Home » England’s sustainable fuels technology firm Velocys goes private; bags €37M growth capital | Silicon Canals

England’s sustainable fuels technology firm Velocys goes private; bags €37M growth capital | Silicon Canals

Oxford-based Velocys, a sustainable aviation fuel technology company, announced on Tuesday, February 6, that it has begun a new chapter following the completion of its “take-private transaction” on 18 January 2024. 

As part of the transaction, a new consortium of growth investors, including Carbon Direct Capital, Lightrock, GenZero, and Kibo Investments, has invested in Velocys with $40M (approximately €37M) of growth capital. 

The company will use the funds to speed up the delivery of its technology to customer projects, enhance its technology leadership, scale its production, and expand the team’s expertise.

Henrik Wareborn will continue to lead Velocys’ management team as the Chief Executive Officer.

Henrik Wareborn, Chief Executive Officer of Velocys, says, “The deal secures the future of Velocys, our pioneering technology, and our industry-leading talent, allowing us to keep our foot on the accelerator as we continue to lead the way in innovative sustainable aviation fuel solutions as we enter an inflection point for our industry. For the past twenty years, Velocys has had a critical role in the development of reactors, technology, and processes that enable the efficient production of lower carbon SAF, and we and our new partners are excited to see what the next twenty will bring.”

Importance of Sustainable Aviation Fuel 

Decarbonising aviation is a critical climate challenge given the 800 megatonnes annual carbon footprint from airline travel. 

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Velocys predicts a surge in demand for Sustainable Aviation Fuel (SAF) in the coming years due to a combination of regulatory support and the increasing availability of drop-in fuel technologies. 

The European Union has introduced new regulations that require suppliers to ensure that 2 per cent of the fuel made available at EU airports is SAF in 2025, 6 per cent in 2030, 20 per cent in 2035, and 70 per cent in 2050. 

In 2023, more than 490,000 flights were partially powered by SAF, up from just 500 in 2016, indicating exponential growth in demand.

Velocys: Providing sustainable fuels

Led by Henrik Wareborn, Velocys offers services and capabilities that support the successful engineering, manufacturing, development, and financing of sustainable fuel projects.

The resulting fuel is chemically identical to the carbon-intensive fuels currently used worldwide. It can be dropped straight into existing engines without the need for any alterations and can be made from various waste materials.

The company’s Fischer-Tropsch technology is compatible with multiple project types employing diverse feedstocks, including municipal solid waste, woody biomass, and CO2 & green hydrogen, and has demonstrated performance at a commercial scale. 

This fuel can then be used in aviation and, more broadly, in heavy goods transportation.

Velocys has invested in scaling its reactor facility in Plain City, Ohio, to ensure a stable supply of reactors for delivery to SAF project owner-operators globally. 

Velocys’ 52,500 square-foot reactor facility will be able to produce an initial 12 reactors per year, which is the typical requirement for the operation of a commercial-scale SAF biorefinery. There are also plans to ramp up the facility’s capacity as demand for SAF grows. 

Velocys originated from a University of Oxford technology spin-out company called Oxford Catalysts, which floated on The London Stock Exchange in 2006.

The investor

Based out of New York, Carbon Direct Capital is a growth equity investment firm focused on carbon management technology. 

The firm partners with companies in the carbon management ecosystem. The firm believes that selective investing with a science-focused approach maximises both climate impact and financial returns. 

Josh Dienstag, Chief Investment Officer of Carbon Direct Capital, says, “We believe drop-in fuels are the most promising, scalable solution to decarbonise aviation and to deliver climate impact the soonest. Velocys is a scarce supplier with the technology readiness, production capacity, and leadership team to deliver for SAF project partners. We are pleased to be part of this investor consortium and to support Henrik and the Velocys team.”

Lightrock is a global impact investing platform that backs companies that pursue scalable and tech-driven business models around the key impact themes of people, planet, and productivity/tech for good. 

The company’s portfolio includes over 90 high-growth companies across Europe, the US, Latin America, India, and Africa, supported by over 105 Lightrock professionals based in 6 global offices. 

Kevin Bone, Partner at Lightrock, says, “We are delighted to be partnering with Velocys as it takes the next steps in its journey to becoming the leading provider of SAF solutions to the aviation industry. This critical objective requires long-term backing with the requisite experience of supporting industrial companies as they seek to realise their potential. I do not doubt that this consortium is best placed to do just that.”

GenZero is an investment platform company focused on accelerating decarbonisation globally. 

The company adopts a flexible investment approach across three focus areas to drive climate impact: 

  • Mature-based solutions that help protect and restore our natural ecosystems while benefiting local communities and biodiversity;
  • Technology-based solutions that deliver deep decarbonisation impact; 
  • Carbon ecosystem enablers refer to companies and solutions that support the development of an effective, efficient, and credible carbon ecosystem. 

May Liew, Investment Director at GenZero, says, “Decarbonising the global aviation industry will require innovative solutions that can be adopted with ease and at scale. This is where Velocys’ pioneering Fischer-Tropsch reactor is relevant, with its modularity and efficiency to support the development of advanced biofuel applications. By leveraging technology to transform waste materials into sustainable aviation fuel, Velocys is well positioned to play a key role in scaling the use of low-carbon fuels to pave the way towards net-zero aviation.”