Methane producer raises $100m VC funding(3)

GreatPoint Energy is backed by venture firms like Kleiner Perkins and Draper Fisher Jurvetson, but the company brought in institutional investors for its third round of fundraising.

GreatPoint Energy has raised $100 million in Series C fundraising in support of its catalytic gasification technology, which transforms coal into methane. Citi Sustainable Development Investments, Dow Chemical, AES and Suncore Energy joined GreatPoint's existing venture capital investors for the latest round.

Its prior two rounds of fundraising raised a total of $37 million from venture firms such as Kleiner Perkins Caufield & Byers, Khosla Ventures, Draper Fisher Jurvetson and Advanced Technology Ventures. GreatPoint decided to bring in strategic investors this time in order to tap their gasification expertise as the company moves into the demonstration and commercial stages, said the company's chief financial officer Dan Goldman.

The Cambridge, Massachusetts company's gasification process takes low cost feed stocks such as coal or petroleum coke and converts it to methane, which is used for heating, cooking and electricity. GreatPoint plans to use the new capital to support a large scale demonstration project. The company then expects to go to market in 2011 or 2012.

Other companies such as General Electirc and Conoco Phillips use similar processes. But their methods usually require four steps, whereas GreatPoint's method is carried out in a single step, Goldman said. GreatPoint's technology also has an edge over conventional gasification methods because its end product can be transported by pipeline and need not be used on site.

GreatPoint's technology is important, Goldman said, because the US has 250 years' reserves of coal but is already a net importer of natural gas.

“We're going down the same road with natural gas that we went down with oil in the 1970s,” Goldman said. “We have to import from unstable places in the world, dependency is going up and security is being jeopardised.”