Funding is on the rise from last year, as the maturing industry sees more
large-growth-stage investments, Lux Research says
BOSTON, MA – October 21, 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.”
“Participation of corporate investors has also increased,” he added, “suggesting that large multinationals in many industries see bio-based materials as strategically important.”
Lux Research analysts studied the investment landscape for BBMC, evaluating VC, corporate VC, IPOs, and M&A activity. Among their findings:
- North American companies dominate. Driven by technology entrepreneurship and a favorable 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.
- Fermentation leads technologies. 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.
- M&A is on the rise. Subpar performances from companies such as Gevo and Amyris have dampened the public markets' enthusiasm for the space. 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 Trellis Earth’s cheap acquisition of Cereplast.
The report, titled “Dynamics of Venture Capital Funding in the Bio-based Chemicals Industry,” is part of the Lux Research Bio-based Materials and Chemicals Intelligence service.