Bionavitas Pursues Algae Dream in Food Additives, Toxic Cleanup—Then Maybe Biofuel

5/18/09Follow @xconomy

When most entrepreneurs think of algae, they think of its potential to churn out renewable biofuels. But Bionavitas wants you to think first about dietary supplements. It also has its sights set on cleaning up toxic byproducts from polluters.

There are fascinating scientific and economic reasons why the Redmond, WA-based company has crafted this strategy. I got to hear the overview from CEO Michael Weaver, and get a little tour of his facility a few weeks ago.

Algae has long captivated the imagination of scientists looking for a cheap source of renewable fuel, because the fast-dividing microorganisms don’t depend on a growing season like soybeans, and can pump out far higher yields of biofuel per acre. It can be grown even more efficiently inside closed bioreactors with artificial light, but at a massive scale, for a product that can only retail for $2.50 a gallon, Weaver points out, “the capital costs will kill you.”

So Bionavitas has turned its attention first to making algae indoors to pump out a product called axtaxanthin—an antioxidant food additive that makes farmed salmon look pink. This product is many times more valuable per kilogram than biofuel, and it doesn’t need to be made in enormous vats to turn a profit. Suddenly, it’s feasible for a small company like Bionavitas to grow algae in a controlled indoor environment, and spend the money on electricity to give it the artificial light it needs to grow.

“What we’ve done is develop the light technology, it’s the key to our future,” Weaver says. “It may have something to do with biofuels. It may have a lot more to do with other markets in the short term.”

Bionavitas showed its algae-growing technology in public for the first time in February. Its secret sauce is what it calls “light immersion technology,” which it says will help algae get more of the sunlight it needs to put ordinary photosynthesis on steroids.

Most existing processes depend on growing the green stuff in outdoor ponds, with ample natural sunlight, like in the southern California desert. One of the big limitations with this approach is that ponds get bogged down when algae start growing too dense, creating a “self-shading” problem. The algae on the surface blocks light to algae lower down in the water, meaning it can only grow in a 3-5 centimeter layer in the water.

bionavitas-lit-rods2The Bionavitas technology uses cheap acrylic-like rods (pictured to the right) that float in the water, and channel sunlight into the deeper depths below. It can be used to better immerse the algae with light vertically, through internal reflection—the same physical property that helps channel light to travel efficiently along a fiber-optic cable. These rods are engineered to allow just enough light to leak out horizontally through the sides to allow algae to grow efficiently in one full meter of water depth. The company says it can squeeze another 10-to-12 fold boost in yields over standard algae production techniques.

Bionavitas, founded in 2006, has just six employees at the moment. It has gotten its early funding from angel investors, including Weaver himself, a successful IT entrepreneur with Applied Discovery, and Craig Watjen, a prominent investor and the former treasurer from the early days of Microsoft. Watjen, who made money in Weaver’s previous company, introduced him to people from one of his portfolio companies, Bellevue, WA-based Light Sciences Oncology. They are the experts in making light waves do all sorts of nifty things—in their case, activating drugs to fight cancer.

Even with its light immersion technology, there are many other enabling technologies that need to be made in parallel to bring about commercially feasible algae, Weaver says. One technology might be genetically modified strains of algae that are more efficient, he says. But the multiple layers of technology needed means that algae-produced biofuel on a commercial scale is at least five to six years away from reality, Weaver says.

For the business, that means Weaver would need to raise a lot of venture capital to keep the doors open during that product development cycle, which certainly wouldn’t be easy. Enter dietary supplements thought to have health benefits (nutraceuticals), and toxic cleanup (or bioremediation).

What makes nutraceuticals attractive is their high price, and low production volumes, Weaver says. Axtaxanthin sells for about $15,000 per kilogram, Weaver says. It is in strong demand as an antioxidant dietary supplement, and for giving farmed salmon its pink color. Because of the high price, it can justify the more expensive controlled growing conditions of an indoor bioreactor. That means Bionavitas doesn’t have to worry about competing algae species elbowing aside its preferred strain to make axtaxanthin, and there’s also no bird poop to worry about, like in an open pond.

The bioreactor can be housed in Redmond, with artificial light running 24 hours a day, because electricity is cheap here. His company ought to have an edge with its light immersion technology, because competitors currently use large fluorescent lamps that light up entire rooms and lose a lot of energy to heat, making them less efficient, Weaver says.

Weaver showed me how this works. Bionavitas has figured out a way to get the most out of the electricity. It uses only red and blue light—the parts of the visible light spectrum that algae can best respond to—and its bioreactor is set up to flash light every 1/24th of a second, instead of continuously, because algae only need the flickering light for photosynthesis. That greatly reduces the electric bill.

Bionavitas is currently trying to raise money—Weaver wouldn’t disclose how much—to build up a pilot-scale manufacturing facility to put this process to the test in larger quantities.

The second potential application, bioremediation, is a market Bionavitas sees potentially opening up if legislation passes to establish a carbon cap-and-trade market, giving big polluters more incentive to seek ways to reduce their emissions, Weaver says. That’s because algae facilities can be set up near toxic runoffs from mining companies, chemical companies, and major agribusinesses. These operations throw off toxic concentrations of selenium, nitrogen, and phosphorus, which algae can mitigate, Weaver says. An algae production site would have to be set up on-site next to one of these plants through a partnership, Weaver says.

The bioremediation market will be much bigger than the nutraceutical applications, but exactly how big will depend on how the market for carbon offsets materializes, Weaver says. Politics at the state and federal level are key to launching the business—the day after our interview, Weaver traveled to Olympia to brief a House committee on the opportunities with algae.

Also in the weeks since I did the original interview, one of the leaders in the algae biofuel industry, Cambridge, MA-based GreenFuel, closed down. Weaver didn’t predict his competitor’s demise during our interview, but he clearly must have seen some writing on the wall for algae biofuels. He pushed hard on the theme of his company’s diversification.

“If biofuels never comes to fruition using light technology, it will not destroy our company. It would not have an effect, other than we’d be losing one potential marketplace,” Weaver says. “If it does come to pass, we’ll just have a much larger marketplace to license our technology to.”

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