In a market research report released today, Algae 2020, Vol. 2, Emerging Markets Online highlights why some algae companies will be winners and some will be losers bringing their product from pilot to commercial scale from 2011-2020. The report concluded that of all the current algae production companies, R&D ventures and public-private partnerships currently in play, less than a dozen will graduate into pre-commercial, deployment-stage algae ventures using pond, photo-bioreactor and fermentation based production systems.
“For the Algae 2020 study, I did my research the old fashioned way, where you conduct an on site visit, you kick the tires, and you say I understand you’re producing algae and you have a pilot project. Show me,” said Thurmond. “While I was on site I conducted interviews with CEOs and various staff scientists, took pictures, analyzed the data, and determined three common strategies of companies that are attracting investment capital and scaling up.” Thurmond interviewed more than 200 algae related companies and visited 30 in person.
The study found three key strategies that determine which companies will attract capital and scale up their enterprises while others will be perpetually stuck in the laboratory or garage, many never even scaling up to small, test-pilot phase.
Strategy #1: Algae Long-Term Winners Focus on Drop-In Fuels and Biofuels. Thurmond notes there are about a dozen leading algae companies that have successfully progressed into pilot and demonstration scale projects. Why? In addition to being able to produce either ethanol or biodiesel, these organizations are also able to produce drop-in replacement fuels like biojet and renewable diesel that are in high demand today by various industries including oil and gas, aviation, petrochemical, and the U.S. military.
Strategy #2 Algae Short-Term Winners Target Diversified Markets. Algae 2020 discovered that most winning algae producers are diversifying their short-term focus on high-value products including: omega 3s, health products, cosmetic, pharmaceutical, and specialty chemical uses, and some mid-value markets like livestock and fish meal, renewable chemicals. This allows a company to bring in revenue to pay the bills and establish brand identity while scaling up their operations over time to commercial scale biofuel production.
Strategy # 3 Algae Winners Bring Together R&D Labs, Universities and Public-Private Partnerships. According to Thurmond, the third key finding from Algae 2020 study: among R&D and start-up related algae projects, the winners attracting government grants, funds, or private funds share the following in common. These winners bring together “collaborative clusters” of research labs, industry, government, academia, cleantech investors, and producers to share and collaborate on key technology challenges and market demand-based opportunities.
The report concludes that if algae companies and R&D ventures engage in the above strategies, as detailed in the Algae 2020 study, they are more likely to attract the needed investment dollars, and ultimately more likely to scale up from the R&D stage to demonstration and commercial scale, thus becoming an algae winner rather than an algae loser.
You can listen to my full interview with Will here: Interview with Will Thurmond, Author Algae 2020, Vol. 2