Ethanol producer Mascoma Corporation raised $61 million in a third round of funding that included a $10 million equity investment from Marathon Oil Corporation (NYSE: MRO). The two companies said the funding demonstrates Marathon’s commitment to collaboration on the development, adoption and deployment of next generation ethanol production.
Marathon’s investment will go towards the funding of research and development activities at Mascoma, as well as the construction of operating facilities. As part of this new investment, Cliff Cook, Senior Vice President of Supply, Distribution and Planning at Marathon, has joined the Mascoma Board of Directors.
With the completion of this round of financing, Mascoma has raised approximately $100 million in equity investment. Mascoma has also received commitments for over $100 million in state and federal grants, including the recent awarding of a $26 million grant from the U.S. Department of Energy.
Marathon is the fourth largest United States-based integrated oil and gas company and the nation’s fifth largest refiner. The company is a leading ethanol blender, and by mid-2008, Marathon will have the capacity to blend ethanol at the E-10 level throughout its entire distribution system, the company said. Marathon also holds an equity interest in two Midwest ethanol manufacturing plants with a combined capacity of 220 million gross gallons per year.
Based in Boston, Mascoma is using proprietary microorganisms developed at the company’s laboratories in Lebanon, NH, and is collaborating with research partners globally to identify, patent and deploy a new generation of microbes and low-cost processes for developing advanced biochemistry technologies to produce ethanol and other biofuels, as well as high-value products beyond ethanol, including the transformation of biomass into valuable green chemicals and chemical intermediaries. All of Mascoma’s processes use non-food, renewable feedstocks.
In addition to Marathon, General Motors Corporation and several other investors participated in the third round of financing, joining the company’s existing investors who include Khosla Ventures, Flagship Ventures, Atlas Venture, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Pinnacle Ventures and Vantage Point Venture Partners. Pinnacle Ventures also provided a $20 million debt facility to Mascoma.
Mascoma’s single-step cellulose-to-ethanol method, called Consolidated Bioprocessing, or CBP, is designed to lower costs by limiting additives and enzymes used in other biochemical processes. Mascoma has a nationally recognized research effort focused on CBP and is currently testing its CBP technology with the expectation of beginning ethanol production later this year at its demonstration plant under construction in Rome, NY. Mascoma also is pursuing opportunities in the states of Tennessee and Michigan.
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