A biodiesel start-up headed by a former Microsoft Corp. executive announced it has closed $113 million in equity financing and a $101 million line of credit, one of the biggest investments in the rapidly growing "clean-technology" sector.
The announcement was made today by Imperium Renewables Inc. of Seattle, whose chairman and chief executive officer is Martin Tobias. Mr. Tobias served in various operational capacities for Microsoft before leaving in 1997 to become an investor in technology and alternative energy companies.
A biodiesel plant owned by Chevron and a unit of Standard Renewable is expanding.
The deal comes amid accelerating venture-capital investment in companies focusing on alternative energy or other clean-tech products amid uncertainties about oil supplies and public concern about climate change. One of the most active areas is biodiesel fuel, which is made from natural substances such as vegetable oil and designed to be used in diesel engines.
In 2006, North American venture investment in clean tech nearly doubled to $2.9 billion from $1.6 billion in 2005, according to estimates by the Cleantech Venture Network, an industry group in Brighton, Mich. In all, about $8 billion has been plowed into the sector since 2002, according to the group, which is hosting a forum on the subject in San Francisco this week.
"The biggest thing is, investors realize they can make money at it and do good at the same time," said Craig Cuddeback, chief operating officer of the Cleantech Group, which runs the venture network.
Technology companies have seen their share of booms and busts. Clean-tech investments also could implode -- especially if oil prices were to plummet and take away some of the financial incentives of switching to alternative energy.
So far, the momentum is continuing. Another start-up, Houston's Standard Renewable Energy, said it is negotiating for equity financing of about $100 million and $125 million in debt, on top of $35 million in hedge-fund financing and private investments it has secured already.
Although Standard Renewable also makes biodiesel, the company's business plan is to provide whatever form of renewable-energy services a customer might want.
"We're saying there is no silver bullet in terms of one renewable energy source," said John Berger, Standard Renewable's chairman and chief executive officer, who cofounded the start-up last year.
Much of the money raised by Standard Renewable and Imperium is going toward expanding production capacity. As in many parts of the clean-tech sector, large sums of money are needed to build the infrastructure for making biodiesel fuel.
In Standard Renewable's case, Mr. Berger said the company's investment would help expand capacity at its existing plant to 110 million gallons a year from the current 20 million gallons, while building two new plants to make another 390 million gallons. The company operates the biodiesel plant in Galveston, Texas, through a joint venture with oil giant Chevron Corp.
Imperium officials say their manufacturing capacity will jump by 100 million gallons of biodiesel from five million gallons once the company completes a refinery in Washington state by July.
Company executives say they plan to use proceeds from their latest financing to build three more biodiesel plants elsewhere in the world that would be capable of making another 400 million gallons a year by the end of 2008.
Imperium was founded in 2003 and is focused for now on supplying biodiesel to West Coast markets.
Imperium's CEO, Mr. Tobias, said the clean-tech industry will face increasing challenges in the years to come. One issue, he said, is going to be trying to maintain a comfortable profit margin while investing enough to keep up with growth.
He also predicted, as in any boom, some companies will have a harder time than others.
"You will have a lot of novices bumbling around," Mr. Tobias said, "and they will make a lot of mistakes."
Write to Jim Carlton at jim.carlton@wsj.comWall Street Journal
