Newport Beach-based Earthanol Inc. has raised $7.1 million in a first-round funding that will be used to develop plans for a waste-to-energy plant.
The company plans to build its first plant in the Central Valley, using waste from local cheese makers to create ethanol, the clean-burning fuel hailed by environmentalists.
Costa Mesa-based Sail Venture Partners LP led the funding. Others included Nth Power of San Francisco, @Ventures of Wilmington, Mass., and Calvert Social Investment Fund of Bethesda, Md.
The company plans to use technology used in Ireland and Brazil, Chief Executive Larry Folks said.
“We’re not inventors or technology creators, so we’ll use third-party technologies for license or purchase,” Folks said. “What we really are are developers.”
The plant would take hundreds of thousands of gallons of waste from cheese plants, distill it and create ethanol. Right now, the waste is just being dumped, Folks said.
One big cheese maker, Hilmar Cheese Co. near Turlock, found a heap of trouble dumping its waste into nearby farmland, according to published reports.
“That’s where the whole idea came from,” Folks said. “The cheese companies have a waste stream. There’s an application of proven technology that can convert that stream of whey permeate into ethanol. It’s simply a fermentation process.”
Other plants are planned in big cheese-producing regions in Oregon and Wisconsin.
Folks said the technology he plans to employ would remove the waste, create little by product and be more affordable than corn, which is most often cited as a source for ethanol fuel.
David Jones, managing partner at Sail Venture Partners, said they were introduced to the concept in 2004, but wanted some more expertise on the company’s side.
“We were intrigued by the potential economics of the technology,” he said.
After Folks and another executive with some energy knowledge were added, Sail took another look.
The venture group is headed by Walter Schindler, an Ivy League-educated lawyer turned venture capitalist intent on helping alternative energy startups. Since launching a venture fund in 1999, Schindler has invested in Irvine-based Oryxe Energy International Inc., a maker of a diesel fuel additive used to cut down on emissions.
Sail provided Earthanol $500,000 in seed capital in 2005 and began 10 months of due diligence work with the other funding partners. Nth Power is a well-regarded venture fund for developing alternative fuels.
“We’re tremendously gratified that they’re joining the syndicate,” Jones said.
Earthanol will spend the next year or so completing development plans and then take a second round of funding to begin construction, Folks said.
