Noubar Afeyan, managing partner and CEO of Flagship Ventures, was in Washington D.C. yesterday, to pick up an honor on behalf of portfolio company LS9. It’s called the Presidential Green Chemistry Challenge Award, and LS9 won the “small business” category for its technology to produce hydrocarbon-based biofuels and chemicals.
I spent a few minutes on the phone with Afeyan, just after the ceremony wrapped up:
peHUB: What, from a business prespective, did this award mean to LS9?
Afeyan: Well, the award is recognizing substanstial innovation in making a greener version of chemicals and fuels. From a business standpoint, that’s precisely what LS9 has enabled — allowing our partners to use sugar as the starting raw materials for fuels rather than petroleum.
It’s called the Presidential Green Chemistry Challenge Award. Was the President himself there?
No, but there are a lot of Administration people around. EPA Administrator Lisa Jackson presided over the ceremony and signed the award plaque. Obama’s chief scientific advisor, John Holdren, was here and read a message from the President.
One stumbling block for VC-backed biofuel companies has been obtaining enough project finance to build production facilities. How is LS9 handling that aspect of the business?
This is a multi-step process, and we’re very engaged in forging partnerships. We have one with Procter & Gamble, and on the fuel side have a smaller one with Chevron. These sorts of arrangements lower the barriers to funding… almost a catalytic approach to funding.
We’ve obviously had discussions with banks, but partnerships are our primary approach. This award also should help get us in front of large strategics, particularly when you consider that the other winners this year included Dow Chemical and BASF.
Have you learned any lessons from the VC-backed biofuel companies that have come (and gone) before you?
I wouldn’t so much say lessons, so much as that we approached this deal with the view that capital would be a scarce resource… Nothing we’ve seen so far makes us think that we were wrong in that assessment. Time will tell if our strategy of pursuing partnerships over large funding rounds is the right way to approach things. It’s worked for us on biotech investments, and do think it will work here.
LS9 has raised over $40 million in VC funding from Flagship Ventures, Chevron Technology Ventures, Khosla Ventures and Lightspeed Venture Partners. Go here to listen to a podcast conversation about its award.