Can we identify the key reasons that many bioenergy projects fail to get funding? Yes. Is there a “magic bullet” that guarantees funding for 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 doesn’t make sense, has not been verified, or simply doesn’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 owners and developers 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 a new technology, we need to know that it truly brings something unique and valuable to the market. The 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 requested 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 to 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 knowing the markets. These are the professionals who can put together all the pieces of the puzzle.
For over 25 years, Lee Enterprises Consulting has been assisting companies and investors with issues relating to sustainability, bioenergy, biomaterials and chemicals, biotechnologies, and feedstocks. With over 150 consultants, we have the diverse expertise and geographical reach to assist in virtually any bioeconomy project worldwide. These seasoned professionals average over 30 years each in their industry experience. Our ability to assemble these professionals into multidisciplinary teams allows us to fully integrate the technical, scientific, and regulatory aspects of a project, and combine them with years of hands-on experience. Take a look at our experts and the services we provide. You will note that most of our experts are also available for ancillary engagements and advice, for specialty engagements like serving as expert witnesses in litigation matters. A good overview of our group is found in this video. Call us at 1+ (501) 833-8511 or email us for more information.