Japanese Giant Mitsui Leads $60M Investment In A Startup That Turns Pollution Into Pure Money

Posted: Mar 26 2014, 2:53am CDT | by , Updated: Mar 26 2014, 2:57am CDT, in Technology News


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Japanese Giant Mitsui Leads $60M Investment In A Startup That Turns Pollution Into Pure Money

As places like China and India continue to grow, an ever-increasing supply of billowing smoke stacks mark these countries’ landscapes. 7 million people died in 2012 from air pollution. LanzaTech wants to clean up those industries by turning all that pollution into extremely valuable fuels and chemicals.

And LanzaTech has just raised $60 million Series D round with Mitsui, one of the largest industrial conglomerates in Japan, in the lead at $20 million to help build the company further. Other new investors in this round include the venture capital arm of Siemens' and the private equity fund for financial services giant China International Capital Corporation (CICC). Existing investors Khosla Ventures, Qiming Venture Partners, K1W1 and the Malaysian Life Sciences Capital Fund also contributed.

Ranked at #48 on our 2013 “America’s Most Promising Companies” list, Illinois-based LanzaTech makes low-carbon fuels and chemicals from the nasty pollution coming out of steels mills, oil refineries, chemical manufacturers and the like. Specifically, LanzaTech uses a type of bacteria discovered in the intestinal tract of rabbits to convert carbon monoxide into fuels, such as ethanol or jet fuel, and chemicals, such as butadiene for nylon production and propylene for plastic.

It’s not cheap working on such large-scale industrial projects and like a lot of cleantech, things have been slow going for the company. Originally founded in 2005 in New Zealand, LanzaTech has since moved its headquarters to the US and has raised $150 million in venture capital so far in addition to this extra $60 million. It has a prototype in New Zealand that is able to pull out 16,000 gallons of ethanol a year.

It was until 2012 that LanzaTech scored its first commercial operation with Baosteel, one of China’s largest steel manufacturers. Baosteel is fully funding the LanzaTech’s inclusion in new steel plants and is expected to be in operation in 2015.

The company has around about five other projects in the pipeline, LanzaTech CEO Dr. Jennifer Holmgren said, though she couldn’t go into any further detail.

“ Our business model has production facilities fully funded by our business partners,” Dr. Holmgren told me in a phone call from New Zealand. “So we have the luxury of using this new capital to build the technology and products, not making facilities.”

Finding interest first in China or other Asian countries follows a strategy seen in quite a few other US-based cleantech startups. There’s a greater willingness in Asia to invest in and partner with cleantech companies.

“In places like China and India, it’s survival-driven,” said Andrew Chung, a partner at Khosla Ventures and also a board member at LanzaTech. “You have a lot of corporate and governmental interest in doing whatever it takes to solve national problems.”

Finding partners and investment in Asian countries is a part of a strategy Chung is actively pursuing with all of Khosla’s portfolio companies.

“I lead our activities in China,” said Chung. “I’ve been spending a lot of time figuring out how all these companies’ technologies could make sense for China, India, Korea or Singapore.”

Just earlier this month, another Khosla-backed venture EcoMotors set up a $200 million joint manufacturing partnership in China to build its efficient motors.

“These countries all need to reduce carbon emissions–especially places like China and India,” LanzaTech’s Holmgren said. ”Here’s an opportunity to invest and get something back to sell. That’s the interesting thing. But it’s not just an environmental solution, it’s an economic solution.”

Source: Forbes

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