With sustainable technology as a goal, chemical makers buy into start-ups

Chemical makers are stepping up investment in start-up companies with the aim of gaining access to disruptive technologies. Four recent deals underline forecasts by industry watchers who say the chemical sector will experience strong venture investment through 2022, especially in start-ups developing sustainable technologies.

In one deal, Solvay has invested in Zürich-based 9T labs, developer of a method to 3D print carbon-fiber-reinforced plastic (CFRP), which can replace metal for faster building of lighter vehicles and aircraft. “Our technology combined with Solvay’s high-performance and recyclable materials…make CFRP parts more sustainable, accessible and cost-competitive, especially at higher volumes,” Martin Eichenhofer, 9T Labs co-founder and CEO, says in a press release.

In another deal driven by sustainability, Mitsubishi Chemical’s Diamond Edge Ventures has invested in San Francisco-based Lingrove, developer of a carbon-negative composite designed to replace wood. “This investment proves that large material companies can be provocative in fostering carbon neutrality,” Patrick Suel, president of Diamond Edge Ventures, says in a press release.

Meanwhile, Evonik Industries has put money into the Tennessee medical device developer CircumFix Solutions, and BASF has made its second investment in B2B Cosmetics, the developer of a machine that allows users to create their own personal care products.

Bernd Elser, a managing director and global chemicals lead for the consulting firm Accenture, sees two drivers behind the investments. “One is the need for chemical companies to reduce their carbon emissions, which requires significant investments in low-emitting chemical processes and plants, and divestments, rather than investments, in businesses with high carbon footprints,” he says. “The other is that there is currently a surge in the number of start-ups with interesting technologies.”

Accenture has tracked a more than 10-fold increase in investment into chemistry-related start-ups by venture capital firms and other third parties in the past 10 years. Investment hit $9.9 billion in 2021, and Elser expects 2022 to be another strong year. “The industry is changing,” he says. “We have not seen this influx of start-ups for many, many years.”