by Amol Deshpande
I am an investor and entrepreneur with a passion for biomass in all its forms. As a partner with the venture capital firm Kleiner Perkins Caufield & Byers (KPCB), I am involved with three different biomass-related technology investments focused on extracting the energy value from organic waste such as food waste, yard trimmings, wood and municipal solid waste (MSW).
The venture capital industry began investing in biomass, in earnest, five years ago when hype around ethanol and other biobased fuels led to an unsustainable capacity expansion and strained feedstock supplies. This was followed by an era of numerous investments in "second generation" biofuels and chemicals, mostly focused on sugar and syngas platforms or algae. All of these involved some metabolic engineering or related breakthrough energy conversion.
These investments are interesting and worthwhile, but fundamentally challenged. First, in most cases, proprietary feedstock supply chains must be built around these innovations, i.e., thousands of tons of specially cultivated biomass (e.g., energy crops) need to be redirected to wherever the plant is. Second, technology hurdles in yield and selectivity must be overcome where organisms or catalysts are tasked with producing novel output and scaled up from liters to millions of gallons. Third, feedstocks must be pretreated so fickle organisms or unit operations downstream won't be corrupted. Finally, downstream separations and unit operations like distillation often make the energy balance of these processes unsustainable.
This assessment is not to debate the merit of making these investments. But many very large opportunities, with less structural hurdles, have still gone unexploited and could be developed in parallel for a completely biobased future. The venture capital community should look for opportunities to manage technology risk quickly and deploy systems with limited capital outlay.
Elements of Compelling Technology
So what does a favorable technology look like? What technology will be successful at getting investment dollars? Perhaps I can outline, for a venture capitalist, what might constitute a compelling biomass technology:
- Scales down and can operate in a distributed manner
- Produces a product that is supply chain compatible, e.g., a grid connection, pipeline access points
- Uses a feedstock that already has a supply chain
- Has a beneficial reuse and is free of harmful contaminants or odors
- Uses available feedstocks of low value and that require minimal pretreatment
- Costs less than $5 million to demonstrate at a semi-commercial scale
- Consumes minimal water and parasitic energy
- Has one step for its primary energy conversion, i.e., one primary unit operation, like an anaerobic digester
- Takes less than six months to build a commercial plant from "shovel in ground"
These constitute rules for a "gut check" on whether a technology is intriguing or not. However this says nothing of the most important factor - the quality and integrity of the management team. Not all technologies can fit into this box, but I think opportunities do exist, particularly with more dollars going towards research and development of biomass energy.
