Gas farming startup Luca to withdraw its IPO

The second greentech startup that had planned an IPO this month has now withdrawn its plans citing market conditions. On Monday afternoon Luca Technologies, a startup which uses biotech to produce natural gas via naturally occurring microbes in coal beds, announced that it intends to withdraw its IPO plans due to “adverse market conditions.”

Earlier this month solar thermal company BrightSource Energy also withdrew its IPO plans citing poor market conditions. Looks like the greentech IPO revival is just not panning out. Luca’s CEO Bob Cavnar said in a statement:

The current market, depressed natural gas prices and ongoing economic instability do not support an environment for us to complete an IPO even though we were well received by potential investors.

Cavnar also said “we believe there are more attractive opportunities for us to finance our growth strategy.” Which points to one of the problems with this crop of greentech IPO-hopefuls: they’ve been looking to go public as a fund raising mechanism. And their lack of revenues and profits just might not be attractive enough to investors.

Luca filed to go public back in the Summer of 2011 and planned to raise as much as $125 million. But the company is in an early commercial stage and only generated $1.06 million in operating revenues for 2011, with a net loss of $18.02 million in 2011. Luca says in its S-1 that “as of December 31, 2011, we had an accumulated deficit of approximately $81.9 million.”

If the tech ever is moved to a large scale it could be interesting. Essentially there are tiny microbes already found in the water of coal beds, and Luca identifies these environments and boosts the conditions to get the microbes to produce as much methane as possible. Then Luca collects the gas — called gas farming — and sells it.

There are companies already targeting farming natural gas from coal beds, but Luca says its technology, which it developed in 2003, is a whole lot cheaper than the standard. Luca said last year that it will be selling the natural gas into the $700 billion global natural gas market.

Investors in Luca Technologies include Kleiner Perkins Caufield & Byers, Oxford Bioscience Partners, mRNA Fund, and BASF Venture Capital.