Coskata secures equity financing

By Bryan Sims | January 03, 2009
Web exclusive posted Dec. 12, 2008 at 10:15 a.m. CST

Warrenville, Ill.-based cellulosic ethanol developer Coskata Inc. has secured a Series C round of equity financing led by New York-based Blackstone Cleantech Venture Partners LP.

In addition to Blackstone, new investors include Sumitomo and Arancia. Several of Coskata's earlier Series A and Series B investors also participated in the Series C round, including Khosla Ventures, Advanced Technology Ventures, Globespan Capital Partners and TriplePoint Capital. General Motors Corp., which previously has provided Coskata with funding, did not participate in this latest round of financing. The valuation and terms of the financing round were not disclosed.

Specifically, the company intends to use the funds to complete construction of its 40,000-gallon-per-year demonstration facility in Madison, Pa., which is expected to be operational in early 2009, according to Wes Bolsen, chief marketing officer and vice president of business development for Coskata. In addition, Coskata has also initiated engineering and design work on the company's first full-scale 50 MMgy to 100 MMgy commercial cellulosic ethanol plant, which will be financed through a combination of strategic partnerships and low-interest guaranteed government grants. The company hasn't selected a location yet, but Bolsen said Coskata intends to make an announcement sometime early next year.

"This money is truly moving Coskata into commercialization," Bolsen said, noting that a possible Series D financing round is likely, but no specifics have been mapped out. "Money is still moving towards good technology and Coskata is very fortunate to have raised a significant round of funds in probably one of the most difficult financial markets in more than a generation."

In November, Coskata entered into an agreement with Clewiston, Fla.-based United States Sugar Corp., the nation's largest produce of cane sugar, to explore building a 100 MMgy cellulosic ethanol plant in Clewiston that would convert approximately 1 million tons of sugarcane waste and bagasse into ethanol using Coskata's proprietary conversion technology.

In addition to commercial plans in Florida, Bolsen said the company has had multiple discussions regarding potential partnerships with pulp and paper mills and steel mills, both domestically and globally. In October, Coskata announced it's exploring the cellulosic ethanol market in China.

In early March, Coskata received $19.5 million of Series B equity financing both from initial and new investors.

"The flexibility of the Coskata technology is what allows all of these partnerships to begin and flourish," Bolsen said. "We want to build, own and operate facilities to generate revenue too, but if we did just that it would be too difficult to impact the biofuels market."