With a new CEO (almost) in place, two potential term sheets on the way for a long-sought new round of financing, and another pair of partnership deals in the works, Cambridge, MA-based biofuels company GreenFuel Technologies could be on the threshold of a major new phase of its operations.
That was the picture painted by interim CEO Bob Metcalfe, on the heels of Tuesday’s announcement that after a year-long hunt, the company had found a new chief executive who will start next month. In an interview on Tuesday after the announcement, Metcalfe, who will become chair of GreenFuel’s board, spoke about the difficulty in finding energy entrepreneurs, as well as the company’s brightening future.
GreenFuel is developing algae bioreactor systems to convert carbon dioxide emissions into renewable, clean-burning biofuels. Last June, the firm had to close its third-generation algae greenhouse in Arizona, which had produced too much algae for the system to handle properly. Around the same time, it also learned that its algae-harvesting system would cost double the planned amount. The setbacks forced the layoffs of roughly half the company’s 50-person staff and the appointment of Metcalfe, a general partner at major GreenFuel investor Polaris Venture Partners, as interim CEO.
Only “interim” almost became interminable. Metcalfe says the long CEO search—led by Polaris general partner Peter Flint, in conjunction with Hobbs and Towne, a search firm specializing in the alternative energy field—highlights the difficulty in finding executives with experience in clean energy fields who also have a startup, entrepreneurial mindset (this is something Xconomist Bill Aulet has blogged on here). “The hard part is that unlike the computer industry and the Internet industry, there aren’t a lot of two-time serial entrepreneurs around,” Metcalfe says. “Most of the qualified people have worked for British Petroleum for 25 years. They don’t really have the small-company experience which we think is important. Simon does.”
He’s referring to new CEO Simon Upfill-Brown, who will start in mid-July. Even before then, Metcalfe will be working to hopefully arrange a Series C financing round for the company. GreenFuel recently completed a $13.9 million extension of its Series B round—$5.7 million of which was debt conversion—from inside investors, including Polaris, Access Private Equity, and Draper Fisher Jurvetson. “We just did our third close on the B—that’s a 2005 B that had three closes,” Metcalfe says. “We’re still planning to do a C.”
I asked him about the timing of the new round, and in a typical fashion, he quipped: “Yesterday would be okay.” It might not be too long after that, though. Two potential deals are likely coming in July, he says. “But neither one of them is in the bag…we don’t have a term sheet yet.”
Completing that round is the last of seven steps Metcalfe laid out shortly after taking the reins at GreenFuel last summer. “We have one more to go,” he says. The Ethernet inventor seemed to relish the possibility of wrapping up the deal before Upfill-Brown arrives. “This is my crack at the C round, and then if those two prospects don’t mature as we’d like them to, then Simon will lead the next crack at the C round and I’ll help him as chairman.”
He’s also working on some key partnership deals, to follow on one we wrote about in March to build an algae-based fuel plant in Europe; that deal could be worth up to $92 million.
The new deals relate to GreenFuel’s efforts to boost the size and productivity of its algae farms, Metcalfe says. The firm is now hard at work building its second 100-square-meter algae farm in Cambridge, MA. “It should come on line in July,” says Metcalfe. He says the company is talking with two potential new partners about extending this work on an even bigger scale. “It’s with those partners that we’ll make the move to 1,000 square meters,” he says. Any operations on that scale, though, won’t be in Cambridge. “Those will be in places with more sun.”
Metcalfe says the goal is to sign the partnership agreements later this month or in July. Then, he says, “we would hope to get to 1000 square meters probably in a year,” stressing that this estimate is a “very round number.”
Getting such a deal done, especially in conjunction with lining up a new financing round, would be a great cap to his CEO stint. Still, he doesn’t sound too sad to be leaving. “I’ve learned a lot about energy. I’m not a natural choice to be the interim CEO of GreenFuel. It’s been fun being on the steep part of the learning curve.”
