Solazyme, Founded on ‘Delusional’ Idea of Algae Biofuel, Stakes Claim as Industry’s First Mover

7/27/10Follow @xconomy

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this idea of algae that essentially pumps out oil inside those giant, dark fermenters. It has continued to work on molecular biology of making algae strains that are ideal for pumping out various kinds of oil—for diesel fuel, to soap, to cosmetics. It has hired people with different backgrounds in chemical engineering, and agricultural oil extraction processes, who have experience running large-scale industrial processes. It has raised a reported $75 million in venture capital, although Wolfson says it’s now more than that, without providing a specific figure. Solazyme was awarded a $21.8 million Department of Energy grant last December to build out a large-scale fermentation plant in Pennsylvania for algae biofuel production. Last week, the company delivered 1,500 gallons of algae-derived jet fuel to the Navy for testing and certification. That’s not much in terms of quantity, but if Solazyme can pass these early tests, it could impress a huge future customer. The Navy has a goal of getting half its fleet running on renewable fuel by 2020.

Solazyme certainly has its critics. The company has to buy biomass as feedstock, adding an important cost to its production process, instead of relying on the free wattage from the sun to grow its algae. Wolfson dismisses this point, saying that the sun isn’t really free, because of all the production steps that need to be carried out to nurture algae in open ponds.

It’s possible that algae biofuel rivals that rely on the sun will succeed, Wolfson says, but it will probably be further out in the future. He’s staking his claim that the industrial fermentation route is the one that will grab the early lead.

“This is going to sound arrogant,” Wolfson says. “But I think we’ve made more fuel in the last couple months than all our competitors, put together, have ever made.” If Solazyme can truly go from making large test batches like it makes today, to make large quantities for commercial sale in 2012 or 2013, then it should have a big advantage over all those who follow. And even if the others follow fast, the market for fuel is so big that there’s room for many companies, Wolfson says.

If everything goes according to plan, when might Solazyme turn profitable, and then start making real money? Wolfson didn’t offer a firm answer to that question. Even though he’s now pushing 40, his answer to that retains all the can-do optimism of a teenage entrepreneur, with a lot more caveats that come with experience.

“Our mission is not about telling people we’re going to do something, it’s about actually making money,” Wolfson says. “It’s about making a difference in the world also, but it’s about making money and making an enormous return for our investors while doing something we all think is important.”

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