Contamination! and other crises: 12 Signs that your favorite biofuels venture may be in trouble

December 18, 2012 |

Is your favorite biofuels venture in trouble? — or might look in trouble but actually be just fine.

Here are 12 tell-tale signs if you’ve “got trouble, right here in River City.”

In the game of professional golf, Saturday is traditionally known as “moving day” as the leaders begin to separate themselves from the pack — and in biofuels terms, 2012 has certainly been a “moving year”. While some companies have celebrated successful transitions to larger-scales, others have stumbled, often at the final gates, seemingly inside the stadium in what was supposed to be a triumphant final lap after a long marathon.

Solazyme went to 500,000 liter fermenters this year; LS9 to 135,000. Companies like KiOR, INEOS Bio and Beta Renewables reached mechanical completion at commercial scale. But others have had more wretched luck and disappointing outcomes – some visible public companies, many smaller private entities whose rough patches occurred far from the spotlight.

Investors, policy-makers, supply-chain partners, observers – so many stakeholders ask the same question – how do you really know when your favorite biofuels venture is having real trouble as opposed to a non-material slowdown or hiccup.

In industrial biotechnology as in all business, the laws of gravity apply — and profits are the driver and indicator of almost all good things. Customer offtake agreements, healthy margins backed by real-world deals. Good, affordable project financing. All these are the classic signs of health. Claims that exceed the Laws of Thermodynamics, or traffic in theoretical rather than real-world results – well, that’s the opposite side of the coin.

But not every venture is far enough along or transparent enough to offer classic data for analysts or the adventurous private investor.

How do you tell – what are some tell-tale signs that, from the outside, can tip you off that you “got trouble, right here in River City.” Let’s look at 12 Signs.

1. Layoffs.

It’s a tell-tale sign. Keep in mind that early-stage ventures have no revenues, essentially. And also that there is affordable equity available for transformative technologies that hit their milestones. So an unexpected shortfall of cash usually means that a funding source is losing faith (based on data that they see, and you and I don’t) and the next round will be delayed. Could be that the investors are supportive but that it is going to take longer to get certain problems solved than originally expected.

2. Delaying projects.

Also, look for the project equivalent of layoffs – canceling or delaying planned projects, A tell-tale sign that the money has become expensive due to risk. Or, that the team is being concentrated on one really critical project to try and break through on unsolved, mission critical challenges.

3. Missing trucks, empty silos and tanks.

Count the trucks delivering biomass. Divide the truck tonnage by 80, and that’s the capacity the plant is running at. Or, divide the number of trucks by 20-40 tons each. Now, the trucks may come in an awful hurry at harvest time, so keep that in mind. Alternative, ask the local franchisee how baler sales are going, or the nearest 7-Eleven how soda sales are – not an entirely bad predictor on the truck traffic.

Silos or barns empty around harvest time? Not a good sign if the plant built way more capacity than it is using.

Wait! There are more signs. Check them out.

EXTENSION: Biofuels Venture in crisis? Check staff ratio, milestone payments, downtime

EXTENSION: Biofuels Venture in crisis? Check ordering, design changes, capacity reductions

EXTENSION: Biofuels Venture in crisis? Check samples, suing, extraction technology

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