The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Are There Lessons for Biofuels from the Rise & Fall of the Dot-Com Bubble?

In the late nineties, several of my first business partners and I worked together on website projects that were the predecessors for This gave us a unique opportunity to ride the huge wave now known as the "Dot-com Bubble" which rocked investors and was a major factor in the overall economic recession of the early 2000s.

Interestingly enough, many of the same characteristics of the difficult dot-com rise and fall are present in the current biofuels boom being experienced around the world.

The dot-com bubble was marked by unrealistic speculation involving faulty business models. The resulting business plans overestimated projections, included wild claims about market share, often did not consider factors such as logistics, and were backed by an impressive list of bios for personnel who passionately believed in the potential for the new companies but many times lacked legitimate experience.

In hindsight it has been apparent that basic business development questions should have been asked such as, "How long has the management team worked together?" Unfortunately these and other crucial questions were often ignored in the wave of excitement. Sound familiar to what is going on now?

Yet another component to the popping of the bubble was the fact that the dot-com's were fueled by venture capitalists and an investment climate fed by low interest rates and a strong economy. Many of the more conservative investors continued to scratch their heads, but ended up coming along for the ride based on the frenzy and novelty that was perpetuated by well-meaning entrepreneurs. People were led to believe that they had to be on the "in" although they did not necessarily understand the new business paradigm.

A similar trend has manifested with the biofuels boom as investors are attracted to the originality and the cause behind the business concepts. In fact, with issues such as global climate change, rising energy costs, and the Iraq war, there is a strong and altruistic demand for answers that are pulling along the entrepreneurs and investors.

One of the mainstays of the dot-com bubble business model was the use of investor money to fuel a net loss with the goal being the acquisition of market share. This strategy reminds me of many models I have seen in the biofuels industry that make the assumption that bigger is definitely better. However, this may not be the case in emerging technologies such as cellulosic ethanol in which I believe the winners will be the companies that are going from lab to pilot scale before ever pushing a scaled-up model. Investment in research and development may be a better bet than infrastructure at this point in the game.

The aforementioned is a much more diligent approach considering the variety of high-value products and corresponding markets whose ramifications on the industry are not fully understood, leading to many assumptions that may be flawed. I continue to believe that those projects that have access and logistic capabilities to involve multiple feedstocks while having the flexibility to add value as technology and markets develop will be the ones that will ultimately succeed.

So even though the parallels and perils of the "Dot-com Mentality" to the current biofuels industry should be obvious, does this make the inevitable consolidation and failures on the horizon bad news? Not necessarily. In fact, we should begin preparing now in the media, through open discussions and politics, to tell the story of the companies that emerged from the "Dot-com Bubble Burst" such as Google, Amazon, and Yahoo, and the fact that similarly strong players will emerge from the biofuels boom/bust.

There will be some exciting companies that materialize from the coming shakeout as true powerhouses in genetics, biotechnology, enabling technology, logistics, processing and and downstream value-added products.

Please feel free to contact Pete Nelson of BioDimensions at to discuss this article. This article is republished and used with permission of BioDimensions.

Untitled Document


Energy Storage and Geothermal Markets Look To Team Up in the Hunt for Lithium

Meg Cichon In today's fast-paced tech environment, no one can make a splash quite like Elon Musk. So when he decided to enter the energy storage game in 2014, he did it with gusto. Musk is now in the process of building what he coined...

Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integr...

UK Government Proposes Solar and Biomass Subsidy Cuts

Alex Morales, Bloomberg The U.K. proposed to reduce support for the solar and biomass-power industries to help consumers who fund the subsidies through their energy bills. Ministers plan to end a government aid program for small solar projects a y...

Some Hope for US Renewable Energy Tax Credits As Extension Bill Passes Committee

Vince Font In a lopsided 23-3 vote, the U.S. Senate Finance Committee voted yesterday to extend a number of renewable energy production tax credits through the end of 2016. The vote allows developers of wind, geothermal, biomass, land...
Peter Nelson is a principal in BioDimensions, which provides services and makes investments in startup companies developing new green technology. He is an advisor to Arkansas-based Infinite Enzymes and Ontario-based Stemergy, both of which are wor...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @megcichon @jennrunyon



StartUp Green

AREI, American Renewable Energy Institute, in partnership with ...

2015 AREDAY Summit

The 12th Annual AREDAY Summit, August 8-13th in Snowmass Colorado. Engag...

SAP for Utilities

SAP for Utilities is North America’s most comprehensive utilities ...


Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

SAP for Utilities Blog

The Eventful Group produces the annual SAP for Utilites Conference ...

Renewables make huge strides globally in 2014

Renewable sources of energy are making an increasing impact on the globa...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now