Not Your Normal Start Up...

I recently attended official media event hosted by Okanagan Biofuels, Inc. (www.okanaganbiofuels.com). If you are a start up technology company, you will likely be green with envy at this new emerging innovator. How many of us dream of owning a patented process to a virtually guaranteed market where demand for our product outstrips supply, where the Federal and Provincial governments back your project, and your key challenge isn't finding investors or creating customers?

From left to right, key Okanagan Biofuels, Inc. executives include: Fraser MacKay, Vice-President of Marketing; Alexander V. Kopp, President & CEO; and, Richard M. Marshall, Vice-President Operations.

Okanagan Biofuels, Inc., located at the site of the former Hiram Walker distillery in Kelowna, will become Canada's first fossil fuel free and energy independent ethanol manufacturing facility. The $110 million construction project is set to begin shortly on the facility, which will use corn, wheat and other biomass to make ethanol, a renewable and clean source of energy.

Even though the demand for ethanol in Canada today far outweighs supply, there are several factors that will continue to fuel the demand for ethanol. As countries like Canada adopt the Kyoto Accord to reduce greenhouse gas emissions, ethanol will continue to be a natural choice. Also, the BC government is considering mandating a five per cent ethanol use, which will spark the industry over the long term.

There are several key factors that help to differentiate Okanagan Biofuels, Inc. from their ethanol competitors:

• Unique technologies that combine a traditional front-end ethanol facility with a patented backend anaerobic digestion system aimed at revolutionizing the ethanol industry around the world.
• Significantly different natural gas usage, power demands and profit potential. For example, traditional ethanol plants require 1,000,000 GJ of natural gas per year, have large power demands and make about $5 million profit per year. Okanagan Biofuels will not require any natural gas, will create a surplus of power of 130,000 Mwh per year and is expect to earn double or $10 million in profit per year.
• The plant will produce residual green power - enough to satisfy approximately 20% of Kelowna's power requirements - and concentrated liquid and solid organic fertilizers which are by-products of ethanol production.
• The economic benefits to the Okanagan will be significant: up to 60 jobs at the facility within the first year and 400 to 600 additional spin-off jobs related to farming, transportation and other aspects of ethanol production and delivery.
• Access to existing US markets, such as California, which is a large user of gasoline additives.

In considering all of the upside associated with this project, I enjoyed my conversation with the management team at Okanagan Biofuels - Alexander Kopp, President and CEO; Richard Marshall, Vice-President of Operations and Fraser MacKay, Vice-President of Marketing. With such a huge market opportunity in front of them, their experienced management team is poised to put Kelowna on North America's alternative energy map. The key to Okanagan Biofuels' long term success won't be finding financing or creating new customers, rather it will be a set of very different challenges: to properly manage their growth opportunities and to actually deliver on their promises. Problems that 99.99% of Okanagan start-ups would love to have.

From my perspective Okanagan Biofuels, Inc. encapsulates what makes the Silicon Vineyard so attractive - taking a unique market opportunity that could be capitalized upon anywhere in the world and choosing to live and play in the Silicon Vineyard.

Steve Burns, CA, CMC, CFP is the President & CEO of Burns Innovation Group Inc. and Steve Burns Inc. Chartered Accountant, which provides consulting and accounting services to technology companies.

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