Victoria: Hi, this is Victoria.
I am back with another great episode of The Chemical Show.
And this one's kind of special because it is a two part series,
which is not something we do often.
I am speaking today and next week with Rob van der Meij, who is a
partner at Capricorn Partners, which is a venture capital and investment
management firm focused in on clean tech chemicals and other investments.
Rob is a wealth of information, and we had such an amazing conversation
about the role of venture capital.
How, uh, Capricorn and other VC companies investing in, in early stage startups
really make a difference in chemical companies in the role of clean technology
and in accelerating this innovation.
You're going to hear about it this week and next week, and I hope
that you listen to both episodes.
Um, what we're going to be talking about today though, is, you know,
sustainable investing practices, the critical role of company leadership
and how Capricorn Partners helps to navigate the landscape of
venture capital investing in clean tech and the chemical sectors.
You don't want to miss this.
This is like a learning laboratory for anyone that's interested in understanding
how do we really bring innovations to market and how to venture capital
companies help in driving this innovation in driving us to a cleaner, greener,
more sustainable future, Listen in, I think you're going to enjoy it.
voiceover: A key component of the modern world economy, the chemical
industry delivers products and innovations to enhance everyday life.
It is also an industry in transformation where chemical executives and workers
are delivering growth and industry changing advancements while responding
to pressures from investors, regulators, and public opinion, discover how
leading companies are approaching these challenges here on the chemical show.
Join Victoria Meyer, president of Progressio Global and
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As she speaks with executives across the industry and learns how they are leading
their companies to grow, transform, and push industry boundaries on all frontiers.
Here's your host, Victoria Meyer.
Victoria: Hi, this is Victoria Meyer.
Welcome back to The Chemical Show where chemicals means business.
Today I am speaking with Rob van der Meij, who is a partner at Capricorn
partners, which is a venture capital and investment management firm focused on.
Innovative companies that help people and planet.
So clean tech and green chemicals and other things.
Rob's a chemical engineer and has spent the majority of his career in
chemicals at big companies, including Akzo Nobel and Shell Chemicals.
In fact, I met Rob at shell and we might get into that part of the story.
Um, and then he has since been CEO of a number of startups before he
started and joined Capricorn Partners.
So we're going to be talking about the role of innovation, how
venture capital plays into it and a little bit about clean technology.
So Rob, welcome to the chemical show.
Rob: Thanks, Victoria.
Victoria: Happy to have you here.
So, so let's just jump right in.
You have worked at some of the world's biggest companies.
Um, and now you focus on startups with innovative technologies and really,
frankly, quite small companies.
So first of all, how'd you get interested in chemicals in the first place?
And then secondly, how did you make this shift from big to small?
Rob: Okay.
A lot of questions in one go.
So, um, I got interested in chemicals because my, my brother
studied chemical engineering.
And, um, when I went to look at universities on what to do,
um, I found the, the, the part chemicals where it creates stuff.
You take molecule A and B and you make C and that was kind of like a magical box.
And, uh, still when I think about my, uh, my graduation work, my thesis there
on the role of zeolites in methanol to elephants, that's, uh, almost 40
years ago, but it's still actual.
So
the code has not been cracked, uh, but it was kind of magical to see
methanol going into your pilot plant.
And, and then smell gasoline coming out, you know, obviously
we had a leak, but okay.
Um, yeah, but, uh, so that that's how I got interested that in, in
a chemical business, in a chemical industry, you create stuff and,
um, that, that got me going.
And, and then, yeah, I worked at, at Akzo Nobel in, in catalyst and
technology business, and then in Shell Chemicals, first in catalyst, and then
later on in the, uh, in the surfactants business where, where we both worked.
And, um, yeah, the, the, the chemicals industry, it's a cash machine on the
one hand, you know, because it's, it runs very large facilities with an
immensely important role in the world.
At the same time, it, it, it has this questionable image.
Victoria: Right.
Rob: Partly, partly probably deserved and probably also partly very undeserved,
but, um, then I switched to, uh, to being an entrepreneur, um, basically in
Shell Chemicals, there, there was this, you know, you kind of saw a little bit,
you know, plant based stuff coming.
And in our own business in the surfactants, Shell had the ethylene
based surfactants and you saw the palm oil based surfactants coming in.
That intrigued me, then biofuels got there and Shell clearly did not have a strategic
interest at that time to go that way.
an acquaintance of me from Akzo Nobel had developed some patents
and started a small company.
And then I decided, you know, I can, Shell is a freight train and
you can only influence a little bit, but in a small company,
you can have a lot of influence.
So then I decided, okay, you know, you don't get those that many chances in
your life to do something completely different in a field where you,
you think you can be comfortable.
So that's when I jumped to, uh, to the small corporate world and I learned, uh,
the hard way how American venture capital works where, you know, in my first,
uh, investment as a founder, as a CEO.
Uh, I was also the first one to get fired, um,
partly because I was stubborn.
Partly, I think the venture capital world at that time, grossly overestimated its,
its capacity to, to be in the energy world, you know, this, this is 2008, 2009.
And venture capital from Silicon Valley had the, the idea that they could
change how the energy world works or,
Victoria: Right.
Rob: you know, but, but yeah, it's, it's a very different world.
It's fascinating in small companies to, to see what you can do by yourself.
Now it's, and the impact you have on that at the same time, it's usually
frustrating because, you know, one thing you, you see when you work at
a company like Shell is, is the, the incredible power of the machine that
you have there, you know, and, and also.
The quality of the people in systems, you know, people complain
a lot about working in corporate is bureaucratic, blah, blah, blah.
But, but in reality, you know, shells, uh, is a, is a, is a
continuous asset management machine.
You know, if, if you remember the plant managers we've had at the time and, you
know, at Stanlow and Geismar and how every year, year on year, they improve
performance continuously, you know, I, I thought that that's an amazing skill.
Victoria: It is.
Rob: And then the supply chain complexity that a company can handle, but then
when you come to the startup world.
You know, where, where people have very little experience and then how
they grossly underestimate supply chain or, or manufacturing complexity
or construction complexity, you know, and that's where if, if you have kind
of the mix of experiences, I have it.
It actually, you know, is a good place because I'm not a specialist
in anything, but I know enough of it all that I can be of use.
Let's put it that
Victoria: Yeah, absolutely.
Well, and I think that's an interesting point.
I think the, uh, people do underestimate the value that the processes, um, and the
systems and the brands have when you're at major corporations, um, across the
industry, Shell, Dow, Akzo et cetera.
Um, and then you move to a startup, which is nimble and fast.
But, but probably makes a whole lot of mistakes and doesn't know,
a lot of times you don't know what you're doing and how you're doing it.
So, uh, quite a contrast between the two.
Rob: Definitely.
Victoria: Yeah.
So let's talk a little bit about Capricorn Partners, um, just in terms
of who you guys are and what you do.
Rob: Yeah.
So we're, we're, what we call an, uh, alternative, uh, we operate under a
license of the alternative investment funds management, um, regulatory.
So we are what you call a regulated fund.
Which means we are under guidance of the European financial authorities.
So we have quite some, some good compliance, uh, procedures, risk
management, et cetera, and we manage both listed equity funds that invest in clean
tech, and we manage venture capital funds.
That invest in, in clean tech, in digital and health type, um, startups.
So we have different funds.
We are a player that plays in the, in the more specialized ranges.
Um, typically the, the series A type financing, which means, you know, there
is a market, there is a prototype.
Company has eyes on, on how to get there.
You know, this is the phase where companies are between
say five and 15 people.
Um, And that's when we start to invest.
So you're beyond science, you know, but, but you're not in the market and
you haven't scaled technology yet.
Victoria: Yeah,
Rob: that's the point that we like to
Victoria: I, you know, before we started recording, you know, we,
we were talking about how the fact that, um, frankly, most of the, the
chemical industry and certainly people are big established companies don't
actually understand how venture capital works, the role of venture capital.
And I think certainly we see.
Um, in the chemical space, when we think about green chemistry, there is a lot of
startups right that are at, uh, varying sizes, varying degrees of success.
Some quite small, um, with small valuations, some quite small
with really big valuations.
Um, and I've had the opportunity to speak with, you know, several different people,
some of whom, um, uh, Capricorn Invests.
So I think about, uh, James Gibson at Void Polymers and, uh, and
Keith at Econic Technologies.
And I've also spoken with, uh, Uh, Gaurab Chakrabarti from Solugen, which
is arguably one of the biggest clean tech startups, uh, in chemicals today.
Um, but, but what's really the role, I mean, when you, cause you've obviously
experienced this from the corporate side, and now you've experienced
it from the small company side, and now you're experiencing it from, uh,
the venture capital side in terms of going I guess identifying investments
and figuring out where to put money.
So tell us how that works.
Rob: uh, how much time we have.
So, no, it's interesting.
I, there's no real blueprints.
Every follow a sequence on, on scouting, scanning, selecting.
You know, et cetera, that, that, that's all pretty obvious.
But the, the, the thing is really, um, one of the key things now that
you have is, Um, there's a lot of good presentations out there, but, but the
key question for us is always, is this, uh, a good, is this a good presentation
with a bad idea now, or is this a bad presentation with a good idea?
So, the thing that we do in our funds, um, and like in the cleantech
team, all the people in the cleantech team have a scientific, technical,
engineering, business background.
So, so before we make any, any serious attempt to, to look at the company, we
look at, you know, is it thermodynamically possible and, and you may laugh about
it, but, but we've seen proposals that from thermodynamics make no sense at all.
And, and some of these actually get financed.
Okay.
So, so, so don't get me going on direct air capture technologies, et cetera.
But, um, we, we can have a different discussion about that, but at the
same time, you see, there's a business need for these things and therefore
things get through, but what we try to do is, is really, we have a slogan
where we say we invest, you know, where technology impacts most, but,
but then we have the second question, which is like, does it make sense?
Victoria: Hmm.
Rob: Is it thermodynamically possible?
Is it chemically possible?
And then what you get, does it make sense?
And the does it make sense question is, Is business?
but for instance, also complexity of manufacturing, you know,
it's, it's, it's like, you also have a chemistry background.
So, you know, with, with 25 synthesis steps, you can make almost any molecule
you want, you know, but, but outside the pharmaceutical industry probably
doesn't make any sense at all.
Victoria: Yeah.
You can't actually afford it at that point.
Rob: Yeah.
And, and, and then the other question is towards the market.
It doesn't make sense for the customer to buy this or use
this product or technology.
Victoria: Yeah.
Rob: And, and that's the, that's the most critical thing to look at.
And anything else, you know, uh, the political correct answer
is of course that I really like the team and blah, blah, blah.
But if you have a bad idea, even with a good team, it's hard to make
that work in the chemicals world.
If you get to software and SaaS, it's, it's a different thing, but,
but in, in the, in the engineering chemical tech world, you know, you
cannot have a product that works 95%.
Victoria: Hmm.
Rob: I mean, still today, Microsoft Windows is not perfect.
Yeah, but,
Victoria: Tell me about it.
Rob: But, but yeah, but, but the chemicals plant that that's not perfect
can explode or, or, or when you don't get your cost, you know, over variable
costs, it's, it's a money sink.
And that's, that's one thing I really learned in Shell.
Like this, this cost focus is, is an enormous thing.
And a lot of people underestimate that.
And, and, and so we, we want to have, does it make sense to do it?
Does it make sense for the customer to buy it?
And doesn't it make sense to manufacture it now that that's the short version.
Victoria: And, yeah, , I guess the question for me maybe isn't a question
I think for a lot of people is like, you know, why venture capital?
How does it work?
And, and so you talk about going in and investing a lot of series A, which means
in my, uh, very simple point of view, it, it tends to be companies that are.
The technology has been developed to a certain degree, and then
it's ready to start moving into some degree of commercialization.
Small scale, probably initially.
Um, but there's still so many unknowns.
And I guess the question is, , why do people go to venture
capital to make this happen?
Versus some other form of funding.
How do you guys fit into the ecosystem of innovation, um, and business development?
Rob: Um, well, so, so a lot of corporates are good at evolutionary progress.
When they have a product, they can improve it.
When they have a technology, they can improve it.
But if they want to try something new in a big corporate, there's hardly space.
There's no room to do real new things.
So startups are there to kind of promote that, that ecosystem.
Now they are in this ecosystem supported by accelerators and hubs and whatever.
And with these startups, you can work out ideas.
It's trial and error.
And so the startups, they need finance and there's a lot of say governmental
regional finance, but the, the, the, say the chemistry based world is,
is quite, um, not that many people that have the knowledge in that.
And if you look at life sciences, there, it's a developed
ecosystem of, of startups.
. And it's a very common model to go to venture capital for your research
and then large pharmaceutical companies, they are basically selling
marketing and regulatory machines.
Victoria: Hmm.
Rob: So they need new molecules in their pipeline.
They don't develop a lot of molecules themselves.
Because it's very costly, high risk takes a long time, but once there is a molecule
that there is an acquisition model, in the pharmaceutical world, there's an existing
acquisition model where you can invest in, in clinical trial, phase one, phase two,
phase three, there's certain valuations related to that in terms of the size of
the market in the chemicals industry.
We don't have that yet.
Victoria: It
Rob: chemicals industry.
Victoria: that direction though.
Right.
If I think about what's going on in biosurfactants,
Rob: hope so.
Victoria: let's say, right.
The, that,
Rob: surfactants is, is, is a good example.
That's where it starts to happening.
Um, yeah, but, but so we get into the series A, as, as a
specialized investor that helps co investors to put money in it.
Like, they have some trust in us
Victoria: Got it.
Rob: Because at least we
Victoria: of provide the vetting process, I suppose.
Rob: Yeah, we can draw the molecule, you know, that's
that helps and, and, and, yeah.
And, uh, and then we can estimate like, you know, we can kind of do an evaluation.
Is this scalable or not?
And how would you do it?
And how much risk is involved?
You know, and, and, and then kind of call for the other investors
like, Hey, this, this has a chance.
This, this is,
and the role of venture capital is then really to, to take that, say
first three to seven years in a company to, to bring it to a stage where,
you know, you, you get to the either large scale demo, or you, you get to
the real commercialization phase.
Victoria: Okay.
So you maybe answered my question, which is what's your investment horizon
when you guys put money into a startup?
How long, how soon, how long do you plan to stay with that startup?
Rob: Uh, well, most venture capital funds have a 10 year horizon now, but,
but they have plus one, plus one, or plus two, plus two as, as extensions.
And, and actually the 10 years is too short really for most.
But the way we balance that is by investing.
We only do early stage investments at the early phase of a fund, you do
some later stage investments, too.
So you balance your portfolio between early and later stage.
So that means that at some companies, you'll stay three, five years.
Other companies, you, you stay, you know, five to eight, 10 years.
That depends.
Victoria: Got it.
Got it.
Yeah.
And your point about it, you maybe even need longer.
Um, I know like the LanzaTech story, which Is...
, It's a great success story, right?
I, it's gotten, um, a lot of investment, it's getting a lot of success, et cetera.
And for those that hadn't followed their story, they don't realize
this is 20 years in the making.
This was not overnight success.
This was not five years success.
It was 20 years to get to
Rob: Well, and,
Victoria: substantial commercialization.
Rob: and, and, uh, uh, our story is Avantium Capricorn invested early
stage in Avantium and, and we've been in the, we just sold our last portion of
shares because we liquidated the fund.
Victoria: Okay.
Rob: So we could not keep the shares.
And otherwise we may have, we may have hang on.
But, um, I think we've been, uh, 16 years in a Avantium
Victoria: No kidding?
Rob: Now and, and, and, and yeah, but, but if you think about it in that
timeframe, we've had the financial crisis.
Uh, as, as, as one big thing, you had low oil, high oil prices, um,
the whole development of wind, electricity, solar, uh, and COVID.
Uh, so, so the people at Avancium, Tom van Aken, really, you know, the,
the persistence of these people is, is admirable, you know, but, but hey,
they're, they're building the plant.
And I think opening is scheduled October, November, so great.
Yeah.
Victoria: so Rob, as you mentioned that I hadn't realized that you
guys were part of Avantium as well.
So I'm going to have to, so when people are listening to this or reading this,
I'm going to end up linking all of the episodes of executives I've talked to that
are somehow affiliated with Capricorn.
So.
I talked to Tom Van Aken, Avantium, uh, I've spoken with Corey Tyree of Trillium,
I think you, you made that intro.
James Gibson, Void Technologies.
Uh, and then of course Keith, uh, um, Keith Wiggins.
There we go.
Keith Wiggins from, uh, from Econic Technologies.
So there's a whole lot of, uh, clean tech energy investment that, uh,
we can, that I've managed to talk to and that we'll link to this,
that have a Capricorn connection.
Rob: Definitely.
Victoria: Great.
So, so Rob, how do you contrast, um.
What you guys do from a venture capital perspective versus.
Private equity or versus some of the big venture capital?
Cause it sounds like you're coming in very early stage, relatively small investments.
When we think about, um, just heck, let's be honest, the scale of what it
costs to build and develop a chemical plant or chemical product, relatively
small investments, but how do you contrast what you, what you, um, are
doing versus what like a private equity firm might do or a bigger VC firm.
Rob: Okay.
Yeah.
So when we enter, we do a smaller ticket, but at that point in time,
the valuation of the company is still on the, on the lower side.
So we get a decent share package.
And then when the company grows, we, we continue to invest.
So we stay until there's a growth phase where.
We cannot no longer follow and then we start to dilute, but by that time,
you hope that the valuation has gone up sufficiently and that your dilution
is compensated by valuation increase.
Victoria: Got it.
Rob: And of course, at some point, we need to sell it now, um, and that
that's what I tell all the people you just mentioned to James and Keith and
others, like, you know, we, we invest to sell at some point, you know,
so, um, you have to agree to that.
The difference between venture capital in the early phase is.
We get pretty actively involved in, in the board
Victoria: Okay.
Rob: where, where we use our network.
Uh, uh, we, we can help the, the, the management team on, you know,
look at this, think about that.
Um, you need to make changes to, to people or to processes procedures.
Um, we help the connection, uh, you know, not to strategic
partners, to service partners, but, but also syndicates to invest.
When, when we look at a company in, in our first investment round, we also
look at investability down the road.
are there co investors that are interested in this space?
And of course, are there potential exit parties interested in this space.
But then our role is really in that, that syndication and private equity
and, and say, late stage venture capital really comes into play
when the technology risk is out.
And when the initial business risk is out.
Victoria: Got it.
Rob: And, and they come in and, and they're really good at growth, you know,
when, when you then say, all right, we, we, we put in chunks of 50 million, a 100
million, and we got to make this work.
Victoria: Yeah..
Rob: But that, that's not our role.
You know, we, we do that pre work and when it comes to then the, the financial
reengineering and, and, you know, and the growth finance, uh, that that's for, but.
But we like to be at that beginning of that part.
Victoria: Right.
And so you're really in a lot of the derisking of, of derisking and
validation, I guess, of the technology, of the markets, of the investment to
help it progress to the next step.
Rob: Correct.
Yeah.
It's, it's de risking of technology and business.
Yeah, that's, and, and in some startups, you have to do it at the same time.
You know, you do it parallel.
And then it's like, how do you do that?
Victoria: Yeah.
Rob: Yeah.
I'll be, because it's, it's, if you take, for instance, business development, you
know, um, business development for an existing business is very different than
business development for a new business.
You know, in business development for a new business, you really have to look
at customers where do they understand that we're not completely finished and
do they accept that this is not perfect.
um, and, and also when it doesn't work, is, is it not a
failure to us in the market?
You know, it's, it's sad, uh, it's, it's like your first new surfactant, you may
not want to talk to Procter and Gamble.
You may want to wait till you're a little bit more developed.
And also, and rightfully so for these kinds of companies, they will only be
interested If you have a pathway to large scale, you know, they're not interested
in a tiny little bit of something.
If you want to sell to these type of customers, you have to be able to scale.
If you're in a niche market, You can work with different customers.
So in the business development phase early on, you have to think about that.
You know, where do we have to prove, what do we have to prove?
You know, and, and how do you go about it?
And then, and then you balance your risk profile on that.
Victoria: All right.
And I am calling a pause right here on the first half of my conversation with Rob.
I hope you got a lot out of it.
I know I really did, so much wisdom about the role of venture capital,
how small innovative companies really are critical for driving innovation.
Innovation and development and the future of chemicals and the
role that venture capital plays.
So stay tuned.
Thank you for listening today.
Next week, part two, you are not going to want to miss that.
Rob dropped some great bombshells that are going to be hugely valuable to you.
Thanks for listening today.
We'll talk to you again soon.
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