LEAN BUSINESS MODEL CANVAS

PRODUCT SIDE

IDENTIFIED PROBLEM

China produces approximately 865 million tons of crop straw annually, of which about 731 million tons are recoverable. Although the comprehensive utilization rate of straw has reached nearly 90%, tens of millions of tons are still openly burned or discarded due to a lack of viable economic uses.

Meanwhile, under the carbon neutrality vision, the petrochemical industry is actively seeking to reduce its dependence on fossil-based feedstocks and expand bio-based product development. As fundamental organic acids, volatile fatty acids (VFAs) produced through biomanufacturing align with the dual trends of lowering carbon emissions and substituting fossil resources. Taking acetic acid as an example, China is the world’s largest producer and consumer; however, conventional production methods remain highly energy-intensive and carbon-emitting. By contrast, fermenting agricultural residues to produce acetic acid can reduce carbon emissions by several tons per ton of output compared with petrochemical routes, while simultaneously addressing agricultural waste disposal—achieving dual environmental and resource benefits.

Driven by policies such as the “Plastic Ban,” China’s biodegradable materials market has experienced rapid growth, reaching a market size of approximately 29.9 billion RMB in 2024, representing a year-on-year increase of nearly 30%. The market requires technologies capable of providing stable bio-based organic acid feedstocks to produce biodegradable plastic products. Volatile fatty acids (VFAs) serve as key intermediates for a wide range of bio-based products and can be utilized in synthesizing biodegradable plastics and biofuels. For instance, VFAs such as propionic acid and acetic acid can act as substrates that microorganisms convert into polyhydroxyalkanoates (PHAs) and other bioplastics.

Consequently, if a method were available to transform underutilized and wasted agricultural residues into VFAs, it would effectively fill a critical market gap while simultaneously preventing the environmental pollution caused by open-air burning, aligning with national policies on straw burning bans and resource utilization.

OUR SOLUTION

The core of our technology lies in the principle of a r u m e n - m i m i c k i n g microbial system. In ruminant animals, the rumen hosts a highly diverse and functionally complementary community of anaerobic microorganisms—including bacteria, fungi, protozoa, and archaea— which efficiently degrade coarse fibers 9 VFA SUPPLIER and ferment them into volatile fatty acids (VFAs) for host absorption. Our team collected rumen fluid from fistulated cattle. It introduced it as inoculum into an artificial reactor designed to simulate the anaerobic, mildly acidic-to-neutral (pH ~6–7), and constant temperature conditions of the rumen. Crushed corn stover was directly fed into the system without complex pretreatment.

Experimental validation showed that corn stover underwent rapid hydrolysis and acid production within 72 hours in batch fermentation, yielding a VFA concentration of 8.99 g/ L. Hemicellulose and cellulose degradation rates reached approximately 54.3% and 40.2%, respectively, while even the recalcitrant lignin fraction exhibited 8.6% degradation. The main fermentation product was acetic acid (≈63.6%), followed by propionic acid (24.4%) and butyric acid (8.5%). VFA yield reached 0.42 g/g (based on volatile solids), significantly higher than the 0.24–0.27 g/g yield typically reported for conventional anaerobic sludge fermentation. Unlike conventional processes requiring chemical or physical pretreatment, this biomimetic system could process unrefined lignocellulosic feedstocks directly, while achieving equal or superior conversion efficiency

Further validation was also conducted in a self-designed semi-continuous fermentation reactor, which confirmed the process’s robustness and tolerance to high organic loading. The reactor operated stably for 180 days under corn stover loadings of 2.5%, 5.0%, and 8.0% (w/v), achieving average VFA concentrations of 8.5, 11.1, and 13.3 g/L, respectively. Notably, even at an 8% substrate loading, the system maintained effective acid production, representing the first empirical demonstration of stable rumen fermentation at such high substrate concentrations. It is worth noting that volatile solids degradation efficiency decreased under high loading (≈29% at 8% loading, compared with 53% at 2.5%), indicating incomplete substrate breakdown but higher VFA concentrations. This suggests that increasing feedstock input can elevate acid production but requires careful consideration of residual management.

Overall, the rumen-inspired microbial consortium demonstrated efficient fiber hydrolysis and acidogenesis across various substrate concentrations, delivering rapid and stable VFA production. These results confirm the feasibility of harnessing complex microbial consortia for biomass waste valorization and establish a strong technical foundation for scale-up and industrial application.

UNIQUE VALUE PROPOSITION

We promote our key values as Improved Efficiency, Expanded Compatibility, and Cost Advantage.

Improved Efficiency

Our technology has achieved VFA yields and concentration levels in the laboratory that far exceed those of conventional processes. The hydrolysis step typically limits Traditional anaerobic sludge fermentation, resulting in low VFA concentrations and long processing cycles. In contrast, rumen microbial fermentation can generate more than twice the acid output of conventional sludge methods within only 72 hours. Particularly noteworthy is that this high efficiency is achieved directly using crude raw materials without chemical pretreatment. As a result, the conversion rate per unit of raw material is significantly higher, reflecting an improved feedstock utilization.

Expanded Compatibility

Rumen microorganisms are renowned for their “omnivorous” capacity to degrade diverse types of plant fibers and organic matter. Studies have demonstrated that this microbial consortium can efficiently digest corn stalks, lawn clippings, rice straw, and other feedstocks, achieving VFA yields of 0.3–0.4 g/g within three days. Such broad substrate adaptability greatly expands the scope of application, allowing the technology to be tailored to the specific types of agricultural waste available in different regions, rather than being confined to a single raw material. This represents a clear advantage over fermentation processes that require specific pretreatments or highly refined sugar-based feedstocks. For instance, cellulase-based organic acid production demands high-purity starch or cellulose. In contrast, the rumen-inspired system can directly process crude, impurity-rich feed materials, lowering raw material costs.

From a competitive standpoint, this versatility allows the technology to switch feedstocks according to seasonal or regional availability—such as corn stalks, wheat straw, rice straw, forage grasses, or soybean residues—thereby enhancing year-round operational flexibility and reducing dependence on a single supply source. This multi-feedstock compatibility is a competitive advantage that traditional processes struggle to achieve, and it significantly strengthens the technology’s commercial resilience.

Cost Advantage

By contrast, competitors such as conventional biogas engineering firms prioritize methane production, with acid generation treated as an intermediate stage and acid accumulation deliberately avoided. Meanwhile, other organic acid fermentation processes (e.g., lactic acid production) require sterile conditions and costly nutrient inputs. The superior yield and efficiency of this technology thus confer a distinct economic advantage, particularly in transforming low-value waste into high-value products. This creates a cost-performance barrier that differentiates the technology from existing alternatives.

KEY METRICS

We have divided the management indicators into technical, operational, market, strategic, and social impact indicators to evaluate the entire process from production to sales comprehensively. A detailed table of indicators and the corresponding proposed objectives in each time period is provided in the appendix.

1. Technical Indicators

(1) VFA Yield and Concentration - The conversion rate per unit of raw material (g VFA/g VS) is the core indicator of process efficiency. VFA concentration directly affects downstream separation costs and the end-use value of the product. (2) Substrate Degradation Efficiency - Degradation rates of hemicellulose and cellulose reflect the extent of feedstock utilization. Partial lignin degradation also impacts the cost of residual treatment. (3) System Stability - Key parameters include the pH fluctuation range, microbial community diversity, and length of continuous operation. Reactor uptime (fault-free operating time) is also a critical measure.

2. Operational Indicators

(1) Feedstock Utilization and Supply Chain - Collected straw volume (tons/month) and collection–storage–transportation cost per ton. Feedstock utilization rate = actual input ÷ theoretical collectible volume. (2) Capacity Utilization - Actual VFA output ÷ designed plant capacity. Reflects whether the facility is operating at full potential. (3) Unit Cost and Unit Revenue - Production cost per ton of VFA (including feedstock, energy, labor, and depreciation). Sales revenue per ton of VFA and trends in gross profit margin.

3. Market Indicators

(1) Customer Acquisition and Retention Rate - Number of long-term procurement contracts signed. Customer renewal rate and repeat purchase rate. (2) Market Penetration Rate - Proportion of product adoption within downstream industries (e.g., substitution rate of VFAs in PHA production). Share of the target bio based VFA market. (3) Sales and Cash Flow Growth Rate - Monthly/quarterly sales growth rate. Accounts receivable cycle and cash flow turnover ratio.

4. Strategic Indicators

(1) Policy Support and Subsidies - Amount of government subsidies received and share of total revenue. Inclusion of projects in local/national circular agriculture or “Dual-Carbon” demonstration programs. (2) Partnerships - Number of agreements signed with leading agricultural enterprises, chemical companies, and environmental firms. Standing and stability of these partners within the value chain. (3) Financing and Investor Satisfaction - Financing success rate and valuation changes. Level of investor recognition regarding technological milestones and market validation.

5. Social Impact Indicators

(1) Carbon Reduction - Reduction in CO₂ emissions per ton of straw converted (relative to open burning). Whether the reductions can be quantified and monetized within carbon trading schemes. (2) Waste Valorization Rate - Proportion of collected straw/organic waste effectively utilized. (3) Social Benefits - Number of rural jobs created. Contributions to farmland environmental improvement and reduction in straw burning

MARKET SIDE

CUSTOMER SEGMENT

Within the VFA industry, the most common business model is the raw material–oriented B2B supply model. In this approach, companies supply bio-based VFA feedstocks by constructing medium- to large-scale fermentation production facilities and supplying directly to downstream industrial enterprises. This represents a typical B2B arrangement. Examples include bulk supply of calcium propionate (as an anti-mold feed additive) to plastic additive companies, or the provision of acetic and butyric acids as monomers to biomaterials manufacturers. Demand is typically secured through long-term supply contracts.

Some companies also complement this model with waste-treatment services, receiving raw material subsidies (e.g., charging service fees for straw collection and processing). This creates a “dual-income” model. Under such an arrangement, profitability depends primarily on achieving economies of scale and reducing production costs, with bulk commodity chemical supply as the core revenue stream. The advantages of this model lie in its large market potential and the ability to establish multiple supply chains rapidly. However, it also requires substantial upfront investment in factory construction and sophisticated inventory management capabilities - resources that early-stage startups generally lack. Our founding team is acutely aware of these constraints; therefore, we determined that this model is not feasible.

After extensive internal discussion, our team pursued a customized fermentation service model. The company provides modular VFA fermentation plant construction and operational services tailored to regions or clients with abundant organic waste resources in this approach. For instance, we can design and install a rumen-type fermentation unit for agricultural parks to process manure and crop residues into VFAs. The resulting products may then be utilized directly by the client or repurchased by the company.

This model resembles a “turnkey project + BOS (Build-Operate-Share) operation”, in which the company delivers the technical solution and participates in plant operation. Revenue is generated through service fees and profit-sharing arrangements. The model allows clients to resolve waste-management challenges while benefiting from product revenues. Moreover, for clients requiring specific acid compositions (e.g., chemical plants demanding a high proportion of acetic acid), the company can fine-tune process parameters to deliver customized VFA formulations, thereby increasing product value added. Compared with the raw-material supply model, this approach requires lower capital expenditure and distributes risk between company and client, though it demands strong technical and managerial expertise. It is therefore well-suited for promotion in collaboration with local governments and environmental enterprises. Consequently, according to our business model, we have identified the following customer segments

2) Organic-Waste Treatment Enterprises

This category includes major grain producers and fruit-and-vegetable estates that routinely handle large quantities of crop residues and cull produce. Under traditional practices—open-air burning or direct field return—both environmental outcomes and economic returns are suboptimal. These operators seek to convert agricultural wastes into value-added products (e.g., soil amendments, feed inputs), representing latent demand for customized fermentation services.

1) Large Plantations (Cooperatives and Agribusinesses)

Environmental firms and third-party service providers specializing in collecting and processing agricultural organic wastes may also be strategic partners or customers. Many already operate composting or biogas facilities and want to adopt new technologies that improve efficiency and profitability. Rumen-inspired fermentation can serve as an upgrade module to raise the degradation efficiency of lignocellulosic wastes and enhance product value. Embedding customized fermentation services into their existing value chains can create mutual gains.

3) Rural Circular-Economy Parks

Government- or flagship-enterprise-led agricultural circular parks aggregate regional farming wastes for centralized treatment and demonstration. These parks require integrated technical solutions and operational support to establish replicable showcase plants. As a technology partner, the service provider can supply on-park fermentation equipment, positioning the park as a model project. Public authorities often favor such demonstrators, which can facilitate resource linkages. As experts from the Ministry of Agriculture and Rural Affairs have noted, localities should select appropriate technology models, strengthen typical demonstrations, and explore new, scalable pathways

4) Leading Agricultural Enterprises and Agri-Food Processors

Large, vertically integrated agrifood companies (e.g., aquaculture and grain-oil processing) possess waste-treatment needs and commercialization capabilities for fermentation outputs. These clients typically strongly accept specialized services, ample capital, and explicit sustainability goals. Collaborations can channel VFA outputs into higher-value products—such as feed additives and bio-based materials—thereby increasing value capture and closing the loop from waste to product. This aligns with corporate green-transition mandates and policy guidance encouraging leading enterprises to drive circular utilization and increase farmers’ incomes

CHANNEL

To effectively target our segmented customer segments and deliver value, we plan to adopt a mixed channel design to reach potential customers

1. Online Promotion and Digital Marketing

Leverage the internet and new media to raise awareness of the service among target customers. Establish a professional website and official WeChat, Douyin (known as TikTok), and Xiao Hongshu (known as Little Red) account to regularly publish success stories, explain technical principles, and share data on resource recovery outcomes. Distribute sponsored content and advertisements on agricultural and environmental portals and industry forums, while optimizing search keywords such as “straw valorization.” Short-form videos showcasing reactor operation and product applications can be disseminated through platforms like Douyin and Kuaishou to attract audiences interested in modern agricultural technologies. Online channels expand geographic reach and lay the groundwork for subsequent offline engagement.

2. Offline Ground Promotion

Build trust through on-plant communication and demonstrations in frontline agricultural settings and at industry events. Participate in trade fairs and expos—such as environmental technology fairs, agricultural industry expos, and rural development exhibitions—where booths can display fermentation products and real-time monitoring systems. Host promotional or demonstration events jointly with local agricultural bureaus or veterinary stations in high-potential regions, bringing together major farm operators and cooperatives for technical briefings. Early adopters can be invited to share testimonials, providing compelling peer-to-peer validation. Open-house events at benchmark users’ plants can visually demonstrate the “waste-to-resource” transformation, enhancing credibility

3. Government Resource Alignment

Government collaboration is a critical pathway for rapid scale-up. With agricultural waste valorization emphasized in national policy under the “market-led, government-supported” principle, startups should actively partner with government bodies. Key approaches include:

Participation in pilot projects: Seek inclusion in demonstration programs run by the Ministry of Agriculture and Rural Affairs or local authorities, leveraging government endorsement to expand influence.

Policy campaign collaboration: Support government-led outreach on straw burning bans and manure management by providing technical solution briefings, ensuring that policy stakeholders are aware of available mature services.

Subsidy facilitation: Monitor manure and straw treatment subsidy schemes to help clients secure equipment purchase grants and operational subsidies, reducing barriers to adoption.

Local governments and township officials can act as intermediaries, linking service providers with farms and cooperatives in their jurisdictions. Indeed, several regions have already piloted “government + technical experts + cooperatives/farmers” models, where close coordination with agricultural extension specialists accelerates the replication and scaling of new technologies.

4. Industry Organizations and Partnership Networks

Broaden market reach by collaborating with associations, research institutes, and leading enterprises. Such partners include:

Industry associations, which co-host training sessions and forums and seek inclusion of fermentation services in industry solution recommendations, publish technical articles in association bulletins to raise professional visibility

Research institutes, which partner to establish pilot demonstration bases and secure authoritative testing data and evaluation reports that strengthen market credibility

Leading enterprises, which form strategic partnerships with large agribusiness groups or listed environmental companies, who can introduce fermentation services into their bases or customer networks. Integrating fermentation modules into their existing solutions enables “piggybacking” on established sales and service channels to reach small and medium-sized clients efficiently

UNFAIR ADVANTAGE

Operational stability over extended periods is critical for industrial applications. In continuous operation for 180 days, our technology maintained steady VFA production without collapse or microbial inactivation, demonstrating the strong dynamic stability of the microbial consortium. Although community composition adjusted under conditions of high acid accumulation, acidogenesis was sustained—an advantage rarely achievable with single-strain fermentation. Rumen microbial communities exhibit relative tolerance to pH fluctuations; for example, production remained within a normal range even when pH dropped to 5.95 in experiments, owing to the consortium’s capacity for self-regulation and adaptation through community shifts. Conventional anaerobic digestion often experiences catastrophic acidification if pH declines too rapidly. Moreover, while rumen microbes thrive optimally at ~37 °C, certain species can also survive at mesophilic temperatures (20–30 °C), providing a degree of environmental adaptability. This flexibility facilitates deployment across diverse climatic regions. In summary, this technology demonstrates clear advantages in long-term operational stability and robustness, offering a strong assurance for industrial-scale implementation.

The rumen microbiome is highly complex, comprising hundreds of species of anaerobic bacteria and fungi, and sustaining their synergistic functionality represents a major technical challenge. At the same time, this complexity creates a competitive barrier, as it is difficult for new entrants to replicate such a specific microbial consortium. Research has shown that the core functional genera remain stable even when community composition shifts during fermentation, ensuring continuous acid production. Our team has developed methods to obtain a complete microbial consortium from bovine rumen fluid—without filtering out fiber-attached microorganisms—thus preserving lignocellulose-degrading capacity. By carefully controlling anaerobic conditions, temperature, and pH, we foster the growth of key fiber-degrading microbes such as Prevotella and Ruminococcus, thereby ensuring system stability and efficiency. This ability to harness and manage a symbiotic microbial community constitutes one of the moats protecting the technology

In contrast, conventional anaerobic digestion typically relies on activated sludge consortia, which exhibit low hydrolysis efficiency for lignocellulose, limited community diversity, and high sensitivity to environmental disturbances. By comparison, the rumen inspired system demonstrates greater disturbance resistance and self-regulatory capacity, maintaining core functions even under high substrate loads or lower pH conditions. Consequently, this technology enjoys clear first-mover advantages and distinctiveness in both microbial resources and process know-how

Our unique reactor configuration forms an additional barrier to entry for potential competitors. The rumen-inspired fermentation process involves the efficient contact between solid fibrous substrates and a liquid-phase microbial system, and the influence of acid accumulation on pH stability. Our team designed a semi-continuous laboratory reactor equipped with mechanical stirring, an anti-backflow device (gas bag), and a thermostatic water bath to address these challenges. This system was successfully operated for six months, maintaining stability even at a solid concentration of 8%. Such operational experience provides valuable data for scale-up design. For example, increased slurry viscosity and impaired mass transfer present engineering difficulties at higher solid loadings. Our team observed that a 10% solid loading became unmanageable due to the strong water absorption of corn stover, which hindered effective mixing. From this, strategies such as increasing stirring power or employing staged feeding were identified as potential solutions for industrial-scale applications. The competitive advantage lies in our team’s ability to pioneer solutions to the engineering challenges of high-solid anaerobic fermentation, achieving the first demonstration in the industry of stable VFA production under high loading conditions. In contrast, most existing studies have been limited to much lower loadings (≤2.5%). This technology achieves a higher maturity level through distinctive optimization of reactor design and operational parameters.

III. VALORISING VALUE

REVENUE STREAMS

Our revenue mainly comes from two sources:

1) Waste-Treatment Service Fee (Service Fee)S

Clients (e.g., large growers, agricultural parks) deliver straw to the company for processing. The company provides customized rumen-inspired fermentation services to address open burning or low-value utilization of straw. Fees are charged throughout, benchmarked to an industry average of 200 RMB/ton (to be adjusted based on local subsidies and competitive conditions). The primary payment motivation is burden reduction: compliant disposal, reduced risk of environmental penalties, and improved alignment with government environmental performance targets.

2) Sales of Fermentation Products (VFA Revenue)

The rumen-mimetic system converts straw into mixed VFAs (acetic, propionic, butyric acids, etc.) used as feedstocks for chemicals, feed additives, and bio-based materials. Current domestic reference prices for mixed short-chain fatty acids are around 2,000 RMB/ton, with certain high-purity single acids (e.g., propionic acid) priced higher.

Revenue Estimation

To estimate the potential market size, we use the following Baseline Data and Assumptions:

Recent studies and statistical reports estimate annual crop straw output in China at 700–880 million tons, with several sources citing approximately 865 million tons/year.

In 2021, total utilization was 647 million tons, representing a comprehensive utilization rate of 88.1%; about 400 million tons were returned to farmland. Approximately 11.9% (≈87 million tons) is underutilized or inefficiently utilized

Utilization pathways in 2020: fertilizer application (62.1%), feed (15.4%), fuel (8.5%), substrate (8.7%), and raw-material use (1.0%). The latter—industrial valorization into chemicals and materials—remains extremely limited, indicating substantial substitution potential toward higher-value applications

Calculation Process:

VFA yield (t/ton straw) = VS ratio × VFA conversion yield (g/g VS) VS ratio: 0.88 (midpoint of 0.86–0.91 range) VFA conversion yield: 0.42 g VFA/g VS (based on batch 72h lab evidence) VFA yield=0.88×0.42=0.3696t VFA per ton dry straw Therefore, Revenue per ton of straw processed: Revenue/ton=Service fee + (VFA yield×market price) = 200 + (0.3696×2000) ≈ 939RMB/ton Based on the 87 million tons/year of underutilized straw:

Estimated Total Available Market (TAM) revenue = 87×106 tons × 939 RMB/ton ≈ 81.69billion RMB per year

Given the TAM calculated, assuming a 1% attainable penetration, Serviceable Available Market (SAM) volume: 87million tons × 1% = 870,000 tons/year, so SAM revenue (range) is estimated at ≈ 820 million RMB per year

Considering our stat-up’s limited production capacity, we further narrow the SAM to its 10%, 20%, 40% as our Serviceable Obtainable Market (SOM) in the worst, base, and best scenarios, so we have the following table. • Per-plant capacity Assumption: 100 tons/day (dry straw)×365days≈36,500tons/year • Number of plants: Determined by dividing the target annual processing volume by 36,500 tons, the result is rounded to the nearest whole plant.

COST STRUCTURE

Based on the cost structure (see appendix) in our preliminary laboratory trial, the total cost per experiment was approximately RMB 115 (≈ USD 16). This figure incorporates the costs of corn stover, rumen fluid, nutrient solution, nitrogen gas, serum bottles, gas bags, amplicon sequencing, and the annual amortization of laboratory equipment (incubator, stirrer, peristaltic pump, centrifuge, –80 °C freezer, etc.). Over 180 days, the cumulative experimental cost amounted to RMB 4,076 (≈ USD 566.13). From these experiments, we estimated that the production cost of one mole of the target compound was approximately RMB 11,520 in the laboratory.

However, this figure reflects research-level cost accounting and cannot be directly extrapolated to industrial applications. The reason is that many items included in laboratory calculations—such as equipment amortization, consumables, sequencing, serum bottles, and gas bags—are either absent from industrial settings or diluted across outputs at the scale of millions of tons. Considering the differences between laboratory and industrial accounting, the following adjustments must be made:

1. Raw material cost: Zero. In laboratory calculations, corn stover was valued at RMB 0.12/g (USD 0.01/g), but this cost is eliminated in industrial practice.

2. Rumen fluid: Required only at the start or during microbial re-inoculation. Continuous operation relies on self-sustaining microbial communities and sludge recycling, so there is no recurring cost per ton of feedstock.

3. Laboratory consumables: Items such as serum bottles, gas bags, and sequencing are not required in industrial production.

4. Equipment amortization: Laboratory “per-experiment” amortization is replaced by capital expenditure (CAPEX) depreciation and maintenance, allocated annually across millions of tons of throughput.

5. Major industrial cost categories: Utilities (electricity, heat, water, compressed air, neutralizing alkalis), operations and maintenance labor, repair and maintenance costs, depreciation, and financing.

stover capacity; 36,500 tons/year; 39 °C mesophilic conditions), so the updated cost structure is as follows:

Utilities:

Electricity consumption (mixing, conveying, online monitoring, etc.) ≈ 40 kWh/ton stover; at 0.70 RMB/kWh → 28 RMB/ton.

Heat maintenance is accounted for through energy equivalents above 40 kWh, partially offset by waste heat or biogas exchange.

Chemicals and nutrients:

pH neutralization/buffering (NaOH, ammonia water, ammonium bicarbonate, etc.) ≈ 30 RMB/ton (with a possible range of 20–60 RMB/ton depending on process).

Trace nutrients and antifoam ≈ 5 RMB/ton.

Labor: 18 staff members per plant, annual salary 120,000 RMB/person → 2.16 million RMB/year → ≈ 59 RMB/ton.

Maintenance: Assumed at 3% of CAPEX per year. A 100 tons/day facility with CAPEX ≈ 60 million RMB equals 1.8 million RMB/year → ≈ 49 RMB/ton. (For CAPEX in the 50–80 million RMB range, with 8–12 years depreciation and 2–4% annual maintenance, a reasonable cost range is 300–420 RMB/ton.)

Depreciation: 60 million RMB CAPEX, straight-line over 10 years → 6 million RMB/year → ≈ 164 RMB/ton.

Based on these factors, the baseline subtotal for unit treatment cost is: 28 + 30 + 5 + 59 + 49 + 164 ≈ 335 RMB per ton of stover.

In addition, approximately 10% of revenue should be allocated to marketing expenses. The following revenue, cost, and profit table can be derived from the previous revenue assumptions.

IV. RISK ANALYSIS AND MITIGATION PLAN

The commercialization of our technology requires careful identification and management of potential risks. The major risk areas and corresponding mitigation measures are summarized as follows:

1. Yield Fluctuation Risk

Variations in feedstock composition and environmental conditions may cause VFA yields and composition volatility, potentially disrupting product supply stability.

Mitigation strategy: Establish a robust process monitoring and quality control system to track key parameters in real time (e.g., pH, VFA concentration, substrate degradation rate), with automated adjustments to feed rate and process settings. Incorporate advanced automation (e.g., online VFA analyzers) to enable precise control. Conduct preliminary small-scale trials on different feedstocks to design optimized, feedstock specific operating protocols. Supplementation with minor additives may be used to stabilize fermentation performance. Maintain a safety stock to buffer short-term fluctuations and ensure an uninterrupted supply

Microbial Community Stability Risk

Microbial communities may drift during long-term operation due to contamination, mutation, or ecological imbalance, reducing acid production efficiency

Mitigation strategy: Implement strict hygienic and closed-system practices to prevent contamination. Regularly monitor microbial composition (e.g., monthly rDNA sequencing) and enzyme activity. Corrective actions such as replenishment with fresh rumen fluid or functional inoculants can be taken if functional strains decline. Establish a strain bank to preserve high-performing microbial consortia for reinoculation or system refresh. Deploy multiple parallel reactors, each operating independently but serving as backups to one another, to reduce systemic downtime. Collaborate with research institutions to continuously optimize and domesticate microbial communities, focusing on enhancing acid-producing strains.

pH Control and Acid Accumulation Risk

Excessive accumulation of organic acids during fermentation may lower pH, inhibit microbial activity, and interrupt fermentation

Mitigation strategy: Integrate online pH monitoring with automated neutralization systems to maintain pH. Consider advanced process designs such as staged acidification or membrane separation technologies that continuously remove VFAs, mimicking rumen epithelial absorption to avoid overload. Emergency measures include halting feed input, partially discharging broth, or replenishing with buffered solution. A well-defined pH control logic and contingency protocol will safeguard the system against acid shock.

Regulatory and Compliance Risk

Biological fermentation facilities must comply with environmental and safety regulations, and commercializing VFAs as chemicals or additives requires adherence to market specific standards

Mitigation strategy: Engage regulatory agencies early in the project to secure environmental approvals and ensure compliant wastewater and emissions management, particularly regarding effluent treatment. Maintain compliance with hazardous chemical storage and transport requirements (e.g., acetic acid licensing). Develop safe operating procedures to prevent biogas leakage and fire hazards. For product applications (e.g., food or feed additives), obtain the necessary production licenses and product registrations in line with national standards. Build standard-compliant facilities where required. Monitor regulatory and policy changes (e.g., environmental tax, carbon trading) and adjust compliance strategies accordingly. Employ professional legal and compliance advisors to reduce regulatory risks.

5. Supply Chain and Market Development Risk

In the early commercialization phase, the company may face challenges establishing stable feedstock supply chains and cultivating product markets.

Mitigation strategy: Partner with local governments and agricultural stakeholders to establish collection, storage, and transport systems for corn stover collection. Utilize contract farming and purchase subsidies to secure a steady raw material supply, and consider self-operated reserves (e.g., storage facilities) to buffer seasonal fluctuations. On the sales side, secure early purchase commitments through long-term supply agreements with key customers. Diversify the customer base across industries (chemicals, feed, environmental) to reduce dependence on a single market. Develop in house marketing and branding capabilities, leveraging the product’s green and low carbon attributes to increase customer loyalty. Manage product price volatility using financial instruments (e.g., contract insurance, futures hedging). A robust upstream– downstream network will enable stable operations and reduce commercial uncertainty

6. Financial and Expansion Risk

Commercializing new technologies requires significant capital with long payback periods, which may result in financing pressures and liquidity risks during expansion.

Mitigation strategy: Adopt a phased investment strategy, starting with a small-scale demonstration before scaling up, to avoid overextension. Leverage government subsidies and tax incentives to reduce costs. Strengthen financial discipline by controlling operating expenses and capital outlays while maintaining risk reserves. Expand prudently, aligning growth pace with market demand. Establish transparent and effective governance, with strong investor communications to sustain confidence. Remain flexible to adjust strategic pace in response to market or technological changes, ensuring long term financial stability.

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秦国辉, 刘伟, 王玉鹏, 王欣, 周闯, 罗向东, 苏小红, 范超, 陆佳, & 徐晓秋. (2020a, December 2). CN112525848B - Biogas fermentation VFA online detection system and detection method - Google Patents. https://patents.google.com/patent/CN112525848B/en

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V. APPENDIX

KPI DASHBOARD IN DETAIL

COST STRUCTURE FOR PRELIMINARY LABORATORY TRIAL