The micro algae sourced bio-oils and biofuels industry’s latest Initial Public Offering continues to impress on its second day of trading, breaking through $22 per share this morning. Last Thursday, Solazyme repriced its IPO at $18 a share, raising close to $200 million dollars on the next day.
What’s great about Solazyme?
It has solid revenues today and has executed beautifully on its R&D and production business plan since its founding in 2003.
Among its many investors (including Chevron and Sir Richard Branson) is Unlilever, which wants to use micro algae to replace palm oil, “because the harvesting of palm oil has led to deforestation in Indonesia and Malaysia and has drawn the criticism of environmentalists,“ says Katie Fehrenbacher at Earth2Tech.
But, Katie says, “ultimately, Solazyme wants to scale up algae oil production to tackle the biofuels market – primarily biodiesel. Solazyme is looking to commercialize its fuel technology in the 2013 time frame, with a production cost target of $60 to $80 per barrel equivalent against petroleum. To get there, it will have to build a commercial-scale algae plant, which will likely cost over $100M (one reason it needs cash from an IPO).”
Scale — what everyone’s working on
Indeed, scale is the next big challenge in micro algae sourced production, and Solazyme now has the cash to get there. Today we all live in a petroleum economy. Within 10 years, that may no longer be the case.