Can we identify the key reasons that many bioenergy projects fail to get funding? Yes. Is there a “magic bullet” that guarantees funding of a bioenergy project? No, but a review of the common characteristics of those that fail to receive funding is not difficult, and once understood, provides a pathway to the best chance of success. The most common reasons for funding failures seem to be that either the economics of the project don’t make sense, have not been verified, or simply don’t provide an adequate return on investment. Our team of experts reviews many projects every year. We examine projects for investors, and lenders, and for ownerselopers who want to make certain they are ready to meet with their funding sources. Nowhere does the adage “you only get one chance to make a good first impression” make more sense than in the bioeconomy. The fact is that there are many bio projects seeking funding. Some are new technologies that have solid accolades from the inventor, but have never been tested independently. When representing investors and lenders, we want to know that the project is both a solid idea and can be properly executed. We also need to know that the borrower has the right team to execute it and has factored in market or policy uncertainties. We want to know if the technology is the best available. If it is new technology, we need to know that it truly brings something unique and valuable to the market. A first question is whether the ideas and projections have been reviewed by independent third parties (which is often our precise role). We see good projects fall apart with bad teams, and we note that bad projects don’t get better just because they employ good teams.
If you are an investor or lender, the answer is simply to do your due diligence with experts who understand the industry. While the pro forma numbers may look good, most investors know that things that appear too good to be true usually are. When investors have requests from projects who refuse to allow independent experts to review and analyze the project and its numbers, they are quite readily wary.
If you are an owner or developer, spend the time and money to be prepared. You are only going to get one shot at this, so make it a good one. Remember that when you do poorly, word spreads rapidly in a small industry. Make sure employ professionals to guide you through the process and prepare you for the inevitable obstacles. It is a real mistake not to spend the time and money to engage experts who specialize in funding these types of projects, writing grants, doing techno-economic analysis, technology reviews, and know the markets. These are the professionals who can put together all the pieces of the puzzle.
The bioeconomy is an exciting arena with many new sustainable and renewable projects that will truly change the world. That said, it is new and as with all new industries, fraught with great risk. Large renewable energy and biochemical consulting firms like Lee Enterprises Consulting have experts in biofuels and renewable fuels, and the more common areas like biomaterials, biomass and biomass power, feedstocks, and biotechnologies. Moreover, larger consulting groups also have expertise in more specialized segments like algae biofuels, sustainable aviation (biojet) fuels, ethanol, cellulosic ethanol, advanced biofuels, biodiesel, renewable diesel, renewable natural gas, renewable and biochemicals, biogas, syngas, biochar, bio-coal, biobutanol, pyrolysis oil, and producer gas, and wood pellets. Take a look at our experts and the services we provide. Most of our experts are also available to advise and serve as expert witnesses in bioeconomy litigation matters. For larger projects, we specialize in putting together full-service, interdisciplinary teams with one point of contact. Call us at 1+ (501) 833-8511 or email us for more information.