In this Darwinian strategy, LanzaTech's $55m round last week was a notable example, or big deal.

One theory behind successful venture investing is to find a sector under development and make multiple bets on different start-ups in order to test which ones will do best and then combine the assets of the less successful into them.

In this Darwinian strategy, LanzaTech’s $55m round last week was a notable example, or big deal.

The deal is notable because its follows LanzaTech picking up for $5.1m its first production facility in the US, Freedom Pines Biorefinery, located in Soperton, Georgia, through the acquisition of the former Range Fuels biorefinery on January 3.

Venture capital firm Khosla Ventures had backed Range Fuels and was also an early backer of LanzaTech. If LanzaTech can add its waste-to-biofuels process to the facility, it can potentially test its technology more rapidly than having to build one from scratch.

LanzaTech is also running a pilot with a China joint venture partner, BaoSteel, and if all goes to plan it might be able to float on a stock exchange in the second half of this year, Jennifer Holmgren, LanzaTech chief executive, told data provider Cleantech Group.

But for Khosla, LanzaTech’s initial public offering could follow its third bet in this specialized area of clean-tech – the only major company under development in this area that is not under his wing is Ineos Bio, which has taken more than 20 years to develop versus seven years for LanzaTech. Last month, Coskata, a US-based renewable energy company backed by four corporations and Khosla, said it would raise $100m in its flotation on the Nasdaq stock exchange.

Vinod Khosla, whose on the board of LanzaTech and was a former co-founder of computer server company Sun, has seen his eponymous venture capital firm recently list three other biofuels companies, Amyris, Kior and Gevo, to reap $1bn in paper profits.

The rewards for the strategy, therefore, can be big, but the funding requirements to make it work can be very large as well – Khosla raised another $1bn fund last year, following two others with an aggregate $1.3bn of committed capital in 2009.

James Mawson

James Mawson is founder and chief executive of Global Venturing.