Send Email

By Jennifer Kho

Targeted Growth said Thursday it has raised $22.3 million in private-equity funding for a technology that can boost yields of biofuel crops by about 20 percent.

Investors included Capricorn Management, AllianceBernstein, GrowthWorks Canadian Fund, Integra Ventures, WRF Capital, and Investment Saskatchewan. The round, Targeted Growth’s fifth, brings its total funding to $39.7 million.

Ethanol and biodiesel industries are limited by the supply of farm crops, so technology to increase the amount that farmers can grow per acre could play an important role in growing those industries. According to the U.S. Energy Information Administration, 20 percent of the land in Europe and the United States would be needed to grow crops to replace 5 percent of transportation fuel with biofuel.

Rising corn and soybean prices, as well as an Earth Policy Institute study finding ethanol will require twice the corn as previously expected in 2008 (see Ethanol=Soaring Corn Prices?), has raised pressure for the industry to solve the “food vs. fuel” problem.

Tom Todaro, CEO of Targeted Growth, said the company can modify the gene that controls plants’ growth to increase yields of the corn, soy, and canola used to make ethanol and biodiesel.

“If we want to help reduce stress on the competition between food vs. fuel, the best mid-term solution is just to make more of it [crops],” he said. “If you increase yields by 20 percent, you reduce the pesticides, herbicides, and fertilizers by 20 percent—which is very good for the environment—and you also relieve some of the pressure on food vs. fuel.”

Cells have a natural signal that tells them when to stop or slow their dividing process, he explained. Targeted Growth is able to change the signal, encouraging the cell to keep dividing longer, he said.

The Seattle-based company, founded in 1998, has spent seven years and “tens of millions of dollars” developing the technology, he said.

He added that Targeted Growth can also modify the plants to get them to yield more starch, more protein, or whatever is needed to make them ideal for specific applications, including food.

“This is a wonderful example of how technology can be applied to solving our energy crisis in innovative ways, and if the technology delivers as promised looks to be a very smart investment,” said John Balbach, a managing partner at the Cleantech Venture Network. “There is another facet to consider; namely the larger policy debate regarding the increasing use of food as fuel, an issue which we believe will grow in importance over the course of the next two years.”

But not everyone approves of genetically modified crops, particularly for crops used for food.

“We’re trying to convert the world’s farmland to organic for food, and if crops are going to be used for fuel, people won’t care how they are farmed,” said Rona Fried, editor of Progressive Investor, a green investing newsletter, in May (see Biofuel Firm Altra Gets $50M). “Basic crops like corn, soy, and rapeseed will be genetically modified and will invade organic crops used for food.”

Mr. Todaro said Targeted Growth is the “friendly version” of genetic modification because the company modifies a gene that already exists in the plants, and isn’t introducing any foreign DNA. The company is also aggressively working on a way to make these high-yield seeds without genetic modification, he said.

Anyway, more than 80 percent of corn and soybean plants are already genetically modified, he said. “We believe we can demonstrate why this is an incredibly safe and benign technology and is enormously socially advantageous,” he said.

Targeted Growth says it’s testing its plants in demonstration and regulatory trials in 10 locations in North American and another half dozen in South America.

The company expects to commercialize the plants in four to six years. Mr. Todaro said he doesn’t yet know how much the plants will cost.

Targeted Growth also has plans further into the future. It’s developing a crop specifically for biodiesel production—canolina, an even oilier relative of canola that’s not generally eaten as food—and also is working on crops could help break down their own cellulose and lignin so ethanol manufacturers will be able to turn currently unusable plant parts into more ethanol.