HEARD ON THE FLOOR AT ABLC: BioVeritas takes a giant leap towards commercialization

October 18, 2023 | Jim Lane

ABLC is buzzing about BioVeritas, which tipped this morning that it has initiated the second phase of Front-End-Loading (FEL-2) for its first commercial production facility, which is targeted for commissioning in 2026.

If you are an engineer of the physical world, probably enough said right there. You’d already know that FEL-2 is the Rubicon, stepping beyond the world of theory and bench-top performance, a promising result from pilot scale. With FEL-2, someone is putting serious money into a process — as much as 19 percent of the total cost of a project is expended in this stage; hence, It’s the bioeconomy’s equivalent of a non-refundable deposit, and all focus from that point forward is going to be on getting to the final investment decision, the raising of the capital, and the recovery of all that moolah.

So, that’s where BioVeritas is, and that’s why ABLC is buzzing, someone has seen the hard data and has found love with this process for producing intermediate short- and medium chain fatty acids — and the good things all along the value spectrum that can be made from the.

As the Beatles put it in “If I Fell”, which we’ll rename for a second, “If I FEL”:

If I fell in love with you, would you promise to be true
And help me understand?
‘Cause I’ve been in love before
And I found that love was more than just Holding hands

Yes indeed, there’s a moment when the focus shifts from “great interest” to “serious intent”, from holding hands to something more, and that’s where we are today with BioVeritas and this news.

Next steps

At the completion of this step, you have defined the commercial project scope, validated the design, plugged in the cost estimates, and completed a schedule for construction.

Here’s what comes next, the Raising of the Capital, which is not exactly as hard a Raising the Titanic, but harder than raising a barn, for sure.

In the next year, expect the company to raise a total of $200 million project in debt and equity — that’s a third of the cost of the first commercial plant, and enough capital to run the company for two years. Think $100 million in equity — and, if the capital raise goeth well, think about a groundbreaking announcement early int he new year, perhaps by March, and a FEL-3 kick-off with a two year run to commissioning plant #1 in 2026.

What does BioVeritas make, exactly?

OK, so let’s go back to Terrabon technology as a starting point — short and medium-chain fatty acids, which is a bit of bioeconomy Swiss Army Knife, you can aim for fuels, chemicals or food tech. Starting with ultra-low value waste by-products — in this iteration, plant-based food industry residues.

What’s new? First, the tech has advanced since the days of Terrabon and Earth Energy Renewables. More interestingly, BioVeritas has flipped the script of commercial targets. Not tempted by the blast-furnace of tax credits for fuels, having learned through observation that the capex generally kills companies that rush too fast for the top branch of the momney tree.

In this case, BioVeritas has flipped the script. Instead of the heart-break of fuels first, they’re aiming for food first. Makes a lot more sense. It’s scaled better to the feedstock availability, reliability and cost for plant number one. With bigger economies of scale, optimized supply chains, feedstock conditioning, and plants #2 through #15, lots of new markets become possible. Yes, chemicals. Even, perhaps, SAF. But that’s later.

That’s in contrast to the usual bioeconomy company development script, which goes like this.

An office in Silicon Valley. Enter Dr. Phd, a technologist, speaking with Mr. Money, an investor.

Phd: We have a great technology, we aimed for $3 fuels!\
Money: Brilliant! What happened?
Phd: We never got the scale or yield for $3 fuels. So, we switched to aiming for $5 chemicals.
Money: Brilliant! What happened?
Phd: We never got the scale or yield for $5 chemicals. So, we switched to aiming for $50 food ingredients.
Money: Brilliant! What happened?
Phd: We never got a big enough market for $50 food ingredients. So, now we aim for $50 fuels based on $47 in carbon credits.
Money: Brilliant! What happened?
Phd: We ran through all the carbon credits the first week. But we have a great technology. I hear NASA is looking for $100 chemicals for Mars.

The Mighty Partners

BioVeritas, LLC contracted Wood PLC to lead the overall FEL-2 process. Wood’s multidisciplined team and beginning-to-end engineering experience set the stage for execution excellence. For the extraction and distillation portions specifically, BioVeritas, LLC contracted Koch Modular Process Systems. KMPS has deep experience with the BioVeritas Process™ and is well-equipped to lead this crucial component of FEL-2 given its involvement in developing the company’s existing Bryan, Texas Market Demonstration Unit.

The company behind the company

Ara Partners is a private equity firm specializing in industrial decarbonization investments. Ara Partners invests in the industrial & manufacturing, chemicals & materials, energy efficiency & green fuels and food & agriculture sectors, seeking to build businesses that provide significant decarbonization impact. It operates from offices in Boston, Houston and Dublin. As of June 30, 2023, Ara Partners had approximately $4.4 billion of assets under management.

Samples available

Samples of BioVeritas products are available for qualification at manufacturer plants

Reaction from the Stakeholders

Turns out that Steve Toon — the Fermentation Whisperer himself, has joined BioVeritas full-time as Chief Operations Officer – that’s an interesting sign of progress. Confirms that BV’s CEO Dave Austgen has some Whisperer chops himself, Toon usually gigs around.

About the progress to date, Toon notes:

“BioVeritas is moving quickly towards turning our revolutionary technology into commercial reality. We’ve already sent our high efficacy, neutral sensory, clean label samples to some of the world’s largest food producers, and we receive more requests each month. FEL-2 is a critical next step in our journey, requiring a significant investment of time and resources. When completed, it will not only enable efficient construction of our first commercial production facility, but also send a clear signal to the marketplace that BioVeritas is indeed rapidly moving towards commercialization. The expertise and experience of Wood and KMPS will be invaluable in setting up BioVeritas for a high-quality plant construction and startup process.”