In 2010, investors gave $930 million to alternative fuels start-ups, a four-year low. However, investment climbed dramatically to an all-time high of $698 million for companies with flexible technologies that can use a variety of feedstocks or generate diverse end products. Flexibility increases a technology’s addressable market, provides secondary revenue streams, and unshackles technologies from price volatility.

Specifically, synthetic biology start-ups – which develop novel organisms ranging from Escherichia coli (E. coli) to yeast – have attracted the most funding since 2004: $1.84 billion or 28.4% of the total. Investment dipped just 16.7% from $436.5 million in 2007 to $358.3 million in 2009, and investments actually peaked last year at $447.0 million, representing 25% growth over 2009. Driving this growth were companies with novel and flexible technologies to make both fuels and chemicals, such as Solazyme ($60 million Series D), LanzaTech ($18 million Series B), and LS9 ($30 million Series D). Since those 2010 transactions, Solazyme and several other venture-backed companies in the space have launched successful IPOs (Client registration required).

But investors shouldn’t ignore other flexible technologies. Investment in thermochemical processes (pyrolysis, gasification, torrefaction) did not trail far behind synbio. Technologies in this category account for 43.3% of the funding thus far in 2011. Representative companies include Virent and Elevance, whose catalytic processes produce a range of fuels, rubbers, oils, and plastics. Technologies capable of using agricultural, solid, or gaseous waste, such as LanzaTech, GlycosBio, and Ignite Energy, present further opportunities for investors.