Virent Generates Venture Funds for Sugar to Hydrogen Process

Jun. 12--A Madison company that makes hydrogen from sugar has raised $7.5 million in its latest round of venture funding, attracting investment from the venture capital arms of Cargill and Honda.

The infusion of capital will help Virent expand its Madison office and hire more people, said Eric Apfelbach, chief executive.

Virent, founded in 2002, is looking to commercialize a chemical process that converts sugar into hydrogen. Its first system, sold to Madison Gas & Electric Co., produces a hydrogen-gas mixture to fuel an internal combustion engine that produces electricity.

"The investments from Cargill Ventures and Honda Strategic Ventures give Virent's technology tremendous global leverage in the emerging biofuels and hydrogen markets," Apfelbach said.

The $7.5 million round of financing followed $1.6 million in venture capital raised by Virent last year. Venture Investors, based in Madison, and Advantage Capital Partners participated in both rounds of venture funding.

The company was founded by Randy Cortright and Jim Dumesic from the University of Wisconsin-Madison. They developed the sugar-to-hydrogen chemical conversion process known as aqueous phase reforming. The company has won $4.5 million in grants from the federal Department of Energy and the National Institute of Standards and Technology.

Apfelbach said Cargill was interested "in taking what we're doing and looking at how it integrates with some of their other biofuels work."

Paul Bieganski, managing director and chief technical officer of Cargill Ventures in Minneapolis, said he likes the fact that Virent's process is compatible with today's energy technology, including internal combustion engines, yet can "fit in very well" should the nation shift over the long term to a hydrogen-based energy economy.

"The other thing is that they don't require a whole new energy supply chain or energy infrastructure to be developed," he said.

Bieganski said the MG&E system helped show the company's technology is proven.

"It actually runs a very standard internal combustion engine, which is very interesting and appealing," he said. "The other thing is that the technology is very simple, safe and reliable."

Virent envisions its hydrogen production system as applicable for a variety of end markets, in part because it carries low equipment costs and converts the hydrogen directly at low temperatures.

Potential applications include distributed power systems, fuel stations, centralized fuel production or, in the long term, vehicles.

Honda, meanwhile, is interested in exploring how Virent's technology could be used to supply renewable hydrogen for fuel cells, Apfelbach said.

Virent employs about 20 people today in about 6,500 square feet of space.

The financing will be used to make more demonstration systems of Apfelbach technology, as well as expand Virent's facility to 18,000 square feet to accommodate a larger chemistry lab and research space. Employment is projected to grow to about 30 by the end of next year.

The company is preparing to develop a demonstration system by early next year. That system would either show how the technology can be used to make hydrogen, or be similar to the MG&E system, using the process to power an engine that makes electricity.

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Source: Milwaukee Journal Sentinel