New age venture financing in renewable energy: Biofuels Renewable energy venture financing home

New age venture financing in renewable energy:


A very realistic alternative to fossil fuels, the bio industry has been gaining significant traction. It's available almost everywhere. However, it can release emissions and is often pricier than fossil fuels. It's also so diverse that concentration is somewhat of an issue. This hampers efficiency in that respect, but costs are still on the downward trend. Taking this sector's climate into consideration, following are the basics for new biofuel ventures seeking financing.

Current strategy to follow

The basics

The wide-ranging biofuels sector, although among the most promising, is also one of the most competitive. Start-ups often don't have the capital to rival big industry players' projects in scope. This means that diversification isnít particularly important at this stage for your firm. Concentrate the venture in a sole, unique niche. Commercial viability, cheap raw materials, and an early breakeven point are points of highest relevance to investors.

Itís recommended that focus groups and market research is done and cited extensively in pitches. Since there are so many related products going to market, yours must be distinguished in this respect to obtain seed capital.

Cost savings are best conveyed with your economies of scale. Find the cheapest available materials on the market (without hindering quality) and illustrate this relative advantage in a somewhat expensive industry to investors. A breakeven point for such projects less than three years will help reduce risk perception and make the venture seem more liquid.

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    There are so many potential ways to utilize biofuels that the whole industry has become rather speculative in nature. Farfetched venture propositions find their way onto the same investors' desks as viable ones. This makes it wise to target mutual funds and traditional investment banking and chain institutions in the firm's early years. As the technology becomes more cost efficient and gains a proven market, private equity and individuals' deals become more realistic.

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