Friday, May 09, 2014

LanzaTech Feels the Love

It is good to be loved.  Carbon capture developer LanzaTech has sixty million reasons to feel special.  In March 2014, LanzaTech raised  $60 million in a Series D financing round that was sold privately to a group of strategic investors.  Mitsui & Co. led the round with $20 million.  Siemen’s venture capital arm and CICC Capital Fund also participated as new investors.  Khosla Ventures reportedly did not participate in this round but has been an investor in previous rounds.

The financing bodes well for LanzaTech and proves the rest of us small fry investors some insight into what might be happening behind the closed doors of this private company.  Existing investor have been known to put more money into even failing companies in a last ditch effort to save their skins.  Indeed, Khosla Ventures may not have been able to participate in this round for LanzaTech because it had to ante an additional $25 million into KiOR (KIOR:  Nasdaq) in order to keep the doors open on KiOR’s wood-to-fuel plant.

LanzaTech is trying to use waste gases and residues to produce fuel and chemicals.  The company has come up with a proprietary set of microorganisms to help with fermentation of carbon monoxide found in waste gas generated by industrial processes.  It can work on gases produces when wood or agricultural wastes are gasified.  The company has also developed a system for recovery of the fuel and chemical molecules from the fermentation mix.

The company has managed to line up a few strategic partners.  Most recently Evonik Industries agreed to lend a hand with development of bio-processed precursors for specialty plastics from gas synthesize from waste.  The waste gases might come from municipal waste or agricultural wastes. 

It is a smart move as on the road to renewable fuels, many developers have found the economics of bio-chemicals are much more supportive than the economics of transport or power generation fuels.  As a well known specialty chemical producer with established access to customers, Evonik presents a particularly strong partner.

It makes sense to add LanzaTech to the list of private companies that could very well stage a public offering.  It stands to reason that the venture capital firms that have been footing the bill for development will eventually want realize gains on their investment. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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