Venture Capitalist Marianne Wu On Why Now Is The Right Time For Biofuels

In this extended version of the talk from our new issue, we speak with Marianne Wu, a partner at Mohr Davidow Ventures. "A lot of people assume that green biofuels mean higher prices or worse performance," Wu says. "That's changing."

Marianne Wu | Photo by  Toby BurdittPhoto by Toby Burditt

"It's a really exciting time in biofuels and biochemicals," VC Marianne Wu says. "We're looking at massive markets, increased demand, and significant advances in biology and chemistry. A lot of people assume that green biofuels mean higher prices or worse performance. That's changing. The companies we're investing in give customers the proposition that the fuel is green, performs the same or better, and is cheaper. One of our companies, Zeachem, uses chemical engineering to turn woody biomass into ethanol and basic chemicals, and it does so with the highest yield, lowest carbon footprint, and lowest cost. Zeachem is a biorefinery model, which is like the traditional model: A single petroleum refinery makes many products—solvents, chemicals, heating oil, gasoline. We're replicating what traditional refineries have always done: Take a feedstock and turn it into lots of different products. Biology can do the same."

Fast Company: Why is the time right, in terms of the market, for investing in biofuels and biochemicals?

Marianne Wu: "Although there's a lot of debate over what the overall price of oil is going to be, there's a general consensus that we've transitioned to a high-price-of-oil kind of regime. And there's a lot of volatility, which causes tremendous train for the chemical producers. Consumers, too, are really interested in getting greener and more sustainable chemicals and fuels, and they're pushing on manufacturers to increase their renewable and sustainable content. So there are a bunch of market forces driving this."

How about in terms of scientific advances?

"Scientifically, the biology and chemistry of this has advanced so significantly over the last few years. So you're pumping all these market forces around—market size, need, and demand—against this new engineering capability. The variety of products that can be made is enormous. In fuels alone, you can make gasoline, diesel, bio-substitutes, the crude oil itself. And then you can make tons of different chemicals."

What do you look for in the companies you invest in?

"We look for teams of people with varied skills. As always, you need to have great entrepreneurs, people who have the energy and passion and commitment to start something. We're also looking for great technical skill and some kind of technical advantage in terms of the platform that gets the product to market at a cost point that's really exciting. You also need to know the people you'll work within the larger system. So, over time, companies need to add significant industry operating experience. The key in these biofuel and biochemical companies is marrying the entrepreneur, the technical genius, and the industry domain experience, and making that into a strong, cohesive team."

How can a company prove to you it's going somewhere and isn't just stuck at the fledgling startup stage?

"At the earliest stages, because these technologies are so new, a company often has an idea and a biological pathway they've demonstrated, but they haven't optimized it yet. At some level, they still have building left to do. So the first step is proving the technology. Next, a company has to scale it up and, at the same time, get an ecosystem in place to build a large plant and distribute and sell into the marketplace. You really need an ecosystem of partners that is actively looking for new solutions and willing to act."

Besides Zeachem, what are some of your other companies up to?

"OPX is another one of our companies. It has developed a genetic engineering platform that allows for much faster development so they can find pathways to these fuels faster than other companies. OPX's first product is acrylic acid, which is probably best known as diaper absorbent. It's also used in adhesives and coatings. OPX partnered with Dow to develop that product."

"Another company is Genomatica, which has developed a new bioengineering platform. It's focused on producing intermediate and basic chemicals, such as BDO, its first product. BDO is an intermediate chemical used in running shoes, electronics, automobiles, spandex, and many other things."

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