November 13, 2006 5:35 PM PST

Microbe maker raises $30 million in funding

Dartmouth start-up Mascoma has raised $30 million in a second round of funding that could help the company break out of the experimental stage.

The company is genetically engineering microbes that can break down waste products like wood chips and leaves and turn them into ethanol through fermentation.

Although ethanol produces fewer tailpipe emissions than regular gas, it's not an ideal fuel. Currently, ethanol is made out of crops like corn, which could also be sold as food, and it takes a considerable amount of water and energy to grow these crops and subsequently turn them into car fuel.

A number of scientists and start-ups are trying to solve the problem by developing ethanol from crops with very little independent value and then using single-celled animals, rather than expensive industrial machinery, to process it.

Dyadic, for instance, has genetically enhanced a fungus, called C1, that it says can break down other materials cheaply. Diversa, a San Diego company that tries to commercially exploit microbes from harsh environments (it found a valuable microbe in a Siberian cow pie once), said in July it was moving into biofuels.

The company's primary organism is Thermoanaerobacterium saccharolyticum, which can break down plant material in a warm environment.

Others, meanwhile, are concentrating on genetically engineering plants dense in cellulose that will produce more ethanol per acre than existing crops.

Mascoma has assembled an engineering team and built a lab for demonstrating its technology, but has yet to move into commercial production. The company was founded by Lee Lynd, an engineering professor at Dartmouth, and Charles Wyman, who now teaches at the University of California at Riverside.

Investors in the second round included General Catalyst Partners and Kleiner, Perkins, Caufield and Byers.

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