Fulcrum Energy, billed as the first biofuel company to use zero-cost feedstock, has filed with the SEC in preparation for a $115 million initial public offering, despite not yet having generated any revenue.

Following Mascoma and Elevance, Fulcrum is the third big industrial biotech firm this month to announce an IPO. The firms are riding a wave of IPOs in the past year from biofuel and green petrochemical producers, which highlights the question: why is this happening now?

Considering that a majority of the firms are producing alternatives to petroleum products, oil prices may be a factor. NYMEX futures prices for light-sweet crude oil have risen steadily since the price collapsed in late 2009 after peaking at over $100 a barrel in 2008. While the futures have dipped as of late, they are still at about $80, slightly up year-over-year from 2010. Two years of growth in oil future prices, preceded by constant growth before the price collapsed, may have been enough to convince a number of startups to ready themselves for IPOs.

Rising oil prices are certainly a boon for Fulcrum, which has based its business model on cheap production. Fulcrum utilizes zero-cost feedstock which, in normal terms, is municipal garbage. This is obviously cheaper and less subject to price fluctuations than more traditional, crop-based feedstocks, but there is certainly a question of whether or not solid waste has the quality necessary to produce as high yields as crop feedstocks.

Additionally, Fulcrum relies on securing municipal contracts to guarantee its feedstock supply, which has yet to prove to be as stable as more traditional sources. For its part, Fulcrum states in its Form S-1 that it has “entered into long-term, zero-cost contracts for enough [solid waste] located throughout the United States to produce more than 700 million gallons of ethanol per year.”

While Fulcrum says its core technology has been demonstrated at full scale, its first commercial-scale facility isn't expected to begin production until the second half of 2013. The Sierra BioFuels Plant won't be at its full capacity of 10 million gallons a year until three years after that. Fulcrum says that its municipal contracts guaranteeing feedstock supply allows the company to peg a target ethanol price of less than $1.30 a gallon that's expected to be stable in the long term. That's based on the company's estimate that its current processes will produce net yields of 70 gallons of ethanol per ton of municipal waste.

The filing states that the yield estimate is efficient enough for the company “to operate profitably in the absence of economic subsidies.” Subsidies themselves, along with government investment in the industry, may also be factors in firms pushing for IPOs this year, especially as of late.

This year's focus in Washington on the federal budget means that direct investment, loans and subsidies aren't as secure as they were in past years. For biotech firms which have yet to turn a profit, that insecurity may be an impetus for preparing an IPO to guarantee equity.

For example, Fulcrum's construction of the Sierra plant is dependent on a Department of Energy loan that isn't as guaranteed as it might have been in the past. Mascoma, another biofuel company prepping an IPO, had 86 percent of its 2010 revenue come from government grants.

-      According the the S-1, Fulcrum has yet to produce any revenue (governmental or otherwise) since its 2007 inception. That's a worrisome sign for a company that's the first to utilize its business model and production processes at a commercial scale.

-      Fulrcum's net loss for 2010 was $18.0 million. In the first six months of 2011, the company has lost $13.8 million.

-      Fulcrum has a total deficit of $63.8 million as of June 30, 2011.

-      As of June, the company held $41.9 million from sale of preferred stock and held $29.6 million in senior secured convertible notes and interest. Cash on hand totaled $861,000.

Comparing Fulcrum, which hasn't reported revenue from government grants, to Mascoma, whose revenue is mostly grants, is an interesting glimpse into what the biotech industry may face if government austerity measures become more strict. In any case, it's not hard to imagine that continued political volatility may compel the green biotech industry to push for other sources of equity.