Los Angeles-based alternative-energy company Altra Inc. raised more than $120 million from private investors in its latest financing round -- a sign that major venture capital firms have not been scared off by growing talk that too much money may be chasing too few sustainable ideas in the search to replace gasoline.
The new funding, which Altra could announce as early as today, brings its total to more than $250 million from some of the nation's top venture capital firms. And it took less than six months to line up the cash.
Using investments from the likes of Kleiner Perkins Caufield & Byers, Sage Capital Partners and Khosla Ventures, Altra is building a nationwide network of ethanol and biodiesel plants that will ultimately produce 500 million gallons a year of the fuel.
At that level of production, the 2-year-old venture would capture a sizable portion of the U.S. ethanol market for vehicles and other uses, which today is about 5 billion gallons. Gasoline usage, by comparison, is 140 billion to 150 billion gallons a year.
The surge in such funding for biofuels, wind energy and solar development reflects an unusual combination of factors that could, for the first time, create a sustainable market for petroleum alternatives that have languished for decades, analysts and industry insiders say.
They point to concerns about reliable access to foreign crude, sustained high prices for oil and natural gas, worries about global warming from the burning of such fossil fuels and the growing movement toward government mandates for the use of renewable energy.
For Altra and competitors, it has been a heady time.
Fresno-based Pacific Ethanol Inc., whose publicly traded shares have soared along with other alternative-energy issues, plans to open its first plant this year in Madera County.
U.S. Renewables Group of Los Angeles raised $100 million from Rustic Canyon Partners, as well as "high-net-worth family trusts in Los Angeles," Chief Operating Officer Lee Bailey said. The company hopes to raise $250 million to $300 million in a current funding round.
Venture capital experts say clean technology, particularly in energy, has become the fastest-growing sector in the private funding business. Recently, it surpassed semiconductors as the nation's fifth-largest sector for venture capital, after biotech, software, medical and telecommunications, said Craig Cuddeback, senior vice president of Cleantech Capital Group in Ann Arbor, Mich., which tracks venture funding.
