REAC Fuel, a Sweden-based biofuels company, has raised $4.5m with oil major BP joining the investment syndicate.
BP has joined venture capital firms VantagePoint and Sustainable Technologies Fund in the extended round of funding, which the company said started last Spring.
John Steedman at BP Alternative Energy, the corporate venturing and clean-tech division of the UK-listed oil group, said it was very early stage, only a pilot, so there had been no major announcements so far.
He added: "BP is interested in second and third generation biofuels technologies to distance itself from any unsustainable situation or food vs fuel debate. As such Alternative Energy Ventures looks beyond the business horizon for investment opportunities with disruptive impact such as lower cost or higher efficiency. This includes the ligno-cellulosic feedstock to fuel space where REAC fits. They are generating sugar feedstock from a variety of biomass sources using proprietary technology with the potential of intermediate conversion to fuel or chemical products."
REAC said BP, VantagePoint and Sustainable Technologies made up the consortium alongside existing investors Allba Invest and Jensen Invest, both part of the family office for the Jensen family that sold electronics distributor ELFA to buyout firm IK Investment Partners in 2006 for €130m ($178m).
The full consortium has invested $6m in REAC during the year and in aggregate are majority shareholders of the company.
Anders Carlius, chief executive of REAC since 2006 and who has been working on the technology since 2001, said: "With the backing of BP, VantagePoint and Sustainable Technologies Fund, we are not gaining capital alone, but also access to knowledge and a vital network for refining and commercialising our technology."
REAC is building a scaled-up facility to turn plants into fuel with an estimated completion date in the second half of next year and will double its staff to 20 over the next three months.