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Longing for Venture Capital

This item was contributed by my C&EN colleague Marc Reisch

Startup bio-based chemical producers in the U.S. are having a difficult time snagging the funds they need to propel their businesses forward, says Brent Erickson, executive vice president of U.S. trade group Biotechnology Industry Organization.

Speaking at a meeting of the education group Société de Chimie Industrielle in New York City on March 24, Erickson said that before the economic slowdown, bio-based chemical startup firms could access funding from the venture capital community, but lately that money source has dried up.

U.S. government loan guarantees meant to fill the gap as part of the economic stimulus package aren’t helping, Erickson noted. Instead, under rules now in place, the guarantees are going to wind and solar energy start-ups that can show they have contracts to supply power to customers over a defined contract period. But startup bio-based chemical producers are losing out, Erickson said. They don’t generally operate like utilities and so they don’t sign 20-year supply agreements.

No immediate fix for the funding dilemma appears to be in sight. “A recovery of the venture capital community would be a help,” Erickson said.

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