Monsanto Co. (NYSE: MON) said it will make an equity investment in San Diego-based algae fuel start-up Sapphire Energy Inc. to identify genes that positively affect growth in algae, which might have applicability in modern agriculture. Financial details of the agreement were not disclosed.

The multi-year collaboration will leverage Sapphire's algae-based reseach platform to discover genes that could be applied to agriculture, particularly in the field of yield and stress, Monsanto said. This collaboration will enable Monsanto to tap Sapphire's algal expertise and research tools, which can be used to screen for promising traits in algae that might have applicability in modern agriculture.

For Sapphire, a producer of green crude from algae, sunlight and carbon dioxide, this collaboration will push the known boundaries of algal science to search not only for traits that will impact traditional agricultural crops, but will also accelerate Sapphire's road to commercializing algae as a renewable energy crop.

Sapphire's expertise in algal research offers a novel platform that will allow us to screen and identify promising genes faster, says Robb Fraley, Monsanto's chief technology officer.

By leveraging our algae platform and tools to improve crop yield and enhance crop performance, Sapphire will be able to accelerate our ability to produce a renewable crude oil replacement and reduce our country's dependence on foreign oil, says Jason Pyle, chief executive of Sapphire.

The process for making algae into fuel at a very base level is this: Sunlight and CO2 are the source of energy and carbon dioxide, rather than sugar or other organic material, Sapphire says in its Web site.

By applying the principals used in biotechnology, Sapphire has produced oil in algae that is highly branched and undecorated - the way that traditional crude is – to get a biological crude molecularly similar to light sweet crude. Green Crude is renewable crude oil that is a result of Sapphire's proprietary process of turning sunlight, CO2, and algae into green oils to be refined into fuel.

Founded in 2007, Sapphire Energy is supported by more than $100 million in equity from Arch Venture Partners; Cascade Investment, an investment holding company owned by Bill Gates; Venrock, the venture capital arm of the Rockefeller family; and Wellcome Trust. In December 2009, Sapphire was awarded nearly $104.5 million from the federal government in loans and grants to construct a demonstration biorefinery.

Shares of Monsanto ended Monday's trading at $71.65.