Mascoma, a cellulosic ethanol maker, has been working on gaining capital investment from just about every funding source out there. But now it looks like the attempts to go public and raise $100 million have been pulled off the market.

Gigaom's Katie Fehrenbacher had been puzzled that a company with weak financials – including 86 percent of its revenue coming from government grants – filed to launch an initial public offering. That happened about a year and a half ago but the effort never made it to the stock market.

The other 14 percent of Mascoma's revenue came from selling its next-generation yeast to corn ethanol makers to cut their costs. Mascoma has wanted to go in a different direction – producing next-generation cellulosic ethanol from plant waste and not corn, with the waste coming from wood waste in a Michigan factory.

The company said it was "market conditions" that made it withdraw the public offering.

The Mascoma stock market launch was waiting in the wings until this month, when the company quietly withdrew its IPO plan. The company said it was "market conditions" that made it withdraw the public offering, even though, as Fehrenbacher writes, macro IPO conditions seem a little bit better this year than in 2012.

Another confusing pre-IPO action was Mascoma raising a few million dollars in debt during two rounds over the past six months. That didn't make a lot of sense for a company preparing to go public. Government grants have taken a bigger slice of the pie since the initial filing a year and a half ago. Its latest revenue numbers, from a year ago, said that government grants and awards made 93 percent of its revenue – up seven percent since its initial filing six months earlier.

Mascoma was founded in 2005 by Dartmouth professor Lee Rybeck Lynd. Since that time, company management has secured government funds and at least over $100 million from private capital firms and corporations including Khosla Ventures, SunOpta, GM and Marathon Oil (General Motors took an equity stake in Mascoma in 2008). The US Department of Energy awarded it $80 million, though its not clear if all the funds came through. The state of Michigan offered the company a $20-million grant to build its factory in Michigan.

Advanced biofuels has been a very tough business to break into, and other companies have failed in taking cellulosic ethanol to scale.


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    • 1 Second Ago
  • 12 Comments
      Marco Polo
      • 10 Hours Ago
      Not every alternate energy technology is destined for commercial success. Ethanol production is just one of those technologies. The level of government "grants" instead of loans is disturbing, as is the wisdom of GM's 100 million dollars investment. But in the final analysis, these are not very large sums, (unless you're some poor vet in an underfunded hospital). Lot's of once potentially brilliant technologies prove in time to be just blind alley's ! Just like Zeppelins, corn-based ethanol (and variants) has had it's day, and should be abandoned for better, more practical technologies. Certainly, the US government should waste no more taxpayer funding, and terminate the mandated use of ethanol.
        Electron
        • 10 Hours Ago
        @Marco Polo
        ....ah, the perennial voice of big oil on this forum. Never fails to support the oil industry in its war on ethanol on every single occasion the topic of ethanol comes up on this blog.
          Marcopolo
          • 10 Hours Ago
          @Electron
          @ Electron Ah, the man of many aliases ! Curiously, you never seem to comment when I campaign for the abolition of Bunker oil (an oil product) and you were strangely silent when I documented Total Oil (and it's shareholder the Government of France) when the overthrew the government of Libya when Libya threatened to sell to the PRC. Nor did I hear a peep out of you, when I wrote about the potential environmental disaster looming with Lukoil, Gazprom, CNOOC, Sinopec. exploration and exploitation of the arctic circle. I wonder why ? Or is your hatred only against US oil interests ? Or is the only justification you can find for wasting taxpayer money on a dead end technology like ethanol, is that it isn't oil ? Actually, Ethanol helps eke out remaining oil reserves ! So it actually helps to delay the introduction of EV technology by delaying the effects of oil depletion ! You really don't think these things through do you?
      Rotation
      • 10 Hours Ago
      Grammar point: Companies don't "raise debt". Companies "raise capital" (or "raise cash") or more commonly "issue debt". Taking on debt isn't a positive thing in and of itself, so few like to speak so directly of raising their debt level. Good catch on this, gigaom. Although it is unstated, it's very likely that the reason for this IPO was simply that the company is running out of money. Many companies have gone public for this reason even though it is a terrible reason to go public. You just hope that you can get out the door without people taking notice of it.
      raktmn
      • 10 Hours Ago
      Anti-ethanol hacks keep saying ethanol is to blame for corn prices. Ethanol production is slated to go up again this year, yet the price of corn is crashing downwards so fast that the only thing keeping it from crashing farther are the CME trading limits. "Corn falls to 9-month low on U.S. stockpiles, fund selling" http://www.reuters.com/article/2013/04/01/markets-grains-idUSL3N0CO13720130401 So when the price of corn was going up, all usual suspects pointed their fingers at ethanol to take the blame. Now that corn prices are going down, will the usual suspects now say it is ethanol that should take the credit for lower prices? Whatever.
      Roy_H
      • 10 Hours Ago
      Although this approach to sustainable energy looks attractive, the energy going in is usually about equal to the energy out. A lot of work for little gain. I cannot understand the governments opposition to LFTRs. Liquid Flouride Thorium Reactors could power the world for 10s of thousands of years with cheap (as in free) plentiful thorium, no long term radioactive waste, and inherently safe. Only China is pursuing this technology which was pioneered at Oakridge National Laboratories in the late 1960s where Alan Wienberg proved all the fundamentals viable. See: http://flibe-energy.com/attributes/
        Marco Polo
        • 10 Hours Ago
        @Roy_H
        @ Roy_H An excellent point, Roy. Prejudice against LFTRs is based on irrational misunderstanding of the technology. The power produced would hasten acceptance of EV technology, and reduce dependence on fossil fuels.
      2 wheeled menace
      • 10 Hours Ago
      Another solyndra for the right wing folks to point at and say 'see, green energy is BAD and a waste of money'. Merry Christmas.
        throwback
        • 10 Hours Ago
        @2 wheeled menace
        Or to say why, "why do we keep giving money to companies with no viable business plan?" It's telling that the only sorcue of revenue for this company is government grants.
          Ford Future
          • 10 Hours Ago
          @throwback
          "There must be a demonstrable benefit from the investment." - so this qualifies.
          2 wheeled menace
          • 10 Hours Ago
          @throwback
          There must be a demonstrable benefit from the investment. That is what needs to be measured.
          Rotation
          • 10 Hours Ago
          @throwback
          The only source of revenue for SpaceX is government grants too. Perhaps there has to be more to determining a company's merit than just whether it gets all of its money from the government.