Cleantech Group sent this report about venture capital investments in renewable chemicals sector reaching $361m in the first half of 2010, which could drive 2010 to a record-year if the second half will see the same pace. VC deals in renewable chemicals for 2008 reached a total of $425m.
The study’s principal author Andrew Thomson noted that VCs are becoming more interested in renewable chemical companies as they continue to build up their understanding of the market and developed their networks in this space. At the same time, biofuel developers, who have already been exposed in the VC arena, are increasingly using their technology platforms to produce high-value chemicals.
“While capital intensity had been a concern in the past, the sums required to reach commercialization are considerably less than in many other sectors such as biofuels, and fit in the sweet spot of many VC investors who have raised large funds in recent years,” said Thomson.
Another factor promoting VC interest, according to Thomson, is the presence of new venturing units of chemical companies (such as DSM Venturing), as well as corporate partnerships which make it easier for VC investors to qualify their investments.
As you’ve seen in the past recent posts, IPOs (initial public offerings) are also coming into play this year from several companies that deals with renewable chemicals such as Codexis, Amyris, Gevo, and PetroAlgae. Another likely IPO candidate, according to the report, is Solazyme. These IPOs could also attract further VC attention and raise the profile of the renewable chemicals sector.
Several companies such as Amyris Biotechnologies, Elevance, Enerkem, Genomatica, Green Biologics and Rivertop Renewables were profiled in the report. Cleantech Group estimated the global renewable chemicals market to grow to $60bn by 2014. The global market for all industrial and basic chemicals is projected to be worth $2.8 trillion by 2014.
By the way, another report that came to my attention recently is from Global Industry Analysts, which projects the global renewable chemicals market to reach $56.9bn by 2015.
The US and Europe both accounts for more than 60% of the market. Developing economies including China, India, Russia and Japan, which largely consume chemicals developed from petrochemical feedstock, are expected to offer immense potential opportunities, according to the report.