A lead product in the right proportion
When petroleum arrived, the lead product was more or less kerosene for lamp oil, to replace whale oil and tallow candles for a world that wanted more light and was running through the whales very quickly. There was enough value in the lead product that the petroleum business was viable long before anyone found a good use for the range of light cuts we know as gasoline.
Looking at algae, the lead product varies from venture to venture. Astaxanthin for some — though the market seems over-saturated in supply, if you ask us. Why not omega-3 fatty acids — algae’s replete with them (that’s where the fish get them from)? Omega-3s are to algae what kerosene was to petroleum or the Model S to Testa — a nice pioneer product that gets a venture out the door. Sales volumes are limited — but new ventures have less production anyway. Omega-3s retail at something like $280 per kilo, or $280,000 per metric ton (as Vitacost explains, here).
In the case of Cellana, that’s EPA. There’s another omega-3 that’s more widely used around the world — and that’s DHA. But supply is broad, players are established, and you can make DHA via microbial fermentation, so there’s more competition. EPA offers more of a market-opener to a small company.
But if every adult around the world had a 1 gram supplement per day, that’s 1.8 million tons per year, or about 60,000 acres of algae cultivation. Not going to give corn a run for it’s money. So, it’s a pioneer product — and a margin sweetener.