GreenFuel Runs Out of Fuel, Shuts Down; Algae-to-Biofuel Technology for Sale
[Updated 7:30 p.m., 5/13/09, with input from former GreenFuel interim CEO Bob Metcalfe, see below.] Cambridge, MA-based GreenFuel Technologies, which struggled for eight years to commercialize an industrial-scale process for growing algae that could be turned into biofuels or food, is closing down for lack of financing and selling off its technologies. Greentech Media broke the story earlier today.
Duncan McIntyre, an associate at Waltham, MA-based Polaris Venture Partners, which participated in several venture rounds that raised more than $70 million for GreenFuel, told Greentech that the company could not raise the funds needed to build planned test facilities in Spain. “We are closing doors. We are a victim of the economy,” McIntyre told the publication.
Xconomy is seeking comment on the reported closure from GreenFuel CEO Simon Upfill-Brown. But Bob Metcalfe, a Polaris partner who was GreenFuel’s interim CEO prior to Upfill-Brown’s hiring and is its current board chairman, confirmed the shutdown in an e-mail message. “Simon Upfill-Brown and Holly Flesh [the company’s vice president of business operations] are now working to sell GreenFuel’s technologies,” he wrote. “You could help by sending potential buyers their way.”
GreenFuel’s ride was a bumpy one. The company built its first field bioreactor, using specially bred strains of algae to capture carbon dioxide emissions and rapidly convert them into biomass through photosynthesis, at MIT in 2004. In 2005 the company hired energy industry veteran Cary Bullock as CEO to lead efforts to scale up the process. But in 2007, the company had to shut down its third-generation bioreactor facility in Arizona after the plant produced more algae than the company’s equipment could handle. At the same time, the company learned that its algae harvesting system would cost twice as much as expected. Some 25 employees, about half the company’s staff, were laid off as a result of the plant shutdown.
Metcalfe relieved Bullock as CEO after the setback, and spent the next year coordinating cost-cutting efforts, raising cash, restarting the Arizona bioreactor, rounding up strategic partners, and recruiting new leadership.
Things seemed to be looking up for the company by mid-2008. In March of that year the company signed a deal with Spanish cement maker Aurantia that was expected to bring up to $92 million to the company. (Cement plants are a huge source of carbon dioxide.) New CEO Upfill-Brown joined in July, and the company obtained additional Series B funding and began work on a fourth-generation algae bioreactor in Cambridge. By October, GreenFuel had finished the first phase of its work at the Aurantia plant, a 100-square-meter prototype greenhouse and harvesting operation. A 1,000-square-meter facility was to be ready by 2010, and the company was beginning to collect some of the funds promised by Aurantia.
But the startup was hit hard by the economic crisis and by the decline in petroleum prices from their 2008 peaks, which took much of the bloom off the biofuels rose. Upfill-Brown was not able to raise a Series C investment round on the timetable that he and Metcalfe had originally projected. In January, the company laid off 19 people—again, just under half of its staff—and decided to outsource the design and engineering work on the Aurantia project.
“We’ve got to weather this economic storm as best we can…” Upfill-Brown told Bob at the time. But he said he was optimistic about the company’s direction: “We pretty much feel GreenFuel is ahead [of other biofuels companies]…We’re going to keep plugging away, stay ahead.”
Apparently, the company could no longer keep its head above water. Which could become an increasingly familiar story as biofuel startups—none of which have come close to producing ethanol or other fuels at prices comparable to those of fossil-based fuels—burn through their cash and look to empty-handed investors for additional capital rounds.