Bio-based chemicals to attract $1 bn investment in 2014

The bio-based materials and chemicals industry is poised to attract nearly $1 billion in investment this year, led notably by later-stage funding rounds, according to Lux Research. The estimated $974 million investment represents a 28% increase from 2013, suggesting companies that endured the waves of economic disruption have gained maturity and regained investors’ confidence.
 
“Over the last two years, funding for bio-based materials and chemicals has shifted decisively toward later-stage rounds, reflecting the growing maturing of the industry and the shift from R&D to production,” said Meraldo Antonio, Lux Research Associate and the lead author of the report titled, ‘Dynamics of venture capital funding in the bio-based chemicals industry’.
 
He added, “Participation of corporate investors has also increased, suggesting that large multinationals in many industries see bio-based materials as strategically important.”
 
As per Lux Research report, driven by technology entrepreneurship and a favourable investment environment, North American companies cornered 87%, or $2.2 billion, of the total venture capital funding for the BBMC sector over the past three years.
 
Among technologies, fermentation took home the largest share of investment, with companies in this space pulling in nearly $3 billion total since 2000, hitting a peak of $475.6 million in 2011.
 
Subpar performances from companies such as Gevo and Amyris have dampened the public markets' enthusiasm for the space, added Lux Research reported. As a result, many start-ups have scrapped IPO plans and sought other exits - witness Stora Enso’s acquisition of Virdia, Renewable Energy Group’s purchase of LS9 and Cereplast’s cheap acquisition of Trellis Earth.