Propel Fuels, having opened its first station less than a year ago, has already received significant funds for investment
Propel Fuels offers drivers access to gasoline, ethanol and biodiesel fuels at a single pump. Continuing to expand the means by which renewable fuels are breaching the US energy market, Propel is a pioneering, young company whose strategy relies on consumer adaptability, rapid expansion and technological prowess.
A self-proclaimed environmentalist who reportedly spends his free time scaling 200ft California redwood trees, Acting CEO Matt Horton’s business methods are both pragmatic and principled in their makeup. Having originally worked as a venture capitalist in the Silicon Valley office of @Ventures, Horton invested a great deal of time and entrepreneurial spirit in the formation of Propel’s initial business plan in 2007. While at first being intended as a vendor for high-blend biodiesel, the company was later repositioned to offer multiple fuel types.
The company, while offering a variety of fuels, focuses primarily on ethanol-based fuel derived from corn, most notably used in E85 and E10 fuels. At present, Propel – in partnership with Solarzyme – is trialling algae-derived fuels at Propel gas stations throughout California. The pilot programme is the first such instance of algae fuel being sold to US consumers and saw sales rise 35 percent through January and February this year.
Location, location, location
Having opened 31 retail stations across California and Washington as of January 2013, Propel is strengthening the foundations for what Horton terms the “slow, but exciting” transformation of the US automotive industry. Last year, Propel secured $21m worth of funding for the furthered construction of 200 fuelling stations over the next two years. Both government and private investment types back the company. This has included the recent procurement of $11m in equity capital and $10m in debt financing from a number of venture capital firms.
The alternative fuels industry is dependent on its largest competitor as a pathway into the market
Propel is currently based in California, where the company benefits from the Low Carbon Fuel Standard, through which the company aims to reduce carbon intensity in transportation fuel. Though similar laws are implemented across the US, few are as stringent or progressive as California’s laws for the reformation of environmental strategy.
Location is integral to Propel’s business strategy in that it seeks to target those of an adaptable and enterprising sort to best ensure the maximum adoption of its product. Though the oil industry is considered to have a chokehold on US markets, Propel demonstrates a confidence in its consumers beyond that of competing companies. Using software built by the company, Propel chooses locations it believes best suit its technical requirements. Horton said: “In this business, the vehicle drives everything. You can have all the infrastructure in the world, but if there aren’t any vehicles around that use it, it’s not going to make any difference.”
Capturing the base
Propel ultimately seeks to create an extensive network of fuelling stations, as well as determine similarly minded consumer bases whose ultimate profit lies in the wider acceptance of alternative fuels throughout the US. Horton’s optimism is highly representative of the company’s healthy cash flow and future projections, having averaged 300 percent growth since 2010 and received in excess of $10m in revenues through 2011. With continued commitments to both R&D and spearheading advances in alternative fuel developments, Propel is looking to expand into further states throughout the US.
There are inherent challenges to the furthering of this project. Geoff Cooper of Renewable Fuels Association said: “The gasoline stations don’t want a competitor, but the alternative fuels industry is dependent on its largest competitor as a pathway into the market.” Regardless of such obstacles, Horton maintains that ‘The energy industry is ripe for disruption,” as well as stating his belief that Propel can better the cause of renewable fuels across the US.
Most reassuring for Propel’s future is Horton’s confidence in the market: “I believe strongly in the power of business and the American consumer to drive change. A company like Propel moves us in a more sustainable direction, rather than relying on regulation and government mandates.” Horton’s willingness to instigate change and innovation, as opposed to waiting on slow and inconsequential reforms, will surely allow Propel Fuel to reduce the US’ negative environmental impact.