Cellulosic ethanol hopeful Mascoma quietly pulled its IPO hopes last week. In some ways, I feel bad for Mascoma because it missed the biofuels/biochemicals IPO wave a couple years back that included Solazyme, Kior and Gevo. Those companies’s share prices have all tanked post-IPO. No doubt the overall performance of the biofuels sector has made it very difficult for Mascoma. And the fact Mascoma has many of the traits that other biofuels companies possess—it has almost no non-government revenue and has some significant debt capital requirements to produce its product at scale–doesn’t help.

One can pick on biofuels all day, but they actually raise an interesting question about capital markets, IPOs and appropriate venues for risk. I’ve spoken to sell side analysts, the guys who provide research and buy/sell recommendations on public companies, about biofuels companies. Many analysts believe that it’s still reasonable for a company with no revenue and significant capital scaling needs to be publicly traded if the potential future rewards of owning the stock offset the major near term risks. It’s an interesting perspective because it’s very much the perspective of venture capital, that a high multiple of return justifies high risk.

But we don’t normally like those sorts of risk profiles to appear on public stock exchanges. Why? Well, the SEC would say that we need to protect your average investor. But others might say that making a company like Mascoma publicly traded would open it up to additional financing and offers investors a potentially large return. At this point it’s a theoretical conversation. Because the investors needed to get a company like Mascoma public just don’t exist.