A Billion Dollar Win and a Half a Million Dollar Loss for the Algae Industry

By Jonathan Williams

Biofuels Digest covers two major announcements this week in the algae field, a promising story and a cautionary tale. Essentially, Martek is being acquired by DSM for over $1 billion, one of the largest infusions of cash into a company working with algae. OriginOil CEO Riggs Eckelberry posted on his blog that this was the ‘first billion dollar algae transaction.’

Conversely, BioCentric Energy’s many financial problems, including not being able to pay almost $500,000 in debt, led to its demise.

Here is Biofuel Digest’s take on what these two events:

The Wild, Wild Wet period in the development of the algal bio-based products industry is coming to a close, and winners and losers are beginning to emerge. Could there be any more stark contrast of the Tale of Two Cities type (“it was the best of times, it was the worst of times”) than the announcements regarding DSM, Martek and BioCentric?

One extraordinary winner: Martek, which has parlayed its development of a vital nutraceutical made from algal biomass into a billion-dollar business.

One extraordinary loser: BioCentric Energy, which had raised hopes with a promising series of announcements in the development of a closed-loop photobioreactor system, but appears to have all-but-collapsed in a series of major financial misjudgments for which the consequences may create some difficult personal consequences for individuals, and clearly wrought havoc on suppliers and employees for a good portion of 2010.

This should provide a cautionary tale to everyone who is looking into investing into an algae company. You can either strike it big or you can lose big. The algae industry is very young and the companies are even younger. That means that before the company has fully matured, you can (sadly) expect more algae ventures to fold.

The good news is that those employees in the case of BioCentric Energy should be able to find employment elsewhere. The algae research field as a whole is growing and the market isn’t flooded with those with backgrounds in algae biofuel production.

Additionally, as in any industry where most of the companies are considered startups, it is expected that some companies with succeed and others with fail. The hope is that in this process, the industry will continue to mature. With major success by companies like OriginOil and Solazyme, the overall trend is moving the algae industry towards maturity.

For more in this story, visit http://www.biofuelsdigest.com/bdigest/2010/12/23/a-tale-of-two-algaes-dsm-to-acquire-martek-biocentric-energy-collapses-amidst-irs-bad-check-labor-crises/

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