The Department of Energy this morning announced that FloDesign Wind Turbine of Wilbraham, MA, and five other Massachusetts startups and laboratories are among the 37 companies and organizations awarded research and development grants under the department’s new Advanced Research Projects Agency-Energy (ARPA-E) program. FloDesign has tentatively been awarded $8,325,400 to advance its research on radical new designs for electricity-generating wind turbines.

The other local winners include 1366 Technologies of Lexington, MA, Agrivida of Medford, MA, FastCAP Systems of Cambridge, MA, the Massachusetts Institute of Technology, and Sun Catalytix, also of Cambridge. Massachusetts organizations won $33.3 million in all, or 22 percent of the overall funds awarded, making the Bay State the largest recipient by far of the ARPA-E funds. United Technologies Research Center of East Hartfort, CT, was awarded $2.25 million, bringing the New England total to nearly $36 million.

“I think the fact that Massachusetts organizations received over 22 percent of the money allocated by the DOE is clear testament to how fast the region’s cleantech cluster has grown, and to how much of an economic impact it will provide in the future,” says Nick d’Arbeloff, president of the New England Clean Energy Council, a Cambridge, MA-based non-profit working to boost the region’s cleantech economy. “Companies like FloDesign, 1366, Agrivida and Sun Catalytix represent the future of high technology in the Commonwealth.”

[Update 10/27/09: Massachusetts also has a plausible claim as the home to the top grant winner in the competition, Foro Energy, which will receive just over $9.1 million. As Xconomy reported last night, the Littleton, CO-based startup, which is developing a new drilling technology for tapping geothermal energy deep in the Earth, was originally launched in the Boston area and is funded by Waltham, MA-based North Bridge Venture Partners.]

FloDesign CEO Stanley Kowalski says his company learned about its award this morning in an e-mailed letter from the Energy Department.

“It will accelerate to market what is inherently a risky endeavor,” Kowalski says. “Or at least, it’s been risky in the past because of the many false starts by others. This will allow us to put the proper money into research and development, which is the most capital-intensive phase, and will hopefully help us to get out to market with a reliable turbine.”

FloDesign is building and testing wind turbines with an unusual tube-like design reminiscent of a jet engine. The company says this design allows it to capture more of the energy in wind than a conventional free-bladed wind turbine can. Though the startup has tried to remain stealthy, it has been in the spotlight almost since its beginning—it won a $200,000 grand prize in the MIT Clean Energy Prize competition in May 2008, and later scored an investment from prominent Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.

FloDesign shared a copy of its notification letter from the Energy Department, which said the company’s application was “among those of the very highest scientific and technical merit, and is part of an ARPA-E portfolio of high impact projects that have great potential to revolutionize the U.S. energy sector.” A total of $151 million was handed out to the 37 organizations on today’s list, who are all finalists in a competition launched last spring as part of a $400 million boost to Federal energy spending contained in the American Reinvestment and Recovery Act, colloquially known as the stimulus bill.

The $8.3 million awarded to FloDesign is the third-largest amount awarded today, after Foro Energy’s $9.1 million and an award to Dupont of Wilmington, DE, of $9 million.

The ARPA-E grant will make a big difference to FloDesign, Kowalski says. “It’s a sizeable investment, and I think it’s indicative of where we are and the capabilities of the team we’ve got on board,” he says. “We continue to recruit world class talent and we certainly have a radically different turbine that nobody has ever attempted to commercialize in the past. The support from ARPA-E will allow us to fund that appropriately for the R&D effort that’s approaching.”

1366 Technologies was awarded $4 million in the competition. Agrivida will get $4.6 million, FastCAP Systems will get $5.3 million, MIT will get $6.9 million, and Sun Catalytix will get $4.1 million. The full list of awardees is here; the Department of Energy said it selected the 37 winners from an initial pool of more than 3,600 concepts, from which the department requested 300 full applications. The exact amount of each award will be determined in final negotiations between the department and the winning organizations.

The 37 ARPA-E winners hail from 17 states. The department said that 43 precent are small businesses, 35 percent are educational institutions, and 19 percent are large corporations.

In a statement on the awards, Energy Secretary Stephen Chu said, “After World War II, America was the unrivaled leader in basic and applied sciences. It was this leadership that led to enormous technological advances. ARPA-E is a crucial part of the new effort by the U.S. to spur the next Industrial Revolution in clean energy technologies, creating thousands of new jobs and helping cut carbon pollution.”

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Seattle-based Principle Power, a company focused on offshore wind energy, announced today it has received a $750,000 grant from the U.S. Department of Energy to develop water power technologies. Principle Power is working with the National Renewable Energy Lab and Marine Innovation and Technology on the project, which seeks to incorporate wave energy generation into the company’s floating support structures for wind turbines.

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The Deshpande Center for Technological Innovation at MIT today announced the recipients of its Fall 2009 research grants. The funds, $600,000 in all, will go to eight teams working on early-stage projects the areas of composite materials, diagnostics, disease therapies, drug discovery, diabetes treatment, high power electronics, energy efficient displays, and sensors. Recipients include Vladimir Bulovic (flexible micro-electromechanical system arrays), Michael Cima (a drug delivery device to treat brain edema), Karen Gleason (long-lived LEDs on flexible substrates), Rohit Karnik and Jeffrey Karp (a device for separating cells), Michael Strano (a carbon nanotube based, implantable glucose sensor), Timothy Swager (an inexpensive chemical process to produce graphene), Kripa Varanasi (a device for rapid dissipation of heat from high-power electronics), and Graham Walker (new antibiotic targets).

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First Wind, the Newton, MA-based developer and operator of wind farms, nabbed $40.4 million in federal financing for a planned installation at Stetson Ridge in Maine, Mass High Tech reports. The project is one of 12 to receive a combined $500 million under the American Recovery and Reinvestment Act. Wade wrote about the challenges First Wind and other cleantech developers face last year, when the company was known as UPC Wind.

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The big news of the week was Microsoft’s sale of Razorfish to Publicis (see directly below), but there were a few other important deals in software, biotech, and energy.

—Microsoft’s online advertising subsidiary, Seattle-based Razorfish, was bought by French marketing firm Publicis for approximately $530 million, as Bob reported. The payment is expected to include cash and Publicis Groupe treasury shares. In addition, Microsoft and Publicis have entered into a five-year strategic alliance whereby Publicis clients can purchase display and search advertising from Microsoft on favorable terms. Microsoft (NASDAQ: MSFT) originally acquired Razorfish in its 2007 purchase of aQuantive.

—Bellevue, WA-based Confirma, a medical imaging software firm, has been acquired by Merge Healthcare, a Milwaukee, WI-based health IT provider, for about $22 million, as Eric reported. Merge will incorporate Confirma’s MRI software into its IT offerings for doctors.

—Vancouver, BC-based Tekmira (TSX: TKM) formed a two-year partnership with Cambridge, MA-based Alnylam Pharmaceuticals to develop new particles to deliver RNA-interference drugs to diseased cells deep in the body, as Ryan reported. Financial terms of the deal weren’t given. Alnylam is funding the research effort and has exclusive rights to new discoveries, while Tekmira can use the discoveries for some of its own RNAi treatment programs.

—Seattle-based EnerG2 won $21.3 million in federal stimulus funding from the U.S. Department of Energy to build a new manufacturing plant in Albany, OR. The University of Washington energy-storage spinout is developing nano-scale materials to make better ultracapacitors for electric and hybrid vehicles and other applications.

—A few more terms of the Microsoft-Yahoo search deal, in which Yahoo will use Bing as its search engine and will control ad sales for five years, were spelled out in a filing with the SEC. Microsoft (NASDAQ: MSFT) will pay Yahoo $50 million a year for three years to cover transition and implementation costs. It will also hire 400 Yahoo employees, plus another 150 to assist with the transition. Yahoo (NASDAQ: YHOO) can opt out of the deal if it isn’t approved within a year, or if Microsoft and Yahoo’s combined share of the search market dips below an undisclosed percentage.

—Seattle-based Oncothyreon (NASDAQ: ONTY), a developer of cancer drugs, raised $15 million by securing commitments from investors to buy new shares and warrants, as Luke reported. Last week, the company said a small group of lung cancer patients showed long-lasting responses after taking Stimuvax, the immune-boosting vaccine therapy Oncothyreon is co-developing with Germany-based Merck KGaA.

—Seattle-based WatchGuard Technologies, a network security company, acquired Toronto-based BorderWare Technologies, an e-mail and Web security firm, as Eric reported. Financial terms were not given. WatchGuard plans to use BorderWare’s technology to make its security software more comprehensive and competitive.

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Flame-thrower enthusiasts and giant dinosaur puppet-makers of the world, rejoice. The Awesome Foundation for Arts and Sciences wants to support your efforts. Starting in July, the new Cambridge, MA-based “microtrust” will be giving out one grant each month in the spirit of supporting creations that evoke “surprise and delight.” The application process is simple: explain your activity, project, or research idea in 500 words or less. Sufficiently awesome ideas will net their creator $1,000 and a month’s workspace in Beta House, the creative and technological work co-op in Cambridge’s Central Square.

But what lends an idea awesomeness? “It’s something ambitious. Outlandish. Unexpected,” says Tim Hwang, the founding member of the Awesome Foundation. The winning idea could be a computer program, an art project, a machine, or some unforeseen combination of the three. “We’re intentionally keeping it vague,” says Hwang. The foundation is reluctant to define “awesome” too rigidly, he says, for fear of restricting grantees’ creativity.

Ideas do not have to include a business model, though the Awesome Foundation is not averse to supporting a for-profit project. “We’re agnostic as to whether or not you’re going to make money off your idea,” Hwang says.

A researcher at Harvard’s Berkman Center for Internet and Society and the Web Ecology Project, Hwang came up with the idea for the Awesome Foundation while immersed in the grant application process. Applying for funding, he says, “is a really depressing thing. People get really excited about their idea, but run up against the bureaucratic nature of grants.” He hit upon the idea of creating a “microtrust” where a group of people would commit to donating a small amount of money—$100 a month. The money would be given free of any stipulations or strings. In early June, Hwang announced on his blog that he was looking for 10 people to contribute and form the first board of the Awesome Foundation.

Reed Sturtevant is one of Hwang’s “microtrustees.” When not funding awesomeness, he manages Microsoft’s Startup Labs in Cambridge. He sees his involvement with the Awesome Foundation as a way of giving back and encouraging entrepreneurial spirit. $1,000 might not seem like much, Sturtevant says, but “so many people just do amazing things for no reason. There are great creative people and ideas that just need a little spark to help them come forth.”

The application form for an Awesome Grant went online last Friday. By the end of the first day, the foundation had already received 30 prospects, Hwang says. Aside from a few joke applications (such as this one from “Mahmoud Ahmadinejad”: “I need funds to help fix an election in my country. Funds will go to paying people to vote for me, changing votes, lashing out at Western media, and getting my snazzy beard trimmed”), the ideas have run the gamut from technical to artistic. The first winner will be announced near the end of July. Hwang says the only thing the foundation asks of the winner is to show off their work at the end of their month at Beta House.

“We’re thinking of ordering a big checkbook,” Hwang said, “and some of those big scissors to do a ribbon-cutting.”

Awesome.

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Five researchers from the University of Washington and Washington State University, Vancouver, working together with Washington companies, received a total of $376,454 in state funding through Washington Technology Center, according to an announcement today.  The university researchers are working with property data solutions company Data Data in Vancouver; biomaterials firm Healionics in Redmond; pressure instrumentation manufacturer Paine Electronics in East Wenatchee; nanostructure material builder Modumetal in Seattle; and medical simulator developer Simulab, also in Seattle.

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Seattle-based Washington Technology Center announced today it has been awarded $136,000 in funding from the U.S. Department of Energy to improve thin-film silicon solar cells. The project, done in partnership with Oregon State University and the National Renewable Energy Laboratory, involves using nanotech methods to trap more light in the solar cell so as to produce more electricity. The money comes from the American Recovery and Reinvestment Act.

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SpectraWatt, a Hillsboro, OR-based maker of photovoltaic cells, received a $500,000 contract from the National Renewable Energy Laboratory yesterday.  Part of the American Recovery and Reinvestment Act, the contract is for the company to develop ways of improving solar cells without changing current manufacturing processes.  SpectraWatt was one of 13 companies to receive money from NREL, the ultimate goal being to speed up the commercialization of solar energy technologies.

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Seattle-based Modumetal, a nanomaterials startup, and the University of Washington have received a $5,000 grant from Washington Technology Center to develop an anti-corrosion polymer coating for sulfuric acid pipelines. Leslie Warren, project manager at Modumetal, and Rajendra Bordia, UW professor of materials science and engineering, are leading the effort. Modumetal was founded in 2006 and has developed a method for “growing” advanced metal materials for defense, transportation, and other applications.

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Johnson & Johnson Services, a subsidiary of global healthcare giant Johnson & Johnson, will donate $750,000 to MIT’s Deshpande Center for Technological Innovation over the next five years, the center announced today. As a new member of the center’s Corporate Program, J&J’s Corporate Office of Science and Technology will also advise projects and grantees at the center, which is dedicated to lab-bench technologies developed at MIT toward commercialization.

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1366 Technologies, the Lexington, MA-based MIT spinoff working on ways to manufacture cheaper, more efficient photovoltaic (PV) cells, said today that the Department of Energy’s Solar America Initiative has selected the company for a performance-based award worth up to $3 million. 1366 president and CEO Frank van Mierlo says the company will get the money in $100,000 chunks, assuming that it can meet specific technical milestones as it attempts to scale up its proprietary process for building PV cells from multicrystalline silicon wafers.

The focus of the Solar America Initiative, administered by the DOE’s National Renewable Energy Laboratory in Golden, CO, is to bring down the cost of electricity from solar installations until it’s competitive with electricity generated by coal-powered plants. There’s a long way to go toward that goal, mainly because it’s so expensive to process silicon wafers, and because their low efficiency at converting sunlight into electric current means it takes acres of cells to produce a usable amount of power.

“To get the SAI grant you must show demonstrable proof, in the form of a prototype or measurable results, that you can take a proof-of-concept and scale it up to a 3-megawatt production facility,” says van Mierlo. “Being in this program is a big deal—only the top 15 percent of applicants are selected.” And the $3 million could make a big difference to 1366, which started out last March with a venture pot of just $12.4 million.

While many photovoltaic startups these days are out to reinvent the basics of PV manufacturing—for example, by shifting to flexible substrate materials such as plastic ribbons, as Marlborough, MA-based Evergreen Solar is doing—1366 has a more modest, and perhaps more achievable, goal. Co-founder and chief technology officer Emanuel “Ely” Sachs (who is a professor of mechanical engineering at MIT and also founded Evergreen) says the company’s goal is to bring the efficiency of multicrystalline PV cells closer to that of monocrystalline cells, the type used in satellites and other high-end applications, which are more efficient but much more expensive to make.

“We’re doing that by addressing the two main limitations on efficiency of multicrystalline cells, which are light trapping and metallization,” Sachs Explains. “Solar panels are blue—which immediately tells you that they are reflecting blue light and not making use of it. What we are doing is building a structure to trap that light in the wafer, so it has a chance to be absorbed and produce electricity. Metallization has to do with the fingers that collect the current from the wafers. The standard way of screen-printing gives you finger 125 microns wide, but in our lab prototype we can make fingers 25 microns wide, which reduces the amount of the cell that’s shaded, immediately giving you more electricity, and also allowing you to put the lines closer together, which leads to other benefits.”

In other words, Sachs is applying some basic mechanical-engineering smarts to the problem. “We’re not trying to invent a new photovoltaic absorber material,” he says. “That’s a critical distinction because it means you can move fast.”

In fact, 1366 hopes to show within 18 months that it can churn out 6-inch-square PV cells fast enough to build a 3-megawatt solar plant, as the NREL award requires. “That forces you to automate critical parts of the process,” says van Mierlo. “You can have an innovative cell architecture and produce it in the lab with tiny cells that are 1-by-1 inch, and show that the physics works. But by the time you do a 3-megawatt plant, you have to have truly solved all the scaling problems and have a handle on the true economics. That’s what the DOE program is about.”

Ultimately, 1366 plans to build and sell a few key pieces of equipment that would be added to standard photovoltaic production lines. But it won’t get the whole $3 million from DOE unless it can show that the scale-up effort is succeeding. “There are approximately 20 to 30 payments, and we have to show NREL our technical results at each step and prove that we did what we said we would do to get the next payment,” says van Mierlo. “And we also have to match some of the public money with private money. It’s a very well-organized program with a lot of accountability. There is no free lunch. In fact, you’d wish to have a similar program for Wall Street.”

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Conrad Prebys, a San Diego real estate investor and philanthropist, is giving $10 million to the Burnham Institute for Medical Research to support Burnham’s drug discovery center. After getting a $98 million grant in September from the National Institutes of Health, Burnham’s renamed Conrad Prebys Center for Chemical Genomics has become part of the largest public drug discovery effort in the world. The NIH awarded the grant to establish the Burnham as one of four comprehensive screening centers that will be part of the NIH Molecular Libraries Probe Production Centers Network.

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In an announcement yesterday, Cambridge, MA-based biofuels startup Verenium said it had won a $7 million grant from the state of Florida to help build a next-generation cellulosic ethanol plant in Highlands County, FL. The plant will use Verenium’s specialty enzymes to turn renewable grasses grown adjacent to the plant site into as much as 36 million gallons of ethanol per year, the company said. The grant was awarded under the Florida Agriculture and Consumer Services Commission’s $25 million “Farm to Fuel” initiative.

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The Seattle-based Washington Technology Center announced it has awarded $561,797 in funding to eight projects, each comprising a collaboration between a local company and a state university. The grants, which range from $30,000 to $100,000, were awarded to Applied Precision, ATS, Boeing and Heatcon Composite Systems, Enertechnix, GeoMonkey, Greenwood Technologies, Omeros, and Theo Chocolate.

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Venture and private equity firms apparently have clamped down on much of their funding activities in San Diego, but some local firms were able to take advantage of state and federal sources of cash last week. We also saw the Food and Drug Administration give Amylin a break and Qualcomm’s top executives offer their outlook for next year.

—One significant development for San Diego’s biotech community is that the state’s stem cell agency, the California Institute for Regenerative Medicine, opened its spigot for funding business ventures. The change is important because the institute has doled out more than $614 million through 229 grants since it was created in 2005, with all but one grant going to academic scientists at non-profit universities and research centers. Last week the institute awarded six grants to life science companies, and four with operations in San Diego got a total of more than $3.3 million.

—San Diego’s Cohu, which has traditionally been one of the most cautious players in the semiconductor industry, agreed to pay $80 million in cash to buy German rival Rasco from Dover Corp. Cohu makes thermal pick-and-place test handling machines used by chipmakers to test the performance of semiconductors with wire leads. Rasco specializes in gravity-feed machines that test smaller chips used increasingly …Next Page »

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Venture funding for San Diego’s life science companies seems to have slowed to a trickle, but four local biotechs are among the first companies to get grants from California’s taxpayer-funded stem cell institute.

The 29-member governing board for the California Institute for Regenerative Medicine voted Wednesday to approve funding of more than $19.8 million for 23 grant proposals. The grants ranged from $700,000 to $1.1 million, with 17 going to fund research at academic, non-profit laboratories and six designated for California biotech companies.

The institute was established in early 2005 following the passage of a state ballot measure to provide $3 billion to fund stem cell research. California voters passed proposition 71 in 2004, after the Bush Administration dramatically curbed federal funding for stem cell research.

Since then, the institute has distributed more than $614 million in 229 grants. But until now only one of those grants went to a biotech company—a $50,000 grant for San Diego-based Novocell.

As institute president Alan Trounson said in a prepared statement Wednesday, “These awards represent the entry of the biotechnology industry into CIRM-funded initiatives to accelerate progress.”

The grants approved and the San Diego biotechs receiving them were:

—$827,072 for Novocell to advance development of “an implantable device” to capture and retain pancreatic stem cells. Novocell researchers have already implanted the device, a semi-permeable pouch, into animals and collected pancreas stem cells, which develop into mature cells that produce insulin.

—$749,520 for a joint effort by Fluidigm of South San Francisco and StemGent, a Cambridge, MA, biotech with operations in San Diego, to develop a screening technology to help stem cell researchers “reverse engineer” skin cells into stem cells. The technique would enable researchers to work with stem cells in a way that avoids ethical objections and technical barriers to using embryonic stem cells.

—$869,262 for an application by Invitrogen, now known as Life Technologies, for developing methods of modelling human neurodegenerative diseases in human embryonic stem cells. Researchers plan to focus their work on amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.

—$906,629 for Vala Sciences to develop new and improved techniques for developing mature heart cells called cardiomyocyte cells from human embryonic stem cells.

In a related move, the institute’s 29-member governing body agreed to accelerate funding for commercial entities to provide “greater financial stability” for California’s biotechnology sector, which “faces significant challenges arising from the credit crisis and economic downturn.”

The accelerated funding program enables biotechs with applications that are recommended by the institute’s scientific working group to immediately get the first payment of their grant or loan upon approval by the institute’s governing board.

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Bedford, MA-based iRobot (NASDAQ: IRBT), which makes small robots for home and military applications, announced today that it has secured six grants totaling $4.4 million under the Pentagon’s Small Business Innovative Research program. The grants, which are aimed at making iRobot’s Packbot and small unmanned ground vehicle (SUGV) robots easier to use and at developing ways to coordinate ground robots and unmanned aerial vehicles, are coming from the U.S. Army Tank Automotive Research, Development and Engineering Center, the U.S. Army Armament Research, Development and Engineering Center, the Office of Naval Research and the U.S. Army Research Office.

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Even with the upheaval in the financial markets, there was no shortage of deals and other news from the Northwest in the past week. Biotech, software, media, and renewable-energy ventures were all represented.

—Seattle-based Cocrystal Discovery raised a $10 million venture round, as Luke reported. The round was led by The Frost Group, based in Miami, FL. Cocrystal plans to develop small-molecule drugs that stop viruses from replicating, initially focusing on hepatitis C and influenza.

—It was a busy week in Microsoft land. The Redmond, WA software giant officially opened its New England research lab in Cambridge, MA (which is now up to 33 full-time researchers), as Wade reported. Microsoft also teamed up with Seattle-based Cray to market a small, inexpensive ($25K) supercomputer that runs on Windows. Oh, and it pulled those TV ads featuring Jerry Seinfeld and Bill Gates, and unveiled its “I’m a PC” ad campaign featuring celebrities and regular people who use Microsoft products.

—Luke wrote about the departure of veteran tech journalists John Cook and Todd Bishop from the Seattle P-I, and their new home at the Puget Sound Business Journal. The PSBJ is creating a new website to cover technology news in the region; the site will launch in the coming weeks.

—Gilead Sciences, which is based in Foster City, CA, but has R&D offices in Seattle, failed to win FDA approval for its inhalable antibiotic for cystic fibrosis, as Luke reported. It is a blow to Gilead, which will need to either run an additional study or do further analysis of existing data before its drug can be cleared for sale.

—The U.S. Department of Energy awarded contracts to three teams of water-power researchers in the Northwest: Oregon State University and the University of Washington ($1.25 million), Public Utility District #1 of Snohomish County based in Everett, WA ($600,000), and Pacific Energy Ventures, based in Portland, OR ($500,000). The grants will support development and testing of wave and tidal energy technologies.

—The Seattle startup community has seen some interesting comings and goings. While Italian startup-design firm H-Farm has opened an office in town, and is one of the backers of social-shopping site Wishpot, two other startups have recently left town for San Francisco: DocVerse, which makes collaborative-document software, and Chatterous, a “multi-channel communication” service.

—Investors from Voyager Capital, Cascadia Capital, and McKinsey & Co. advised caution in the face of the Wall Street market meltdown. Alternative energy and cleantech may get hit hardest, they said, but with belts tightening, all companies big and small should think twice before trying to raise money.

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As part of a strategy to accelerate development of its biomass-to-ethanol technology, Cambridge, MA-based Mascoma appears to be sparking a little competition between state governments anxious to host the facilities that will bring the technology to market first.

On Friday, Michigan Governor Jennifer Granholm announced an agreement between Mascoma, the Michigan Economic Development Corporation, forestry and mining company JM Longyear, and two state universities that will bring a major Mascoma ethanol plant to Chippewa County in Michigan’s Upper Peninsula. Under “Center of Energy Excellence” legislation passed by the Michigan legislature last week, Mascoma will get a $15 million grant for the facility, as well as help finding a site from the state’s Department of Natural Resources.

The plant is expected to be the first commercial-scale facility using Mascoma’s technology, which is based on the fermenting of sugars from non-food biomass such as wood chips. But the company is already working with the University of Tennessee to build what it calls a “large-scale demonstration facility” in Monroe County, TN, using $26 million in grant money from the U.S. Department of Energy’s Oak Ridge National Laboratory, and with the state of New York to build a “pre-commercial scale” plant in Rome, NY, using $14.8 million in state funds and $1.25 million in tax breaks.

In each location, officials have boasted that their affiliation with Mascoma would help make their states into national leaders in cellullosic ethanol technology. Michigan is “in a race” to become the first state producing cellulosic ethanol from wood in high volume, Granholm told Detroit Free Press reporter Tom Walsh last week.

And wherever Mascoma goes, CEO Bruce Jamerson is quick to praise local leaders for their dedication to clean energy technologies. A few samples of Jamerson’s public statements:

•    “The leadership of the University of Tennessee and its trustees have demonstrated tremendous dedication and zeal towards the advancement of biofuel technology….We look forward to working with our new colleagues as we progress through the stages that will ultimately lead to the production and distribution of a commercial product in Tennessee.” — Tennessee Journalist, October 4, 2007

•    “Cellulosic ethanol will become a commercial reality and the work done at this new facility will dramatically expedite the process. We are excited about the support from New York, and commend New York’s leadership in advancing the cellulosic ethanol market.” — Mascoma press release published by Reuters, December 10, 2007

•    “Working with the state of Michigan, two of its leading universities, and JM Longyear on this significant project brings us closer to commercial scale production of biofuels that can promote energy independence, reduce greenhouse gas emissions, and stimulate regional economic development.” — news release from the office of Governor Jennifer Granholm, June 27, 2008

•    “Michigan, for us, is becoming one of the power alleys.”—Detroit Free Press, June 27, 2008

At a time when venture investment are harder to come by and fewer companies are making it to the IPO stage, it certainly pays to find creative ways to fund a technology company’s growth. Mascoma competitors SunEthanol and Range Fuels, for example, both receive money from the Department of Energy. But Mascoma executives seem particularly skilled at persuading government agencies to offer grants for biofuels facilities that promise to bring jobs and cheaper energy to their regions. Overall, state and federal government agencies have committed more than $115 million in grants to Mascoma—meaning that the company’s growth is being funded by taxpayers as much as by private investors, who have put approximately $100 million into the company.

It’s easy to see why Michigan, with the highest unemployment rate in the nation, would be eager to court growing companies like Mascoma. The $250 million Chippewa County plant, which will go into full operation by late 2010 or early 2011, is expected to create between 400 and 600 jobs in manufacturing, the timber industry, and transportation. And a wood-to-ethanol plant is a natural fit for a region like Michigan’s Upper Peninsula, which has huge amounts of low-quality scrub timber ripe for chipping. (JM Longyear, based in Marquette, MI, owns 65,000 acres of forest in the UP.)

“There are great synergies in Michigan for Mascoma, not only in the ready supply of wood fiber across northern Michigan, but also great research institutions with a long-time focus on this science and our 21st Century Jobs Fund that is tied to bringing job-creating alternative energy ventures to Michigan,” said James Epolito, president and CEO of the Michigan Economic Development Corporation, in a statement issued by Granholm’s office.

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