Virent Energy Systems, which hopes to make gasoline-like fuel from plant sugars, expects to raise $25 million to $40 million by the end of the year in its third round of financing, the company's chief executive said on Tuesday.

The company has already raised about $70 million, some $40 million from corporate investors and government grants and $30 million in venture capitalism arms of Honda, Cargill and other companies. Virent also has a collaboration agreement with oil major Royal Dutch Shell on research.

The next round of financing will be lead by new investors, Virent's CEO Lee Edwards said on the sidelines of the Renewable Energy Finance Forum in New York. He said some of the existing Virent investors will also likely participate in the third round.

Any financing Virent wins would come in contrast to tough times in the market for ethanol. Some of the biggest ethanol producers like VeraSun Energy Corp have gone bankrupt over the last year on volatile feedstock prices and the credit crunch.

The company is also behind others, like some emerging cellulosic ethanol makers, in the race to make motor fuel from non-corn sources, but Lee said investors are interested in Virent, despite the credit crunch, because the fuel has several advantages over ethanol.

Virent currently produces about a liter (0.3 gallon) per day of the fuel from plant sugars through a catalytic process with metals, including platinum, that can be reused. It can break down sugars from a variety of feedstocks such as switchgrass, sugar beets and sugar cane.

Cars can burn the fuel like gasoline, so no changes need to be made to engines. The fuel contains more energy than either ethanol or butanol. And it should be easy to send through pipelines, unlike ethanol which can absorb water and rust ducts.

The Madison, Wisconsin-based company is building a 10,000 gallon per year plant, which should be completed by the third quarter.

Edwards said the company hopes to build a 100 million gallon per year plant by 2015 and one similar-sized plant per year in the years after that to 2020.

The company hopes to form joint ventures to help deal with the costs of building the plants which can cost hundreds of millions of dollars.

In addition Virent hopes to license its fuel process so as many as five other plants could be built by 2020, Edwards said. He added that the fuel should be cheaper than the price of gasoline by 2012.

He said if the United States puts a price on carbon emissions, it would help the fuel become cost competitive with gasoline.