Biofuels production is limited by the cost of sugar—which is fermented to make ethanol—and by how much sugar can be produced on available land. Proterro, a startup that aims to produce ultra-cheap sugar at high yields using photosynthetic microörganisms, says it has just raised $3.5 million in a financing round led by Braemar Energy Ventures to continue developing its technology. It had previously raised $5 million.

Proterro hopes to reduce costs and improve yields using photosynthetic cyanobacteria that have been engineered to continuously secrete sucrose. It hopes to produce sugar for five cents a pound, less than a third of the price of sugar now.