Tag Archives: HCL Cleantech

Rating Thermochemical Start-ups on the Lux Innovation Grid

Small technology startups are driving a wave of new bio-based chemicals and materials technologies, and their growth is catalyzing the biggest change the global chemicals industry has seen in decades. In a recent report (client registration required), Lux Research applied its Lux Innovation Grid to rate 106 startups competing in seven technology areas, ranging from renewable feedstocks like algae, GM crops, and waste gases, to downstream processing in pyrolysis, gasification, and synthetic biology.

This week’s graphic displays the likely winners and losers who are fielding thermochemical processes, which promise the bounty of bioprocessing without the need for engineered microbugs. Unlike bioprocessing, thermochemical technologies create compounds via more scalable catalytic and conventional chemical methods. The Dominant quadrant’s five innovators make the field one of the strongest in the bio-based chemicals and materials space.

Among the top innovators is Elevance, which uses metathesis to convert plant oils into glycerin, esters, and biofuels. Its high Technical score derives from its simple chemical process and capital-light manufacturing, which combine to yield a disruptive process. But Elevance also has ongoing collaborations with Cargill, Materia, Dow Corning, Tetramer Technologies, Stepan, Wilmar International, and others, all of which fueled the company’s $100 million IPO filing.

Also in the Dominant quadrant is Virent, which develops fuels and chemicals from soluble sugars. It rates highly on Business Execution because of its management team’s industrial and scientific backgrounds and investments from Cargill, Honda, and Shell. Moreover, the company has a partnership with HCL Cleantech, which supplies cellulosic sugars. Its technology signifies a unique and effective way to convert sugars to alkanes that may then be catalytically converted to a slew of materials (client registration required).

Both Red Lion Bio-energy and Siluria occupy the High Potential quadrant, but that’s about all the two companies have in common. Red Lion, whose process combines aspects of pyrolysis and gasification to convert biomass to syngas, faces business challenges because its gasification technologies are capital-intensive. Meanwhile, Siluria Technologies has a unique catalyst support technology designed to efficiently convert natural gas (fossil or biogas) to ethylene. While its approach is notable and potentially very valuable, the company is only in its fourth year and has not made much commercial progress yet. It has raised about $17 million in venture funding to date, but it lacks chemical industry connections through management experience or partnerships.

Source: Lux Research report “Assessing Innovator Evolution in Renewable Materials and Chemicals.”

The boom in bio-based materials and chemicals is really a boom in synthetic biology

Venture capitalists (VCs) invested $3.1 billion in bio-based chemicals and materials developers since 2004. As many of those start-ups reach megaton scales and launch IPOs, Lux Research analysts sought to find which technologies venture investors favored. This week’s graphic comes from their just published report (client registration required), in which analysts tracked 177 venture transactions involving 79 companies operating in five technology categories – biocomposites, bioprocessing, thermochemical processes, crop modification, and algae. In short, they found:

Bioprocessing developers brewed up $1.89 billion in 96 deals. Bioprocessing developers – especially synthetic biology companies – landed more than half the total venture capital invested since 2004. Encompassing technologies like fermentation, phage display, natural breeding and synthetic biology, all bioprocessing platforms employ some sort of organism as a “factory” for creating products as diverse as sweeteners and catalyst supports. Intrinsically flexible, these platforms enable the likes of Amyris, Codexis, LS9, and Solazyme to produce multiple products from multiple feedstocks, thus ensuring a relatively low-cost route to high-value compounds and providing a hedge against feedstock and product price volatility.

Thermochemical technologies raked in $577.0 million in 31 deals. Thermochemical processing encompasses technologies like gasification (Enerkem), catalysis (Avantium, Inventure), and acid hydrolysis (HCL Cleantech, BlueFire) that sometimes convert biomass to an intermediate like sugars or syngas, and sometimes go all the way to an end product. (e.g. Virent’s paraxylene is used in Pepsi’s famed 100% bio-based PET bottle

Crop modification companies harvested $371.7 million in 28 deals. IPOs are less common fates for crop modification companies which, as you may have guessed, modify crops to be more amenable and economical for use in bio-based materials and chemicals. Instead, companies in this category, like Athenix and FuturaGene, usually end up being acquired by the likes of Syngenta, Monsanto, DowAgro, or Bayer CropScience.

Algae developers saw $190.5 million in 13 deals. Notably, that figure only encompasses start-ups developing algae strains, cultivation systems, and processing equipment for creating industrial chemicals. Representative developers include Bio Architecture Lab, a macroalgae developer, and Israel’s Rosetta Green, which had raised $1.5 million in venture funds, but more recently brought in almost $6 million in an IPO on the Tel Aviv TASE. Excluded from this category are companies primarily developing fuels (which we cover in our Alternative Fuels Intelligence service), and companies like Solazyme and Green Pacific Biologicals that use algae for fermentation (and, thus, are categorized in bioprocessing, above).

Biocomposites developers brought in $108.9 million in a mere nine transactions. This category includes bioplastic blends, some starch plastics, and bio-based foams, from the likes of Cereplast, EcoSynthetix, Ecovative Design, and Entropy Resins. Because of the relatively simple nature of these technologies, VCs often don’t see them as investment opportunities – forcing companies like SoyWorks and Biop Biopolymer to find other sources of funding.

Source: Lux Research report “Seeding Investment in the Next Crop of Bio-Based Materials and Chemicals.”