Chemical majors seek cleantech start-ups

In their quest to be at the front of the race when it comes to adopting low-carbon technologies, chemical companies are establishing dedicated venture capital funds for investing in promising cleantech startups. Most recently, Asahi Kasei has created a fund with a budget of $100 million over the next 5 years to invest in early-stage start-up companies focused on clean technologies such as hydrogen, energy storage, and biobased chemicals.

The Japanese firm, which runs its venture capital arm from offices in California’s Silicon Valley, is looking to the new fund to help make its materials business carbon-neutral by 2050. In addition to investing in start-ups, Asahi Kasei plans to pick out firms with which it can form joint ventures.

Similarly, the Belgian chemical maker Solvay has a $90 million “evergreen” venture capital fund—in which cash from divestments is returned to the fund—that is focused mostly on sustainable materials. Solvay has accelerated its rate of activity in cleantech start-ups in the past 3 years, making 7 investments in startups and 2 in cleantech-focused venture capital funds, says Thomas Canova, head of Solvay’s venture capital arm, Solvay Ventures. “In the future, we expect to keep this positive momentum by expanding our scope of work and increasingly integrating Solvay Ventures in Solvay’s growth strategy,” he says.

Evonik Industries has a venture capital fund of about $440 million. The firm sharpened its focus on cleantech in May 2022 by setting aside about $160 million of the fund specifically for technologies with the primary objective of cutting CO₂ emissions. It has undertaken 50 investments since setting up its fund in 2012, more than half of which were the past five years. Evonik says it expects to continue investing in 5-10 start-ups annually.

Meanwhile, BASF “will continue to invest at our current investment pace of 6–8 new direct investments and 1–2 fund investments per year,” says Markus Solibieda, managing director of BASF Venture Capital. BASF has a $275 million evergreen fund focused on cleantech, climate-tech, agtech, new materials, and digital business models. “We provide the opportunity to test new strategic options,” Solibieda says.