step#4 has also been completed or “blown away”… (“develop a project plan for a commercial scale algae greenhouse and sign by November at least one letter of intent with a compelling partner.” (Metcalfe disclosed at the time that GreenFuel was already talking with partners about projects ranging between $10M and $30M)
    It will be fascinating to learn the identity of this “partner” willing to spend $10-30M on a commercial scale algae greenhouse…

  • Bob Metcalfe

    Thanks to Bob Buderi for asking about GreenFuel and for publishing some of my informal update comments. Our team enjoys the attention. Or do we?

    It is not surprising that our only Xconomy reader comment so far comes from Krassen Dimitrov, who has made a career of vigilantly enforcing the laws of thermodynamics, of which he frequently calls GreenFuel a wanton violator.

    Dmitrov does this with his old, too-easy-to-find-on-the-web paper that inaccurately mocks algae farming techniques that GreenFuel has over the years progressed far beyond in three subsequent generations. Alas, Dimitrov is clearly not rooting for us and seems deliberately to misunderstand everything said about what GreenFuel is doing.

    If left wondering why, why Dmitrov would now “be fascinated to learn the identity of our partners,” maybe it’s because … he fails to disclose he is a disgruntled former employee of another start-up backed by GreenFuel’s chairman, he has it in for her, he hates venture capitalists in general, and he complains about a lot of other things that have nothing to do with the laws of thermodynamics applied to algae farming. GreenFuel is in some very good company on Dimitrov’s enemies list.

    Anyway, contrary to Dimitrov’s comments, I never said and Buderi never wrote that GreenFuel has already reached commercial scale in algae farming. We have not. When we do, Buderi and Dimitrov will be invited to the ribbon cutting.

    /Bob Metcalfe, Interim CEO, GreenFuel, and General Partner, Polaris Venture Partners

  • http://algae-thermodynamics.blogspot.com/2007/03/how-can-one-not-like-greenfuel.html Krassen Dimitrov

    I see… Apart from all the personal stuff, it looks like Dr. Metcalfe is saying that the first sentence in the article above (“GreenFuel Technologies “completed, and in cases blew away” the first five steps of its seven-part recovery plan, interim CEO Bob Metcalfe reports) is incorrect, as step 4 is also pending…

    There are two possible explanations for this. Either the partners that were already misled – De Beers, Energetix, EBT – are the only ones who believe that the laws of thermodynamics are no longer valid, or that their misfortune has alerted others to be more careful when dealing with GreenFuel…

    As for the personal attacks, it is doubtful people are interested in this stuff; as I have always maintained, neither my modest personality, nor Dr. Metcalfe’s massive credentials can change the laws of nature.
    Briefly:
    I have not “failed” to disclose that I have had previous dealings with Jennifer Fonstad, however, it is true that I could have been more specific and detailed. It is puzzling that Dr. Metcalfe would be bringing up this point, though… When all the details and facts are laid out about NanoString – a company of which I am the Founder and the sole inventor of its technology – it will become even more evident that Mrs Fonstad is a scientific illiterate who makes investment and management decisions by disregarding scientific reality. How is this going to help Greenfuel, if people see that it was not a single isolated mistake, but rather a well-established pattern? Nevertheless, a lot more disclosure will be coming on my blog to satisfy Mr. Metcalfe and the others who have requested it…

    The point that I “hate venture capitalists in general” is completely ridiculous. What a silly concept! Hating a group of people for the actions of a few is a vicious fallacy, which I strongly detest. Venture Capital plays a very important role in the economy… Metcalfe’s notion is equivalent to saying that I hate catholic priests in general, only because I hate the ones who molest children…

    Dr. Metcalfe is neglecting to say here that before my article became “too-easy-to-find-on-the-web” (putting aside the massive irony in having Bob Metcalfe of all people complain about the ease-of-access to information that the Internet offers) I sent a copy of it to Mrs Fonstad and later on to Dr. Metcalfe himself, with a brief e-mail that reads: “Dear Dr. Metcalfe,
    I have been for years an avid reader and a big fan of your visions. It
    is my view that you may have been misled with respect to the
    potential of GreenFuel Technologies”
    How is that “hate”?

    Currently I have another report ready on a company that also promises to violate the laws of physics, and I have given their investors, too, plenty of time to consider it. Now, if these people are not willing to correct their actions in a discrete environment, but rather continue to mislead the public, there is not much I can do but make my analysis as widely available as possible. Anyone interested would have to just dust-off their high school physics texts, take out their calculators and see who is right and who is wrong. All the personal stuff may be titillating, however, not that interesting at the end…

  • http://algae-thermodynamics.blogspot.com/2007/03/how-can-one-not-like-greenfuel.html Krassen Dimitrov

    It is actually Step #5 that is in question – it was spelled out in the first comment, but incorrectly numbered by me…

  • http://algae-thermodynamics.blogspot.com/2008/02/greenfuel-sunflower-and-thermodynamics.html Krassen Dimitrov

    In case anyone still cares, here’s an update on one of these GreenFuel Technologies “partners”

    http://algae-thermodynamics.blogspot.com/2008/02/greenfuel-sunflower-and-thermodynamics.html

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