Cellulosic ethanol developer Verenium has partnered with British petroleum company BP in a $90 million deal—a sign that next-generation biofuels companies are increasingly looking to oil giants for funding. Over the next 18 months, London-based BP will pay Verenium, of Cambridge, Massachusetts, $45 million for broad access to its technology, facilities and expertise, and an additional $45 million to co-fund technical initiatives. Verenium currently operates a pilot plant and is completing a demonstration-scale facility, but as Peter Nieh, a managing director at Menlo Park, California–based Lightspeed Venture Partners points out, “Biofuels startups typically need distribution partners. They can't put fuel into the marketplace by themselves.” As part of the deal announced in August, the companies will equally own any jointly developed intellectual property. Partnerships with large oil companies can be beneficial particularly in later stages of development as they bring refining and market expertise. “These partnerships are new enough that there are a lot of unknowns,” cautions Nieh. Virent Energy Systems of Madison, Wisconsin, in May partnered with Royal Dutch Shell to develop technologies for converting plant sugars into gasoline-like products. Mascoma, a Boston-based cellulosic ethanol company, also in May, closed a round of equity investment that included $10 million from Marathon Oil of Houston.