Discovery of ''Q Microbe'' Shows Promise for Advancing Cellulosic Ethanol Technology

AMHERST, Mass.--(BUSINESS WIRE)--SunEthanol Inc., a biofuels technology company, announced today that it has secured funding to commercialize the Q Microbe, a unique natural bacteria capable of converting cellulose into ethanol. Series A financing for developing patent-pending cellulosic ethanol technology around the Q microbe has been provided by VeraSun Energy (NYSE: VSE), Battery Ventures, Long River Ventures and AST Capital. SunEthanol’s Q Microbe technology, licensed from the University of Massachusetts, has the potential to make the production of ethanol from cellulose economically competitive.

“We are harnessing the power of a naturally occurring microbe in order to convert various forms of biomass into fuel”

“We are harnessing the power of a naturally occurring microbe in order to convert various forms of biomass into fuel,” said SunEthanol CEO Jef Sharp. “In addition to funding the growth of the company, I am very encouraged by the synergies that result from this round of financing. It will enable us to accelerate the commercialization of our novel technology.”

SunEthanol’s Q Microbe represents true consolidated bio-processing (CBP), a technology that consolidates multiple steps into a single efficient and natural process, potentially resulting in a lower cost of production and the ability to convert various forms of biomass into ethanol. It was discovered by University of Massachusetts professor of microbiology, Dr. Susan Leschine in the soil of New England, near the Quabbin Reservoir, and is being developed for cellulosic ethanol production by Dr. Leschine and the SunEthanol lab team. Dr. Leschine serves as a senior advisor to SunEthanol. The team believes that the Q Microbe’s CBP process can be used with a wide variety of plentiful biomass feedstocks including: switchgrass, corn stover, wheat straw, sugar cane bagasse, and wood pulp. It can potentially be used in all parts of the world where biomass is plentiful.

“Commercializing cellulosic ethanol is an important component in reducing our nation’s dependence on foreign oil and decreasing greenhouse gas emissions,” said Bill Honnef, VeraSun senior vice president. “SunEthanol is developing technology which we believe has the ability to be at the forefront of commercial scale cellulosic ethanol production.”

“We have looked at a number of cellulosic ethanol technologies, and are thrilled to make this investment in a potentially game-changing technology,” said Jason Matlof, partner at Battery Ventures. “The development of a CBP solution has long been the goal of the biofuels industry, and SunEthanol has proven that their microbiological process has unique capabilities to meet the industry’s objectives. This funding will give them the support needed to increase the performance and scale of their technology as they work toward bringing it to market.”

“University of Massachusetts faculty are among the most talented researchers in the world. We work hard to engender an academic environment that helps professors convert revolutionary discoveries to solutions to real-world problems and bring them to market,” said Jack M. Wilson, president of the University of Massachusetts. “Spinning off new companies like SunEthanol is a win-win for the University and our state and nation’s economy—our professors and students are involved in basic and translational research that allows the University to foster new technologies, new companies and new jobs.”

About SunEthanol

SunEthanol is a biofuels technology company that is commercializing the Q Microbe, a proprietary cellulosic ethanol production technology. SunEthanol’s consolidated bio-processing (CBP) microbe technology is expected to consolidate multiple steps into one efficient and naturally-occurring process, potentially resulting in a lower cost of production and the ability to convert various forms of biomass into ethanol. SunEthanol's patent-pending technology was developed by Dr. Susan Leschine and her team of research scientists at UMass. The company is backed by VeraSun Energy, Battery Ventures, Long River Ventures and AST Capital. For more information visit www.sunethanol.com.

About Battery Ventures

Since 1983, Battery has been investing in technology and innovation worldwide. The firm partners with entrepreneurs and management teams across technology sectors, geographies and stages of a company’s life, from start-up and expansion financing, to growth equity and buyouts.

Battery has supported many breakthrough companies around the world, including: Airespace (acquired by Cisco), Akamai Technologies (NASDAQ: AKAM), Cbeyond (NASDAQ: CBEY), LIFFE (acquired by EuroNext), and Neoteris (acquired by Netscreen). Its current portfolio includes emerging firms such as Advent Solar, BladeLogic (NASDAQ: BLOG), Freshpoint, Lion Cells, NanoConduction and Netezza (NYSE Arca: NZ), as well as more established companies such as ITA Software, Consona Corporation, MetroPCS (NYSE: PCS) and Nova Analytics.

From offices in Boston, Silicon Valley and Israel, Battery manages nearly $3 billion in committed capital, including its current fund of $750 million. For more information, visit www.battery.com.

About Long River Ventures

Long River Ventures is an early stage venture capital firm based in central and western Massachusetts. The firm invests in a mix of seed, start-up, and more advanced early stage companies, typically with revenues under $5MM per year. Long River focuses on identifying promising opportunities and entrepreneurs in the emerging technology and life science centers of New England outside of the traditional Boston and New York metro regions. www.longriverventures.com.

About VeraSun Energy Corporation

VeraSun Energy Corporation (NYSE: VSE), headquartered in Brookings, South Dakota, is committed to be a leading producer of renewable fuel. The Company has three operating ethanol production facilities located in Aurora, SD, Fort Dodge, IA, and Charles City, IA, with three facilities under construction in Hartley, IA, Welcome, MN and Reynolds, IN. VeraSun is in the process of acquiring another three biorefineries currently under construction in Albion, NE, Bloomingburg, OH and Linden, IN. Upon completion of the new facilities and those being acquired, VeraSun will have an annual production capacity of approximately one billion gallons by the end of 2008. The Company also has plans to extract oil from dried distillers grains, a co-product of the ethanol process, for use in biodiesel production.

The Company markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85TM. VE85TM, the first-ever branded E85, is now available at more than 90 retail locations. For more information, please visit VeraSun’s Web sites at http://www.verasun.com or http://www.VE85.com.