February 28, 2008 6:47 AM PST

Cellulosic ethanol upstart Mascoma fills coffers

Posted by Martin LaMonica

Mascoma, which makes ethanol from wood chips and agricultural wastes, has raised an additional $50 million, according to a published report.

PEHub, citing a regulatory filing, reported Thursday that the Cambridge, Mass.-based company took in $30 million in equity and $20 million in debt.

The financing was led by General Catalyst Partners, and included existing investors Khosla Ventures, Atlas Venture, Flagship Ventures, Kleiner Perkins, Pinnacle Ventures, and VantagePoint Venture Partners.

Spun off from Dartmouth College, Mascoma is among the wave of new companies trying to convert biomass, other than corn, into the liquid fuel ethanol. Its technology uses special enzymes to break down cellulose into sugar before fermentation. Its goal is to condense that two-step conversion into one.

Like many clean-tech start-ups, Mascoma is moving from technology development to commercialization, which is very capital-intensive. It has broken ground on demonstration plants that should be operating later this year.

To get out of the labs and move toward profitability, many new energy and fuel companies need to raise a substantial amounts of money, on the order of $50 million or more, to demonstrate that their products can be made economically.

Mascoma has already raised $40 million in venture funding and gotten state grants from Michigan, New York, and Tennessee.