Lux Research Report on Alternative Fuels

Tomahawk, WI 8/17/2011 (PennyPayDay) – In 2010, investors gave $930 million to alternative fuels start-ups, a four-year low. However, investment has dramatically climbed to an all-time high of $698 million for companies with flexible technologies that can use a variety of feedstocks or generate diverse end products. As this trend continues, start-ups stuck with less flexible technologies will be forced out of the industry.

Since 2004, high oil prices and trillion dollar markets have drawn more than 6.46 billion investment dollars to the alternative fuels industry. According to a new report from Lux Research, however, investors have grown more selective, dishing out larger amounts to fewer companies. Flexibility in feedstock or end product is their guiding principle: It increases addressable market, provides secondary revenue streams, and unshackles technologies from price volatility.

“The recent successful IPOs of Amyris, Solazyme, and Gevo all reflect the larger industry trend of investing in more flexible end-product technologies,” said Andrew Soare, a Lux Analyst and lead author of the report. “A handful of fuels-focused start-ups continue to draw investors, including waste-to-fuels companies Enerkem and LanzaTech, and cellulosic ethanol companies Qteros and Mascoma. But flexibility is part of their DNA as well, in that they derive fuels from multiple feedstocks.”

The report, titled “Hedging Bets with Flexibility in Alternative Fuels,” is part of the Lux Research Alternative Fuels Intelligence service and provides guidance into the factors driving alternative fuels investment, offering insights on future opportunities. Lux Research analyzed 333 investments in 170 unique start-ups since 2004, breaking down investments by technology, fuel, geography, and investment stage.

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