New chemical ventures don’t make money for their investors nearly as often as start-ups in life sciences and software. To correct that imbalance, corporations need to step up and support young chemistry-related university spin-offs, a corporate R&D leader said at a conference for entrepreneurs.
“Many start-ups look for money first,” before they have had a chance to troubleshoot and refine their technology, said David Bem, chief technology officer at paint maker PPG Industries. That’s the wrong tack to take.” Bem made the remark to the roughly 200 attendees at the ACS Entrepreneur Summit, held in Washington, D.C., on Nov. 14–15. ACS publishes C&EN.
A start-up whose technologies align with PPG’s interests might leverage a relationship with the paint maker to gain market and technology improvement insights, Bem said. Such a partnership could improve the value of the smaller firm’s business before it starts to raise funding in earnest, he added.
Too often, Bem said, large chemical firms make small investments in start-ups to learn about new technologies. Instead, they need to take a more active role in helping start-ups to achieve both technology and business success, he said. Chemical firms should set up start-up incubators, he added. The software giant Google and health care firms like Johnson & Johnson already operate start-up incubators.
“We do far more partnering than investing” in start-up firms, said Edward Greer, Dow Chemical’s corporate technology scout. “I’m here to say ‘pitch me,’ ” he told attendees. When Dow invests in a start-up, it does so along with other investors and usually invests less than $25 million.
Where an institutional investor is looking for a profitable exit in a short time frame, Greer said, “we invest for mutual value creation.” To make that happen, he said Dow offers start-ups technology help, business intelligence, and access to potential customers.
Others attending the summit, including executives from Procter & Gamble, Evonik Industries, Mitsui Chemicals, and Waters Corp., also endorsed the value of innovation to their own businesses. Said Gerard Baillely, P&G’s vice president of R&D, “We need entrepreneurs to help guide us to success.”