Potential Hurdles

Finance-related

As many start-ups, Upcycled Aromatics will require a significant amount of cash investment in its initial phase. In order to diminish this requirement, in addition to the traditional means of financing (angels, VC's, etc.), we will approach our feed suppliers (paper recycling plants) with an innovative plan: Front end payment for the installation of our technology for 3 years at a cost lower than the equivalent cost of their waste removal (estimated at $3000 per day for our first partner). This will allow us to secure capital early on in the development of the company. This will help us face the challenge of securing funding without excessively diluting our ownership of the company.

For the early investment, it is a well known generality that new investors will evaluate a company's worth as much lower than the worth perceived by pre-existing investors. As a consequence, these pre-existing investors feel they are giving away too large a share of the company in exchange for the cash investment. In order to avoid this scenario, we are exploring a variety non-diluting funding options:

-Crowdsourcing (ie. Kickstarter)

-Licensing our technology in exchange for a cash payment

-Venture debt (Loan with fixed term and high interest rate)

-Convertible debt (Venture debt with option to convert to equity)

-Royalty financing (Cash payment in exchange for percentage of future profit)

-Upfront payment by feedstock suppliers

Regulatory policy

Since some of the potential buyers of the shikimic acid and cinnamic acid are pharmaceutical companies, we may meet the problem that our product cannot get approval from regulators ( e.g FDA).

In order to mitigate this possibility, we plan to market our product to companies in a variety of industries including the pesticide industry, chemical industry, etc.

Price volatility of the product

The price of our products will change with the fluctuations of market demand, and in some cases the price may be so low that we cannot sustain daily operations.

Having the ability to produce a variety of products means we are not at the mercy of one chemical's price. By shifting production to emphasize whichever chemicals are most profitable at a given time, we can adapt to variable market conditions. If necessary, we will eliminate unnecessary costs such as trade shows and advertisements.

Competitive market

Since the Shikimic market is controlled by Roche, we may encounter a strong entry barrier.

We can counter this effect by seeking out customers who need cheap Shikimic acid. In addition, we may gain significant market share if we are able to supply Shikimic acid at a time when Roche is limited by a bad Chinese star anise harvest.