NextCAT Continues To Push Forward With The Help of Uncle Sam

7/1/11Follow @xconomy

The biofuels industry is still a difficult business to crack, but fortunately for startups like Detroit-based NextCAT, the government continues to believe in the technology.

NextCAT Founder Charles Salley tells Xconomy that the company will likely win a $500,000 National Science Foundation (NSF) grant this month. The Wayne State University spinout, based at the TechTown Research Park, is developing new ways to cheaply and efficiently convert a wide range of oil feedstocks into biodiesel fuel.

The company has already received $600,000 from groups like the NSF, Michigan Microloan Fund, and New Economy Initiative’s First Step Fund.

Conspicuously missing from this list are venture capitalists. Fundraising has been a tough slog for NextCAT—so tough that the company can’t afford a CEO, which is why it lists Salley as the interim top executive.

“We hoped to move a little bit faster,” Salley says. “But we have money in the bank. We are not in a panic to raise money in the short term.”

And in a big boost to the company, NextCAT just signed a joint development agreement with a major biodiesel processing equipment maker, which Salley declined to name. But the company will hopefully install NextCAT’s technology at one of its plants, which will go a long way to validating the startup. If all goes well, NextCAT’s partner just might be its first customer, Salley says.

NextCAT also boasts another powerful ally: Uncle Sam. Last year, the Environmental Protection Agency released Renewable Fuel Standards II, which requires the country to use a billion gallons of biomass-based diesel in 2012.

Biofuels continues to receive strong support on Capitol Hill. On Thursday, Sens. Jeff Merkley (D-Oregon), Tom Carper (D-Delaware), and Michael Bennett (D-Colorado) introduced legislation that they say will help break America’s dependence on foreign oil by providing tax breaks—including an investment tax credit—to develop alternative energy sources like biofuels.

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