What makes one biofuel company different than the rest? Vinod Khosla has funded most of them, so that’s not a defining characteristic. Each claims to have a special refining process using a proprietary thermal cracking/membrane distillation/algae fermentation method. They all want to raise $300 million for a trans-continental network of 500 million gallon mega-refineries. And, oh yeah, a good number of them fall into bankruptcy. While we recognize it’s impossible to replace the international energy infrastructure off a few VC rounds, many of these companies don’t seem to share our viewpoint.

We like Coskata because they apparently agree with us. Since announcing a goal of refining cellulosic ethanol for $1 per gallon earlier this year, Coskata has been busy signing up major partners like General Motors and, we hear, Chevron, while definitely not announcing any new mega-refineries. The company’s two-step refining process gets them off the hook from becoming dependent on any single feedstock – CEO William Roe says Coskata will burn anything ranging from tires and garbage to low-water biomass to carbon monoxide. The different feedstock streams are then fed to microbial colonies living on membranes, which turn the syngas into liquid fuel.

Save for a single 40,000-gallon pilot plant set to open in 2010, Coskata has largely shied away from commercializing its refining process. Instead Roe has set out on the road to technology licensing, which saves the company from the capital risk of rising commodity and construction prices and the sales and distribution problems that have left a number of biofuel companies out in the cold. Since raising $10 million in 2006 from Khosla Ventures, Advanced Technology Ventures, and GreatPoint Ventures, Coskata hs become the biofuel company to beat. The company raised an additional $19.5 million in March, and will announce the mystery location of its pilot plant at the end of April.

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