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Volume 7, Issue 3
Published: April 29, 2013
Financing entrepreneurial innovation

David Berry, a partner with Flagship Ventures, reveals the winning formula that will make biofuel start-ups more attractive to investors

 

In every entrepreneurial sector, founders and managers are seeking to identify the magic formula of how to build, finance and ultimately exit their companies. Some of the more storied sectors, such as biotechnology and digital, have the significant benefit of not only a wealth of startups but also a bounty of success stories.

However biofuels, as both a young sector and a grouping of companies small in number, is lacking in such stories success stories, which leaves for a situation that is as simple as it appears: biofuel financing is a game of exceptions.

As the biofuel sector heated up over the last handful of years, entrepreneurs and investors attempted to create a rule-set around biofuel investment, extrapolating rules from other sectors to this one. For example, the first round or two of financings would focus on bench-scale work and proof of concept, subsequent support would cover pilot financings, and then financial support would drive towards demonstration scale. The extrapolation, however, was not complete.

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