By Jim Kinney
Qteros and the “Q microbe” discovered byUMass researchers and valued for its ability to digest plant waste into ethanol fuel is making a comeback.
Qteros was formed to develop the “Q microbe” discovered by University of Massachusetts Amherst microbiologist Susan B. Leschine and her team in soil of the Quabbin Reservoir.
Qteros, once known as Sun Ethanol, raised $52 million in start-up money including investments from Soros Fund Management LLC, Valero Energy Corp. and BP. But the money dried up early in 2012. In September, creditors auctioned Qteros’ pilot production facility in Chicopee. The equipment was broken up and removed.
“It broke my heart because I built that plant,” said Stephan Rogers of Amherst, an official with old Qteros and the CEO of the new company that has purchased the technology and name from the creditors of the old company. “I believe this technology is sound and they simply had a financing problem,” he said.
Rogers’ group also has the license from UMass to use the Q microbe, said William S. Rosenberg, executive director of the UMass Commercial Ventures and Intellectual Property office. He wouldn’t talk specifics for this deal, but UMass typically retains 4 percent to 10 percent ownership in startups licensing technology developed at the university.
“Rogers got the Qteros technology at basically a fire sale,” Rosenberg said. “We’d already taken our license to the microbe back. Now he has a clean slate. I think the technology was good. It just needed a little more work.”
Rogers said he wants to raise $3 million to $5 million to get new Qteros off the ground.
“That may well get us to revenue,” he said. “We have the benefit of five years of research on a very strong technology. It’s technology that had we not stepped in, would have been lost.”
Some strains of the Q microbe developed by Qteros died when a freezer broke, he said.
But the new Qteros will have a less capital-intensive business model focused on developing both the strains of Q microbe and the equipment needed to produce them and have them make ethanol. The new Qteros will then license that technology to customers instead of building its own plants.
Potential customers include sugarcane ethanol operations both in the South and overseas, and paper mills where the microbes could feed on wood pulp without impacting papermaking, Rogers said.
He aid the new company will need a lab and a staff of about 12. Where that lab will be located depends on who financially backs the enterprise.
Leschine said Thursday that she was disappointed that the old Qteros went away and is hopeful in the new enterprise.
“This is the way these investors work. They back way more companies than the expect to succeed and then pull out when things don’t go well,” she said. “I think what no one realized in the beginning is just how hard this technology can be,. It seems simple. But it is complicated.”
She likes that Rogers now wants to develop partnerships for Qteros.
“I think it would be extremely difficult for one company to go all the way alone,” she said.
She’ll be scientific advisory board of the new company.
Rosenberg admitted that technology startups are likely to fail. But he said creating a new company is often the only way to bring a technology to market.
“We are charged with creating a benefit to society,” he said. “We have to get innovation out there to the world.”