Venture capital for the Biotech Branch – Microalgae forging ahead?
GUEST POST by THOMAS WENCKER
Within issue 31/32 dated August, 02. 2013, the German Engineers Society (VDI) newspaper published an interesting article about the increasing amount of venture capital (VC) for financing innovative companies. Not more than one percent of the submitted proposals for VC are successful. Besides other innovative branches, biotech companies by percentage generally get the highest amounts of funding money. Latest experiences in fact show, that companies from the microalgae biotechnology have to fight a lot for chances of being noted in VC-financing issues.
Venture Capital Survey Q2/2013
Following VDI News a sum of 118 Mio € has been invested in Germany from different investors between April and June 2013. This is an increase of 9 % compared to the related period last year. The money was distributed quite uneven: while the pure number of financings (23%) was the highest within the software IT branch, the highest overall sum of money (31 Mio. €) was brought into biotech companies. Regionally, the German federal states of Bavaria, Berlin and North Rhine-Westphalia seemed to be notably interesting spots. At the same time, just a very small number of companies fulfill the criteria for VC-financing. Main issues were limited growth potential and in addition a limited target market.
Especially the final sentence makes the microalgae branch look on itself. Even though the VDI news article has been decorated with a picture from IGV Biotech’s microalgae laboratory, the number of microalgae companies, which could establish research results in real products, is tractably small compared to other biotech startups. Research funding is paid in relevant amount from the government or the EU within programs like FP7 or Horizon 2020 to different research proposals, but the application of the results of microalgae topics in industrial scale need much higher investment than the funding actually delivers. There is no doubt about the growth potential of microalgae production, the product opportunities and the photobioreactor construction as well. The target markets are huge, as microalgae compete with crude oil and bulk product markets from agriculture.
Investment into industrial microalgae production
So, why did we not yet experience the scaled breakthrough of microalgae? One core issue is that most of the output forecasts are just forecasts based on small scale research installations. The capital demand of industrial plants is that big, that many investors are scared by just figured yields. In case of successful investments cost issues force projects in Southern Europe and the USA to use open pond systems including all their known bioprocess disadvantages or heterotrophic cultivation.
In contrast, IGV Biotech as part of IGV GmbH concentrates its photobioreactor design on closed plants, which are designed for phototropic growth based on sunlight, CO2, nutrients and water. Further on, the closed design allows sustainable water saving production process, which is particularly necessary in most sunny regions of earth. This is a principle how to integrate closed photobioreactors into biorefinery networks. New developments of IGV Biotech take this design criterion into account and aim on relevant investment reduction and on increase of areal productivity as well. First steps into the direction of economically feasible microalgae production for bulk markets have been done successfully.
ABOUT THE AUTHOR
After his studies for the diploma in bioprocess engineering at the Flensburg University of Applied Sciences Thomas Wencker already wrote his diploma thesis within algae biotechnology. He worked several years within the bioenergy branch and the petrochemical process industry before returning IGV Biotech in 2010. There he started his task of technical project management in photobioreactor development and design. As IGV Biotech has developed into a supplier of photobioreactors Thomas Wencker additionally does marketing and sales for the plants, which are based on tubular glass construction.
Photo Credit: VDI News