GM takes stake in Mascoma

Detroit-based General Motors (NYSE: GM) has made another move in cellulosic ethanol, announcing today that it acquired a stake in Boston startup Mascoma.

The automaker did not disclose the amount or size of the equity stake, which follows another investment from GM in Warrenville, Ill.-based cellulosic ethanol startup Coskata earlier this year (see Khosla-backed Coskata, EcoMotors come out of stealth).

GM did not disclose its stake in Coskata either, calling that investment "significant" at the time.

"Taken together, these technologies represent what we see as the best in the cellulosic ethanol future and cover the spectrum in science and commercialization," said Fritz Henderson, president of GM.

"Demonstrating the viability of sustainable non-grain based ethanol is critical to developing the infrastructure to support the flex-fuel vehicle market."

This could be another feather in the cap for Khosla Ventures, which is an investor in both Mascoma and Coskata.

Other backers of Mascoma include Flagship Ventures, Atlas Venture, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Pinnacle Ventures and VantagePoint Venture Partners.

GM said Mascoma's single-step cellulose-to-ethanol method, called Consolidated Bioprocessing, lowers costs by limiting additives and enzymes used in other biochemical processes.

The car maker said Mascoma is testing its Consolidated Bioprocessing technology and expects to begin producing ethanol later this year at its demonstration plant under construction in Rome, N.Y.

GM said Mascoma has also partnered with the University of Tennessee to develop a switchgrass-to-ethanol pilot facility near Knoxville, Tenn., and is pursuing opportunities in the state of Michigan.