This interview was conducted for ‘New Fusions in Advanced Materials Innovation and Corporate Venture Capital’, a new report from LEIF and Global Corporate Venturing. The report is sponsored by Airbus APWorks, the advanced materials and additive manufacturing subsidiary of Airbus, and Saudi Aramco Energy Ventures (SAEV), the corporate venture capital subsidiary of Saudi Aramco.
Bekaert Venturing is responsible for the corporate venture activities of Bekaert, the Belgium-based steel wire transformation and coatings business whose revenues totalled €4bn in 2014. Bekaert products can be found in cars, trucks, elevators, mines, tunnels and bridges and in machines. Established in 2000, Bekaert Venturing is a pioneer in corporate venture capital. It is headed by Nuno Carvalho and invests in innovative technology businesses that offer strategic growth options to Bekaert business units.
LEIF: What is your investment strategy with regard to advanced materials?
Nuno Carvalho: Bekaert’s interest in advanced materials falls into two main categories:
– Advanced materials that can positively impact the properties of steel and/or coatings to be applied onto it.
– Advanced materials that improve our manufacturing processes by making them more energy efficient, and/or through increased automation and processing speed.
The evaluation of start-ups is performed taking into account the potential positive impact to the business platforms, and hence the strategic fit to Bekaert.
LEIF: In the near future, what types of advanced materials technologies and business models are you hoping to invest in?
NC: We are particularly interested in the surface modification of wires, while keeping the bulk properties, to add functionality to the surface. For example, the application of a coating to make the wire resistant to highly corrosive environments. Additionally, we have a long shopping list of innovations we would like to see. This includes high ductility wire, metal composites and metal fibres; material transformation technologies in rolling, shaping, cabling and bunching; thermal treatments and wire drawing. Technologies that enable zero liquid discharge are also of interest.
But we keep an open mind and try not to be too prescriptive because there are technologies out there that could be of benefit to us, but that don’t yet know it. Some start-ups do not know that their technology has applications for us. We want to talk to them too. It’s good to have a shopping list, but you also have to be ready for ‘unusual suspects’.
LEIF: What are the challenges faced by advanced material technology businesses and how can you help other than through investment?
NC: The venturing team that I head is small, but we have large and very well qualified technical teams within the Bekaert group that work with us. This is of great benefit to the early stage businesses that work with us because it really helps with prototyping and testing of their technologies, which can save them time and money. We can link this to JDAs with licensing or commercial agreements.
LEIF: How do you reassure small companies that they won’t get bullied or smothered by a large one?
Crystal clear agreements need to be set from beginning about technical progress and timing. And we should be equally clear about legal and IP issues. We also need to share a spirit of trust and innovation. The relationships we have with start-ups require a long term commitment on both sides because new materials take a long time to get to qualification. The commercialisation cycle can therefore be slower than you would like. When raising capital from corporate VCs, technology businesses have to be patient. A business unit has to assess a technology before the venture professionals like me can really start our work in earnest. My advice to companies seeking money is that if you want money fast, don’t approach us. We are a longer term partner.
LEIF: Please provide two or three examples of advanced materials technology businesses you have invested in? In each case, please identify the advanced materials innovation.
NC: We make direct investments and invest in specialist venture funds. Our portfolio is on our website. I’ll give you two examples. We have made a direct investment in Iosil Energy, a US business that has developed disruptive technology to produce high purity virgin polysilicon from metallurgical grade (MGS) or kerf loss feedstock. The cost of producing polysilicon is thereby reduced thanks to energy efficiency and the requirement for less capital equipment. We’ve backed Tsing Capital’s China Environment Funds III and IV, which invest mainly in early- and growth-stage with focus on sustainable agriculture and transportation, environment protection, alternative and efficient energy, and new materials in China. Our fellow corporate backers of Tsing are ABB, Applied Materials, BASF, Bekaert, BP, DSM, and EDF.
LEIF: Would you co-invest with other VCs?
NC: We are happy to consider co-investment on a case-by-case basis. If there is alignment among co-investors, then we are happy. If co-investors want to pull a company in different directions, this is a recipe for disaster.