Velocys Begins New Chapter as Private Sustainable Aviation Fuel Technology Company with $40 Million Growth Capital Injection

Velocys, a leading sustainable aviation fuel (“SAF”) technology company, announces that it has begun a new chapter following the completion of its take-private 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 infused Velocys with US$40 million of growth capital. The funds will be used to accelerate the delivery of Velocys’ proprietary technology to customer projects whilst further building its technology leadership, scaling its production and enhancing the breadth and depth of the team’s expertise.

Decarbonising aviation is a critical climate challenge given the 800 megatonne annual carbon footprint from airline travel. Velocys expects demand for sustainable aviation fuel to accelerate given the confluence of regulatory support and higher readiness levels of drop-in fuel technologies. For instance, new European Union (“EU”) rules will require suppliers to ensure that 2% of fuel made available at EU airports is SAF in 2025, 6% in 2030, 20% in 2035 and 70% in 2050. Airlines are also expected to drive the exponential growth in demand for SAF. In 2023, more than 490,000 flights were partially powered by SAF, from just 500 in 2016.

Velocys is a technology company whose patented catalyst and micro-channel reactor platform provide a scalable, flexible solution particularly suitable for projects that produce SAF. Velocys’ 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 commercial scale. Velocys’ experience of integrating its technology into an overall scheme is highly valuable to clients, allowing them to maximise lifecycle carbon savings.

Velocys has invested to scale its reactor facility in Plain City, Ohio, to ensure a stable supply of reactors for delivery to SAF project owner-operators around the world. 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 capacity of the facility as demand for SAF grows.  

Henrik Wareborn will continue to lead Velocys’ management team as the Chief Executive Officer. The new ownership consortium – a global syndicate of climate investors focused on harnessing technology to accelerate decarbonisation – has combined expertise, networks, and specialist scaling support that will better equip Velocys to contribute meaningfully to the decarbonisation of the aviation industry.

Josh Dienstag, Chief Investment Officer of Carbon Direct Capital, said: “We believe drop-in fuels are the most promising, scalable solution to decarbonize 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.”

Kevin Bone, Partner at Lightrock, said: “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 have no doubt that this consortium is best placed to do just that.”

May Liew, Investment Director at GenZero, said: “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.”

Henrik Wareborn, Chief Executive Officer of Velocys, said: “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 20 years, Velocys has had a critical role in the development of reactors, technology and processes which enable the efficient production of lower carbon SAF, and we and our new partners are excited to see what the next twenty will bring.”

The Velocys PR team provided this piece to SME Business Review.