Venture capitalists have shown an increasing maturity with their clean-tech investing.
The days of big funding rounds for ethanol plants may be over.
They dish out smaller sums of money, expect higher rates of return and appear likely to balk on the massive solar deals that in the past couple years commanded tens of millions of dollars.
In the fourth quarter, the average clean-tech deal size was about $9 million, compared with almost $14 million for all of 2009.
This maturity is beginning show itself in the biofuels market with powerful effect. New start-ups appear to be favoring smaller funding rounds and technologies like algae and synthetic biofuels in place of ethanol.
“The era of enormous funding rounds for large-scale cellulosic and first-generation ethanol start-ups is over,” proclaims Lux Research. The new companies seeking venture money look at producing higher value products such as butanol, propane, biodiesel and bio jet fuel.
One such company, OPX Biotechnologies has raised $22.5 million from Mohr Davidow, Braemar Ventures and others, and hopes to produce bioacrylics for paints, adhesives and detergents. The company said Tuesday it has reduced production costs by 85 percent to is targetting 50 cents a pound.
According to Lux, biofuels production increased 82 percent from 2000 to 2008. This growth could continue as second-generation cellulosic ethanol fuels – now showing great promise – come to market in the next several years.
But the age of the ethanol science project appears to be coming to an end. In its place, a more lucrative, diverse market may come into being.
