The Discount Should be the Message

Ryan Hunt could tell you about catfish farming practices, waste remediation needs at large carpet manufacturing facilities, and, why venture capitalists or angel investors need to know about both.
By Luke Geiver | August 17, 2012

Ryan Hunt could tell you about catfish farming practices, waste remediation needs at large carpet manufacturing facilities, and, why venture capitalists or angel investors need to know about both. Hunt is the director of research and development (and co-founder) of Georgia-based algae biomass-to-bioplastics developer Algix LLC. The company has researched and developed (with the help of a licensing agreement for some Kimberly-Clark intellectual property) a way to utilize algae powder to create master batch resins for a variety of bioplastics.

Because Algix’s main focus is on acquiring the cheapest available micro or macro algae with a high amount of protein content, he’s had to meet with catfish farmers who have an overabundance of algae in their ponds, and, with carpet manufacturers who could use their wastewater to provide nutrients to feed the algae that could then be used as a feedstock for the very same resins used in their own carpet production methods. Both groups are interested and enthused about the prospect of creating a coproduct stream out of their unused algae biomass.

But, on the project finance side, the enthusiasm isn’t as large. Hunt has been on the VC circuit, trying to voice the message of Algix, and the feedback has been what most of us might expect. As Hunt says, “one of the big problems is that the biofuels and the cleantech sector has been kind of bearish,” adding that “some things have failed, and it makes people skeptical of cleantech.” Hunt of course has relayed the enthusiasm shown by the potential partners (catfish farms and carpet production plants just to name a few), but he’s also done something that all startup, pre-commercial, or even established renewable energy firms could do, should do, and most importantly, need to do.

“We really need to start training the mindset,” he says of his message to VC’s, “instead of explaining the green premium, we need to be explaining the green discount.” For Algix, that might seem very apparent, as the algae-based bioplastic they can produce is actually cheaper to make than the fossil-based equivalent, something he’s explained to potential investors including the partners who would benefit from that discount.

But the idea can still apply in situations where a biomass-power plant or an energy crop farm costs the same (or even more at first glance) than its fossil-based equivalent. Isn’t there a discount to using MSW for bioenergy rather than landfilling or incineration over the long-term? Wouldn’t homeowners in a wildfire engulfed region believe it’s cheaper to have performed strategically planned biomass collection to thin forests and prevent future fire breakouts then figuring out what to do with a post-fire region? Wouldn’t a remote community save on diesel costs if that region could produce its own homegrown fuel or its own homegrown heat? (Not to mention that job creation pundits would be smiling).

Hunt is on to something. It might be an approach that’s been used already, but his example of providing an explanation of a message and outlining the meaning behind the idea of “green,” at least provides a reminder about the power of a detailed, project specific message that doesn’t rely on an overused, under explained term like that of “green.” Green is good, but its better when it’s referring to money.




1 Responses

  1. Tim Baye



    Luke, Nice piece and kudos to Ryan Hunt. Six years ago while preparing to pitch Wall St. concerning a "closed-loop" ethanol project (corn ethanol with feedlot with digesters with nutrient/water recovery with CHP with waste heat to greenhouse complex: Belmont BioAg) a good friend, who is now with Mascoma said: "standing-alone each of these components have identifiable financial/technical risks. Put them together, finance markets view risks as multiplying...exponentially." That was a very sobering, and prophetic message. We never did close the deal.


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