University of Washington, Allied Minds Team Up to Launch Biofuel Company, AXI
I first heard of a Seattle startup called Voltan Biofuel two months ago, when I talked to Jim Roberts, head of business development at UW Tech Transfer’s LaunchPad, a program to promote university spinoffs. Voltan was a LaunchPad company that won $5,000 for “best cleantech idea” in UW’s 2008 CIE Business Plan competition. Yesterday the company announced its official launch under a new name, AXI, with seed funding from Allied Minds, an investment firm based in Quincy, MA.
The terms of the deal were not disclosed, but Allied Minds typically invests a few hundred thousand dollars in each of its companies. As we’ve written about previously, Allied’s strategy is to fund very early-stage technology startups fresh out of academic labs—which VCs often avoid because such ventures are unproven. “What ends at the university is still too early for most investors,” says Roberts. “[Allied] fills a void there for us.”
I caught up with Roberts to hear more about the deal. More than a year ago, Roberts says, he first visited the lab of UW biology professor Rose Ann Cattolico. She was experimenting with new strains of algae that can produce large amounts of oil for biofuels. Not by genetic modification, but rather by using natural evolutionary processes that could potentially be scaled up to large operations. Given the skyrocketing interest in alternative fuels, Roberts immediately grasped the opportunity. “As soon as I saw it, I knew,” he says.
Through LaunchPad, Cattolico partnered with two UW M.B.A.s, Eric Gertsman and Carrie Stearns, and together they entered the business-plan competition. Although they didn’t win the grand prize, they placed well and learned a lot. Having filed a patent for the technology and formed the team, both through the university, the next step was to get an investor interested.
It turns out Allied Minds has a vice president based in Seattle. Erick Rabins has been involved with the local innovation community for years as an entrepreneur and now an investor. Roberts knew him, so he introduced Rabins to Cattolico. It proved a good fit. With Roberts negotiating the terms of the technology license and other parts of the agreement, the deal was done quickly. It’s the first between UW and Allied Minds, but probably not the last. “We hope to do business with them again,” says Roberts.
Roberts says AXI will be based in Washington and will grow oil-producing algae, though its exact business model is still to be determined. “Once we do the deal, we step out of the way,” he says. “But we’ll keep in touch, we’re very interested in how it’s doing… We’re very, very confident. The technology is very, very promising.”
Still, AXI will have plenty of competition in the algae-biofuel space, what with the likes of South San Francisco-based Solazyme, Cambridge, MA-based Greenfuel Technologies, and Naples, FL-based Algenol Biofuels, to name a few. But to Roberts, this is a good thing, as well as a challenge. “There’s real demand and real need,” he says. “The market is definitely there.”