Bioeconomy Project Financing & Due Diligence

By Wayne Lee, CEO, Lee Enterprises Consulting, Inc. and Martin Wahl, Director of Marketing, Lee Enterprise Consulting, Inc.
Special to The Digest

Last fall, the experts at Lee Enterprises Consulting published a series of articles entitled Financing Bioeconomy Ventures[1]. At a high level, this previous series covered pro formas, business plans, strategic analysis, market assessment, engineering design, planning for startup, site selection, and regulatory concerns.

Due to the success of that series, and number of requests we received from those involved in providing funding for bioeconomy projects and from those seeking funding, I am proud to introduce this second series, which explores more in-depth financing options available to bioeconomy entrepreneurs, and the related due diligence components that investors should focus upon at the different stages of technology development and project funding.

It is our hope that this series by members of our esteemed group, provides useful information and a good starting point for bioeconomy due diligence discussions.

The Bioeconomy Project Financing & Due Diligence Series

The following articles will be presented as a series in the upcoming editions of Biofuels Digest:

1. “Introduction to the Bioeconomy Project Financing & Due Diligence Series”by Wayne Lee, CEO, Lee Enterprises Consulting, Inc. and Martin Wahl, Director of Marketing, Lee Enterprises Consulting, Inc.
2. “Expanded Technology Readiness Level (TRL) Definitions for the Bioeconomy” by Dave Humbird, Ph.D. Dave has a BS in Chemical Engineering from Texas A&M University, a PhD in Chemical Engineering from the University of California at Berkeley, and is a registered Professional Engineer in Colorado.  He has 20 years of experience in process engineering, techno-economic analysis, and scientific computing, spanning the renewable fuels, petrochemical, and semiconductor industries.  This article defines technology readiness levels as they pertain to bioeconomy projects and presents a basis for the subsequent articles discussing financing opportunities and related due diligence requirements for projects at various of technology readiness levels.
3. “Getting the Most out of Technoeconomic Analyses”by Daniel Lane, Ph.D. Daniel is an engineering leader with 20 years’ experience and success in process & technology development in multiple fields, including consumer products, specialty chemicals, and renewable fuels and chemicals. This article presents the components and value of using technoeconomic analysis, not just to determine commercial viability of a project, but also to focus and direct R&D efforts, and improve the likelihood of successful bioeconomy project scale-up.
4. “Federal Funding Opportunities for Each of the Nine Technology Readiness Levels (TRLs) – Part 1”This is the first of three articles by C.J. Evans. CJ has a B.A. from California State University at San Jose, and over 30 years of experience in the public policy, fund raising and grant making arenas, working on conservation, agriculture, renewable energy, and advanced fossil fuel issues. He has been at the leading edge of the renewable energy and advanced fossil fuels industries since 2005 helping innovators and companies commercialize new technologies and secure financing. These articles identify the federal funding opportunities that are available to promote innovation for projects at different stages of technology readiness. It is intended to assist readers in identifying federal funding levels that can help commercialization forward in a bioenergy or bioeconomy project. This is the first of a two-part article on Federal Funding Opportunities, identifying federal funding programs targeted to support projects at earlier stages (TRLs 1-3) of technology development. The funding sources are identified, along with application requirements.
5. “Federal Funding Opportunities for Each of the Nine Technology Readiness Levels (TRLs) – Part 2”by CJ Evans. This is the second part of the two-part series on Federal Funding Opportunities. It deals with funding programs available to support projects at later stages (TRLs 4-9) of technology development.
6. “40 Mistakes That Will Kill a Proposal”by CJ Evans.This article presents a discussion of the 40 most common mistakes that will cause an otherwise good proposal or application to be rejected. It comprises a checklist of mistakes readers should recognize and correct when preparing applications and proposals.
7. “Financing a Biomass Project When Commercializing New Technology” by Glen Farris. Glenn was named by European Institutional Investors Services as one of the 5 most influential people in renewable energy in North America.  He has spent over 25 years in project development as well as developing, advising and commercializing new technology in the biomass energy field.  Glenn’s article allows readers to see what lenders and investors seek in the due diligence process for biomass-to-energy projects. It will prove especially helpful for those developing or planning to develop, a biomass to energy project involving the commercialization of new technology.
8. “Evaluation of existing and projected WtE projects – the New Waste Business Model” by Andrew Grant.Andrew has a B.A. and M.A. from Cambridge University and over 35 years’ experience as a manager of biomass conversion projects.  He has been involved in providing guarantees of performance, environmental impact and cost studies, for coal and biomass conversion technologies, and has performed due diligence studies of technologies and of facilities.
9. “Strategic Due Diligence of Emerging Technologies for the Advanced Bioeconomy” by Robert Kodrzycki, Ph.D. and Douglas Rivers, Ph.D.  Bob has a Ph.D. in Biochemistry from Purdue University and 28 years’ experience in synthetic biology, genomics and biofuels in the Ag Tech, Industrial and Renewable sectors.  Doug has a Ph.D. in Microbiology from University of Arkansas with specializations in enzymes, fermentation, and cellulose pretreatment. Their article examines risks and risk mitigation measures for entrepreneurs and investors in advanced bioeconomy projects, including bio stimulants and other projects involving microbial development.
10. 10. “Intellectual Property for Project Development”by Terry Mazanec, Ph.D. and Justin Krieger, Esq. Terry has a Ph.D. in Inorganic Chemistry from The Ohio State University and has been involved in the renewable fuels and chemicals area for much of his 35 years in R&D.  He is the inventor of the Oxygen Transport Membrane process for the in situseparation of oxygen from air for the production of syngas from natural gas, and led a multinational industrial technical team to develop and scale up the process. Justin is a registered patent attorney whose technical focus includes chemistry, chemical engineering, medical devices, metallurgy, nanotechnology, mechanical engineering and consumer products.  Their article addresses the complex and important investor concerns about identifying and avoiding possible intellectual property roadblocks to product commercialization.
11. “Technical Due Diligence Early and Often: the Best Insurance for Bioeconomy Investors”by Lorenz Bauer, Ph.D. Larry has a Ph.D. from Washington University in St. Louis and has 26 years’ experience with the licensing of refining and petrochemical catalysts and processes. He is the inventor on more than 24 patents and his article discusses some of the finer points of technology review and how failure to conduct appropriate technology reviews at various developmental stages has derailed otherwise promising projects. This article explores the importance of technical due diligence at all stages of renewable fuel and chemical project development.  The examples provided will prove valuable to lenders, investors, and project participants.
12. “Production Off-Take Agreements”by Jess Hewitt. Jess is the Chairman of Gulf Hydrocarbon, the premier provider of biodiesel to the petroleum industry. He has over 30 years’ experience in the energy industry and is a former member of the National Biodiesel Board, chairing its Marketing Committee.  He served as President of the Biodiesel Coalition of Texas and on the advisory board for the New York Mercantile Exchange (NYMEX). This article discusses later-stage project development, giving guidance to entrepreneurs who are seeking off-take agreements to meet investor requirements, identifying pitfalls that longer-range planning and consideration can prevent.

Where we go from here

Lee Enterprises Consulting is pleased to be able to offer this series of articles covering such a broad range of capabilities from our experts across bioeconomy sectors.  It is our hope that they will assist lenders, investors and project developers in presenting and reviewing projects during the financing processes. Note:  Many of our members are speaking and/or attending ABLC Global, November 6-9, 2018 in San Francisco. We would be happy to schedule time to talk with interested parties.

[1]For a free series summary, please contact the author.  [email protected]