Kelly Ogilvie, founder of Blue Marble Energy

In an effort to end the world’s dependence on fossil fuels, companies exploring the possibility of using algae as the feedstock for second-generation biofuels are gaining more attention. In 2007, startups in the algae-to-fuels sector raised $32 million in venture capital, according to the Cleantech Network. So far in 2008, venture capitalists have fueled the industry with more than $180 million. Venture capitalists around the world are betting big on the industry, which has yet to grow its most basic ingredient in sufficient volume to make most businesses pencil out.

Kelly Ogilvie, founder, president and CEO of Seattle-based Blue Marble Energy, says that going after biofuels alone is not enough to turn algae into a commercial success. Unlike other companies in the field, Ogilvie is working to commercialize a process that converts wild algae not only to fuel, but also into “high-margin bio-chemicals.”

Ogilvie found a few minutes to sit down with Sustainable Industries to chat about the challenges of building a startup in this economy.

SI: What is the business concept?
KO: Blue Marble is obviously a wild algae company. Now, the problem for commercialization over the past 30 years has been, ‘How do you commercialize this technology and get it to market?’ So we’re focusing on what we think is the clear path to commercialization: creating bio-methane, producing bio-chemicals and also providing an environmental service at the same time. Our core concept is, ‘You can help the environment by remediating a problem, by cleaning the environment.’ There’s a new environmental crisis occurring: algae blooms. They’re human fueled, meaning our carbon dioxide pollution and the way that we discharge human waste into the open-water environment are fueling these massive algae blooms. What we’re saying is that there’s a way to actually turn that problem into a solution.

SI: Where does your company fit into the algae market?
KO: We’re in the middle of a fundraising round. We’re out raising a $5 million round right now. We’ve raised half a million in cash already, as far as early money, as well as about $500,000 of in-kind contributions from labs and other kinds of support. We’re unique in the sense that we have revenue coming in from an operating unit, which is our harvesting operation. And that alone has huge opportunities. If you look at algae blooms popping up on coastlines, we will be uniquely positioned to address them today.

SI: And you plan to process both biofuels and bio-chemicals from this harvested algae?
KO: This is where we radically depart from our counterparts in the space. What we’re doing is we’re not necessarily saying, ‘OK let’s squish some stuff out of this algae.’ What we’re doing is saying, ‘OK, look at nature’ and when we look at nature, we see something like a cow. When you look at what a cow actually does, it’s amazing. A cow can eat grass, which is cellulose, and then through its different stomachs create things like natural gas and also milk and delicious meat. What’s happening is, in a cow stomach, a cow can convert that cellulose…into different types of chemicals. That was our “aha moment” and we looked at, ‘Can we start using bugs or microbes to produce different types of chemicals?’