Forget First to Market
by Luke Geiver (Biomass Magazine) Being first on the scene is beneficial in many markets, but advanced biofuels may not be one of them.
…“Being first to market and establishing a brand has significance in end markets where it matters to grab consumer mind share,” he (Rob Stone) says, citing iPads or Tablet PCs. But in an enormous, trillion-dollar market like fuels and chemicals, he adds, there is room for multiple players and, in fact, customers want more than one supplier to leverage price.
In simple terms, for the majority, when we buy gas, we just want the physical product at the lowest price, regardless of the name that goes with it.
Still, there are benefits of entering the advanced biofuels and biobased chemicals market more quickly than others, Stone points out. Those early entrants will be in a better position to gather additional capital for future expansions and other projects, he says. If the segment of early entrants is profitable, however, some financial backing will go to competitors.
…In fact, for this industry, both (Jennifer) Holmgren and Stone imply that more players in the market is better. “We are fortunate to be working in a space where there are multiple players,” she says. More approaches and more information, especially from failed ventures, provide companies like LanzaTech with more perspectives that help develop processes further, she added. But failed technologies or businesses are not the same as stalled or slowed ventures, she cautions. Because most companies in the sector are often painted with the same brush, she says, the failure of similar companies can attribute to a fall in confidence in the sector as a whole.
Stone adds a different point of view, saying that if a technology or company in the sector works, a significant lift occurs in overall valuation for the entire market. “That’s why venture backers and other funders will end up funding a number of companies in the space,” he says. Stone believes that that probability makes the advanced biofuels and biobased chemical sector appealing and interesting for investors. “There are so many opportunities and the markets are so large and diverse.”
…“If this stuff (technology like KiOR’s) works, unlike an oil well, it will produce level output if not rising output,” Stone says, attributing the statement to the fact that a better catalyst for a biofuel process can always be created and the process can be tweaked over the 40-year lifespan most plants will operate. With a traditional oil well, the start of the production process is high based on optimal well pressure, but will be depleted over time. An operation has to use more enhanced recovery techniques to produce the same amount of product because of falling output and higher recovery costs. READ MORE