The global transition from fossil fuels to renewable energy is one of humanity’s biggest challenges — and one of investors’ best opportunities.
When we think of making the switch to renewable energy, we often think in terms of electrification: switching from coal to wind and solar, powering cars with batteries instead of gasoline, or installing heat pumps and electric stoves in houses instead of gas furnaces and stoves.
But electrification only solves part of the energy problem. Some equipment needs lots of energy delivered at high power rates without taking up too much space. Think airplanes, boats, trucks, and factories. For these use cases, batteries are currently too big, too expensive, and too weak.
That’s why the world still needs fuels. And startups like Manta Biofuel are working to develop sustainable and petroleum-free fuels. Manta Biofuel’s technology cleans polluted water using a magnetic separation system and converts algae into carbon-free renewable oil.
Manta Biofuel took the equity crowdfunding market by storm two years ago. Between November 2020 and July 2021, the company raised more than $1.8 million from equity investors and was rated a Top Deal on KingsCrowd. The company’s low $6 million valuation cap, team, performance, and solution made it a strong investment opportunity at the time.
I called Manta Biofuel CEO Chris Lindsay to learn more about the company’s progress during these last two years. If I had to summarize it in one word, I would say “clarity.”
A Top Pivot for a Top Deal
The Manta Biofuel team was humble enough to realize that the company’s biofuel product would not be ready for the market for a few more years. The team also realized that, instead of constantly relying on investors — which is risky and artificially grows its valuation — it had to find a way to generate revenue.
This clarity on the startup’s future inspired the team to use its mobile water treatment system to generate revenue from water filtration services. As a result, Manta Biofuel made its first sale of $14,160 in the third quarter of 2022. This signals the start of product-market fit.
The Path to a Blooming Startup
Manta Biofuel has contacts in the water treatment industry and wants to grow by completing trials and continuing its water cleaning service. The company wants to break even by the end of 2024.
In the meantime, it plans on investing in the research and development of the biofuel side of its business. Manta Biofuel has to reduce costs, which it could do by recycling the magnetite it uses to harvest algae. Chris hopes that the company’s biofuel process will be ready for commercialization in three to five years.
Still an Attractive Investment
Manta Biofuel’s pivot is a smart move. And the company still offers a strong investment opportunity. The current startup investment market makes it difficult for startups to raise funds. Developing a water treatment solution is a good way for the company to reassure investors of its potential while ensuring its survival in a difficult funding environment. Creating a new way to produce crude oil is capital intensive, but Manta Biofuel is mitigating this risk for investors.
At the same time, the company raised its valuation from $6 million to just $9 million in two years. With its progress and its lower risk, Manta Biofuel is currently raising at an attractive valuation for investors.
