KiOR: The inside true story of a company gone wrong

ITQ is retained

One of the new ideas to be explored involved bringing a catalyst or simple chemicals like an acid, base or a salt into close contact, or inserting such chemicals inside the biomass particles, for the purpose of lowering the liquefaction temperature and increasing catalytic activity/selectivity.

To explore that concept, the Instituto de Technologia Quimica (ITQ) of Univesidad Politecnica de Valencia in Spain was contracted to conduct experimental work.

Khosla Ventures enters the picture

Vinod Khosla

BIOeCON needed additional funds to operate and to support the outside contractual R&D work, and was also looking to find investors. Alex Stamires, who knew of Khosla Ventures and whose father was consulting for BIOeCON, contacted Khosla executive assistant Cyndi Jung in the first week of October 2006. Jung managed the “catch-all” email inbox for venture ideas and was a logical first stopping point for making an introduction. Calls followed, and a write-up summary of BIOeCON‘s background and business interests, a telephone pitch, an in-person meeting, and several months of due diligence.

“The due diligence was no small thing,” O’Connor told Harvard Business Review. “They hired four specialists to look at our technology, and this went on in a very intensive way for three or four months. In the end, their conclusion was that it was very interesting but at an early stage. We needed to do a pilot.”

Khosla Ventures offered a term sheet in the second half of 2007; an agreement was reached to form a joint venture, KiOR, which was incorporated in Delaware on Nov. 1, 2007. It received a Series A investment which totaled $1.436M on November 15, 2007 and $2.916M on July 14, 2008. A Series A-1 investment of $9.999 million was also made in July 2008. All investments were made by Khosla Ventures II, LP.

Rob van der Meij was appointed President and CEO, and Paul O’Connor became CTO and was a KiOR Board member.