Khosla Ventures Backs HCL CleanTech to Develop Cellulose-to-Sugar Technology

HCL CleanTech, an Israel-based company that says it's found a new way to apply old technology to convert cellulose to sugars for biofuel production, has gotten a nod of approval from noted green technology backer Khosla Ventures and other investors.

Khosla and Burrill & Co. joined in the Series A round with HCL's previous seed investor Zohar Gilon, a managing partner of Israeli VC firm Tamar Ventures, and the company's founders, the company reported Monday.

While HCL did not disclose the size of the investment, Israel-based business news website Globes [online] put the amount at $5.5 million.

HCL says it has found a cost-effective way to apply a technology to use concentrated hydrochloric acid to convert cellulosic materials like wood waste into sugars. From there, converting sugars to biofuel is a well-known process.

HCL said it will use the Series A funding to continue research in Israel and to build a U.S. pilot plant next year. The company was founded in December 2007 by Israeli industrial chemical scientists Avraham Baniel and Ari Eyal.

Khosla Ventures' list of  biofuel investments includes cellulosic ethanol makers Mascoma, Range Fuels, Coskata and Lanza, as well as so-called "future fuels" technology developers Amyris, LS9, Gevo and KiOR. (Khosla also backed corn-to-ethanol company Cilion, but doesn't talk about it much nowadays).

The Khosla-backed cellulosic ethanol startups have different angles for making cellulose into biofuel, with varying degrees of success (see Mascoma Starts Up Cellulosic Ethanol Demo Plant and Verenium Plans Cellulosic Ethanol Plant in Florida). Many engage in what's essentially a two-step process - turning cellulose into sugar, and taking that sugar and making it into biofuel.

HCL's approach - concentrating on turning cellulose into sugar – is part of what analysts see as a growing trend of companies choosing to specialize in separate parts of that process (see The Anticipated Market for Feedstock Sugars Takes Root).

Whether or not Khosla Ventures founder Vinod Khosla will be vindicated in his often-stated belief that biofuels are more practical than today's electric vehicle technologies as a solution to the transportation fuel problem remains to be seen (see Khosla Calls Plug-In Cars 'Toys').

A recent report from researchers at UC Merced suggested that it's better to turn biomass into electricity to power electric transportation than to use it as a biofuel feedstock (see Research: Bioelectricity is Better Than Biofuel).

Biofuel makers also may have to contend with state and federal mandates on measuring the carbon footprint of their operations, not just in terms of processing and burning the fuel but also in the impacts that changing land use patterns to grow crops for biofuel production may have on the environment (see Feds Propose Controversial Biofuel Mandate, Offer $800M to Boost Production).