Answering the need

The development and demonstration of emerging technologies have suffered from a financing gap, making them a weak link in the innovation chain. That gap has proved to be a significant barrier to market entry for many Canadian entrepreneurs, especially those involved in developing sustainable technologies.

For certain technology solutions, this financial barrier is increased by a requirement for high capital expenditure (high CAPEX).  Traditionally, projects with high CAPEX requirements rely on debt financing and equity financing to support their larger demonstration-scale activities.

Cellulosic ethanol and biodiesel technologies are emerging and therefore have greater technology risk than more established industries.  With regards to debt financing, lenders have a low risk tolerance particularly for technology risk (i.e. scale-up and process integration risk). 

On the equity financing side, Canadian early stage equity risk takers are still primarily geared to conventional energy & mining.  The international equity markets could be accessible to Canadian companies in the clean-tech space. However, this capital may come at a steep price.

With the NextGen Biofuels Fund™, SDTC’s aim is to increase each project’s chances of success to market by helping them bridge the high CAPEX gap while, at the same time, helping them to scale-up their technology solution to a large, demonstration-scale plant. 

By taking these steps, we effectively de-risk clean technologies and prepare them for downstream financing.