WEBVTT NOTE This file was generated by Descript 00:00:00.460 --> 00:00:01.620 Victoria: Hi, this is Victoria. 00:00:01.680 --> 00:00:05.300 I am back with another great episode of The Chemical Show. 00:00:05.550 --> 00:00:09.369 And this one's kind of special because it is a two part series, 00:00:09.699 --> 00:00:11.490 which is not something we do often. 00:00:11.880 --> 00:00:16.580 I am speaking today and next week with Rob van der Meij, who is a 00:00:16.600 --> 00:00:21.395 partner at Capricorn Partners, which is a venture capital and investment 00:00:21.395 --> 00:00:26.425 management firm focused in on clean tech chemicals and other investments. 00:00:26.945 --> 00:00:32.904 Rob is a wealth of information, and we had such an amazing conversation 00:00:32.994 --> 00:00:35.694 about the role of venture capital. 00:00:36.194 --> 00:00:41.794 How, uh, Capricorn and other VC companies investing in, in early stage startups 00:00:42.234 --> 00:00:47.144 really make a difference in chemical companies in the role of clean technology 00:00:47.144 --> 00:00:49.034 and in accelerating this innovation. 00:00:49.274 --> 00:00:52.294 You're going to hear about it this week and next week, and I hope 00:00:52.294 --> 00:00:53.584 that you listen to both episodes. 00:00:53.924 --> 00:00:57.174 Um, what we're going to be talking about today though, is, you know, 00:00:57.174 --> 00:01:02.314 sustainable investing practices, the critical role of company leadership 00:01:02.584 --> 00:01:07.179 and how Capricorn Partners helps to navigate the landscape of 00:01:07.189 --> 00:01:11.119 venture capital investing in clean tech and the chemical sectors. 00:01:11.220 --> 00:01:12.479 You don't want to miss this. 00:01:12.500 --> 00:01:18.509 This is like a learning laboratory for anyone that's interested in understanding 00:01:19.009 --> 00:01:23.520 how do we really bring innovations to market and how to venture capital 00:01:23.539 --> 00:01:30.094 companies help in driving this innovation in driving us to a cleaner, greener, 00:01:30.094 --> 00:01:33.695 more sustainable future, Listen in, I think you're going to enjoy it. 00:01:41.999 --> 00:01:44.799 voiceover: A key component of the modern world economy, the chemical 00:01:44.799 --> 00:01:48.339 industry delivers products and innovations to enhance everyday life. 00:01:48.859 --> 00:01:53.299 It is also an industry in transformation where chemical executives and workers 00:01:53.319 --> 00:01:56.939 are delivering growth and industry changing advancements while responding 00:01:56.939 --> 00:02:01.469 to pressures from investors, regulators, and public opinion, discover how 00:02:01.469 --> 00:02:05.319 leading companies are approaching these challenges here on the chemical show. 00:02:05.789 --> 00:02:09.129 Join Victoria Meyer, president of Progressio Global and 00:02:09.139 --> 00:02:10.559 host of the chemical show. 00:02:10.834 --> 00:02:15.034 As she speaks with executives across the industry and learns how they are leading 00:02:15.034 --> 00:02:20.614 their companies to grow, transform, and push industry boundaries on all frontiers. 00:02:20.954 --> 00:02:23.204 Here's your host, Victoria Meyer. 00:02:26.539 --> 00:02:28.019 Victoria: Hi, this is Victoria Meyer. 00:02:28.129 --> 00:02:31.679 Welcome back to The Chemical Show where chemicals means business. 00:02:32.139 --> 00:02:37.359 Today I am speaking with Rob van der Meij, who is a partner at Capricorn 00:02:37.359 --> 00:02:42.569 partners, which is a venture capital and investment management firm focused on. 00:02:43.299 --> 00:02:45.559 Innovative companies that help people and planet. 00:02:45.589 --> 00:02:48.679 So clean tech and green chemicals and other things. 00:02:49.099 --> 00:02:52.719 Rob's a chemical engineer and has spent the majority of his career in 00:02:52.719 --> 00:02:57.089 chemicals at big companies, including Akzo Nobel and Shell Chemicals. 00:02:57.329 --> 00:03:00.639 In fact, I met Rob at shell and we might get into that part of the story. 00:03:00.939 --> 00:03:05.089 Um, and then he has since been CEO of a number of startups before he 00:03:05.089 --> 00:03:07.229 started and joined Capricorn Partners. 00:03:07.299 --> 00:03:10.849 So we're going to be talking about the role of innovation, how 00:03:10.849 --> 00:03:14.589 venture capital plays into it and a little bit about clean technology. 00:03:14.909 --> 00:03:16.949 So Rob, welcome to the chemical show. 00:03:17.799 --> 00:03:18.529 Rob: Thanks, Victoria. 00:03:20.159 --> 00:03:21.169 Victoria: Happy to have you here. 00:03:21.209 --> 00:03:22.919 So, so let's just jump right in. 00:03:22.929 --> 00:03:26.219 You have worked at some of the world's biggest companies. 00:03:26.569 --> 00:03:30.999 Um, and now you focus on startups with innovative technologies and really, 00:03:31.009 --> 00:03:32.599 frankly, quite small companies. 00:03:33.049 --> 00:03:36.119 So first of all, how'd you get interested in chemicals in the first place? 00:03:36.159 --> 00:03:40.659 And then secondly, how did you make this shift from big to small? 00:03:42.089 --> 00:03:42.449 Rob: Okay. 00:03:42.649 --> 00:03:44.229 A lot of questions in one go. 00:03:44.309 --> 00:03:48.899 So, um, I got interested in chemicals because my, my brother 00:03:48.899 --> 00:03:50.259 studied chemical engineering. 00:03:51.159 --> 00:03:54.959 And, um, when I went to look at universities on what to do, 00:03:55.659 --> 00:04:00.899 um, I found the, the, the part chemicals where it creates stuff. 00:04:01.159 --> 00:04:06.949 You take molecule A and B and you make C and that was kind of like a magical box. 00:04:07.854 --> 00:04:13.234 And, uh, still when I think about my, uh, my graduation work, my thesis there 00:04:14.024 --> 00:04:19.254 on the role of zeolites in methanol to elephants, that's, uh, almost 40 00:04:19.274 --> 00:04:21.014 years ago, but it's still actual. 00:04:21.024 --> 00:04:21.394 So 00:04:23.474 --> 00:04:27.814 the code has not been cracked, uh, but it was kind of magical to see 00:04:27.864 --> 00:04:29.914 methanol going into your pilot plant. 00:04:30.704 --> 00:04:35.844 And, and then smell gasoline coming out, you know, obviously 00:04:35.844 --> 00:04:36.924 we had a leak, but okay. 00:04:37.344 --> 00:04:42.884 Um, yeah, but, uh, so that that's how I got interested that in, in 00:04:42.884 --> 00:04:47.284 a chemical business, in a chemical industry, you create stuff and, 00:04:47.414 --> 00:04:49.334 um, that, that got me going. 00:04:49.759 --> 00:04:53.839 And, and then, yeah, I worked at, at Akzo Nobel in, in catalyst and 00:04:53.839 --> 00:04:58.239 technology business, and then in Shell Chemicals, first in catalyst, and then 00:04:58.239 --> 00:05:03.079 later on in the, uh, in the surfactants business where, where we both worked. 00:05:04.109 --> 00:05:09.739 And, um, yeah, the, the, the chemicals industry, it's a cash machine on the 00:05:09.739 --> 00:05:15.399 one hand, you know, because it's, it runs very large facilities with an 00:05:15.399 --> 00:05:17.359 immensely important role in the world. 00:05:17.919 --> 00:05:21.229 At the same time, it, it, it has this questionable image. 00:05:23.334 --> 00:05:23.644 Victoria: Right. 00:05:24.029 --> 00:05:31.129 Rob: Partly, partly probably deserved and probably also partly very undeserved, 00:05:32.419 --> 00:05:38.909 but, um, then I switched to, uh, to being an entrepreneur, um, basically in 00:05:38.909 --> 00:05:43.999 Shell Chemicals, there, there was this, you know, you kind of saw a little bit, 00:05:44.179 --> 00:05:45.889 you know, plant based stuff coming. 00:05:46.064 --> 00:05:51.244 And in our own business in the surfactants, Shell had the ethylene 00:05:51.274 --> 00:05:57.044 based surfactants and you saw the palm oil based surfactants coming in. 00:05:57.784 --> 00:06:03.804 That intrigued me, then biofuels got there and Shell clearly did not have a strategic 00:06:03.824 --> 00:06:06.294 interest at that time to go that way. 00:06:07.909 --> 00:06:11.239 an acquaintance of me from Akzo Nobel had developed some patents 00:06:11.239 --> 00:06:12.649 and started a small company. 00:06:13.579 --> 00:06:20.319 And then I decided, you know, I can, Shell is a freight train and 00:06:22.549 --> 00:06:26.519 you can only influence a little bit, but in a small company, 00:06:26.529 --> 00:06:28.159 you can have a lot of influence. 00:06:29.049 --> 00:06:32.549 So then I decided, okay, you know, you don't get those that many chances in 00:06:32.549 --> 00:06:36.239 your life to do something completely different in a field where you, 00:06:36.269 --> 00:06:37.689 you think you can be comfortable. 00:06:37.709 --> 00:06:44.279 So that's when I jumped to, uh, to the small corporate world and I learned, uh, 00:06:44.339 --> 00:06:48.949 the hard way how American venture capital works where, you know, in my first, 00:06:48.949 --> 00:06:51.489 uh, investment as a founder, as a CEO. 00:06:52.184 --> 00:06:54.694 Uh, I was also the first one to get fired, um, 00:06:56.884 --> 00:06:58.364 partly because I was stubborn. 00:06:58.364 --> 00:07:03.454 Partly, I think the venture capital world at that time, grossly overestimated its, 00:07:03.674 --> 00:07:10.862 its capacity to, to be in the energy world, you know, this, this is 2008, 2009. 00:07:10.862 --> 00:07:15.889 And venture capital from Silicon Valley had the, the idea that they could 00:07:15.889 --> 00:07:18.459 change how the energy world works or, 00:07:18.524 --> 00:07:18.894 Victoria: Right. 00:07:19.349 --> 00:07:21.879 Rob: you know, but, but yeah, it's, it's a very different world. 00:07:23.059 --> 00:07:27.539 It's fascinating in small companies to, to see what you can do by yourself. 00:07:28.749 --> 00:07:32.929 Now it's, and the impact you have on that at the same time, it's usually 00:07:32.929 --> 00:07:36.929 frustrating because, you know, one thing you, you see when you work at 00:07:36.929 --> 00:07:41.669 a company like Shell is, is the, the incredible power of the machine that 00:07:41.669 --> 00:07:44.789 you have there, you know, and, and also. 00:07:45.534 --> 00:07:49.694 The quality of the people in systems, you know, people complain 00:07:49.704 --> 00:07:53.324 a lot about working in corporate is bureaucratic, blah, blah, blah. 00:07:53.354 --> 00:07:58.164 But, but in reality, you know, shells, uh, is a, is a, is a 00:07:58.204 --> 00:08:01.054 continuous asset management machine. 00:08:02.234 --> 00:08:06.684 You know, if, if you remember the plant managers we've had at the time and, you 00:08:06.684 --> 00:08:11.164 know, at Stanlow and Geismar and how every year, year on year, they improve 00:08:11.234 --> 00:08:16.304 performance continuously, you know, I, I thought that that's an amazing skill. 00:08:16.744 --> 00:08:17.104 Victoria: It is. 00:08:17.164 --> 00:08:22.244 Rob: And then the supply chain complexity that a company can handle, but then 00:08:22.244 --> 00:08:23.574 when you come to the startup world. 00:08:24.679 --> 00:08:29.989 You know, where, where people have very little experience and then how 00:08:29.989 --> 00:08:35.879 they grossly underestimate supply chain or, or manufacturing complexity 00:08:35.919 --> 00:08:40.949 or construction complexity, you know, and that's where if, if you have kind 00:08:40.949 --> 00:08:43.339 of the mix of experiences, I have it. 00:08:44.534 --> 00:08:49.674 It actually, you know, is a good place because I'm not a specialist 00:08:49.674 --> 00:08:52.974 in anything, but I know enough of it all that I can be of use. 00:08:53.054 --> 00:08:53.644 Let's put it that 00:08:53.874 --> 00:08:54.414 Victoria: Yeah, absolutely. 00:08:54.679 --> 00:08:56.279 Well, and I think that's an interesting point. 00:08:56.279 --> 00:09:02.179 I think the, uh, people do underestimate the value that the processes, um, and the 00:09:02.179 --> 00:09:06.779 systems and the brands have when you're at major corporations, um, across the 00:09:06.779 --> 00:09:09.539 industry, Shell, Dow, Akzo et cetera. 00:09:09.849 --> 00:09:14.069 Um, and then you move to a startup, which is nimble and fast. 00:09:14.519 --> 00:09:17.859 But, but probably makes a whole lot of mistakes and doesn't know, 00:09:17.889 --> 00:09:20.889 a lot of times you don't know what you're doing and how you're doing it. 00:09:20.909 --> 00:09:23.749 So, uh, quite a contrast between the two. 00:09:24.584 --> 00:09:25.174 Rob: Definitely. 00:09:25.489 --> 00:09:25.749 Victoria: Yeah. 00:09:25.999 --> 00:09:30.069 So let's talk a little bit about Capricorn Partners, um, just in terms 00:09:30.069 --> 00:09:32.519 of who you guys are and what you do. 00:09:33.524 --> 00:09:33.734 Rob: Yeah. 00:09:33.754 --> 00:09:39.034 So we're, we're, what we call an, uh, alternative, uh, we operate under a 00:09:39.034 --> 00:09:45.244 license of the alternative investment funds management, um, regulatory. 00:09:45.704 --> 00:09:47.524 So we are what you call a regulated fund. 00:09:48.184 --> 00:09:52.514 Which means we are under guidance of the European financial authorities. 00:09:53.364 --> 00:09:58.864 So we have quite some, some good compliance, uh, procedures, risk 00:09:58.864 --> 00:10:05.584 management, et cetera, and we manage both listed equity funds that invest in clean 00:10:05.584 --> 00:10:08.489 tech, and we manage venture capital funds. 00:10:08.939 --> 00:10:14.979 That invest in, in clean tech, in digital and health type, um, startups. 00:10:15.319 --> 00:10:16.469 So we have different funds. 00:10:16.499 --> 00:10:20.799 We are a player that plays in the, in the more specialized ranges. 00:10:21.639 --> 00:10:27.849 Um, typically the, the series A type financing, which means, you know, there 00:10:27.849 --> 00:10:30.269 is a market, there is a prototype. 00:10:31.149 --> 00:10:34.319 Company has eyes on, on how to get there. 00:10:35.289 --> 00:10:37.769 You know, this is the phase where companies are between 00:10:37.779 --> 00:10:39.259 say five and 15 people. 00:10:39.259 --> 00:10:42.199 Um, And that's when we start to invest. 00:10:42.209 --> 00:10:46.499 So you're beyond science, you know, but, but you're not in the market and 00:10:46.509 --> 00:10:48.349 you haven't scaled technology yet. 00:10:49.269 --> 00:10:49.649 Victoria: Yeah, 00:10:49.819 --> 00:10:51.059 Rob: that's the point that we like to 00:10:51.299 --> 00:10:54.579 Victoria: I, you know, before we started recording, you know, we, 00:10:54.639 --> 00:10:59.129 we were talking about how the fact that, um, frankly, most of the, the 00:10:59.129 --> 00:11:02.319 chemical industry and certainly people are big established companies don't 00:11:02.319 --> 00:11:07.789 actually understand how venture capital works, the role of venture capital. 00:11:07.789 --> 00:11:09.659 And I think certainly we see. 00:11:10.099 --> 00:11:15.069 Um, in the chemical space, when we think about green chemistry, there is a lot of 00:11:15.069 --> 00:11:20.659 startups right that are at, uh, varying sizes, varying degrees of success. 00:11:21.524 --> 00:11:25.824 Some quite small, um, with small valuations, some quite small 00:11:25.824 --> 00:11:27.464 with really big valuations. 00:11:27.884 --> 00:11:31.694 Um, and I've had the opportunity to speak with, you know, several different people, 00:11:32.084 --> 00:11:34.974 some of whom, um, uh, Capricorn Invests. 00:11:35.164 --> 00:11:39.634 So I think about, uh, James Gibson at Void Polymers and, uh, and 00:11:39.634 --> 00:11:41.804 Keith at Econic Technologies. 00:11:41.804 --> 00:11:46.859 And I've also spoken with, uh, Uh, Gaurab Chakrabarti from Solugen, which 00:11:46.869 --> 00:11:52.329 is arguably one of the biggest clean tech startups, uh, in chemicals today. 00:11:52.739 --> 00:11:57.499 Um, but, but what's really the role, I mean, when you, cause you've obviously 00:11:57.509 --> 00:12:00.199 experienced this from the corporate side, and now you've experienced 00:12:00.199 --> 00:12:05.559 it from the small company side, and now you're experiencing it from, uh, 00:12:05.569 --> 00:12:11.079 the venture capital side in terms of going I guess identifying investments 00:12:11.079 --> 00:12:12.669 and figuring out where to put money. 00:12:12.669 --> 00:12:14.649 So tell us how that works. 00:12:16.029 --> 00:12:17.649 Rob: uh, how much time we have. 00:12:19.319 --> 00:12:21.339 So, no, it's interesting. 00:12:21.339 --> 00:12:24.399 I, there's no real blueprints. 00:12:24.409 --> 00:12:28.519 Every follow a sequence on, on scouting, scanning, selecting. 00:12:29.399 --> 00:12:32.489 You know, et cetera, that, that, that's all pretty obvious. 00:12:32.489 --> 00:12:37.579 But the, the, the thing is really, um, one of the key things now that 00:12:37.579 --> 00:12:45.364 you have is, Um, there's a lot of good presentations out there, but, but the 00:12:45.364 --> 00:12:51.464 key question for us is always, is this, uh, a good, is this a good presentation 00:12:52.114 --> 00:12:57.074 with a bad idea now, or is this a bad presentation with a good idea? 00:12:58.154 --> 00:13:01.964 So, the thing that we do in our funds, um, and like in the cleantech 00:13:01.994 --> 00:13:07.424 team, all the people in the cleantech team have a scientific, technical, 00:13:07.444 --> 00:13:08.994 engineering, business background. 00:13:10.154 --> 00:13:15.304 So, so before we make any, any serious attempt to, to look at the company, we 00:13:15.304 --> 00:13:22.654 look at, you know, is it thermodynamically possible and, and you may laugh about 00:13:22.654 --> 00:13:27.514 it, but, but we've seen proposals that from thermodynamics make no sense at all. 00:13:28.469 --> 00:13:30.389 And, and some of these actually get financed. 00:13:30.389 --> 00:13:30.779 Okay. 00:13:31.509 --> 00:13:35.549 So, so, so don't get me going on direct air capture technologies, et cetera. 00:13:35.599 --> 00:13:40.339 But, um, we, we can have a different discussion about that, but at the 00:13:40.339 --> 00:13:44.069 same time, you see, there's a business need for these things and therefore 00:13:44.069 --> 00:13:50.039 things get through, but what we try to do is, is really, we have a slogan 00:13:50.039 --> 00:13:56.149 where we say we invest, you know, where technology impacts most, but, 00:13:56.209 --> 00:13:59.649 but then we have the second question, which is like, does it make sense? 00:14:00.339 --> 00:14:00.729 Victoria: Hmm. 00:14:00.924 --> 00:14:02.764 Rob: Is it thermodynamically possible? 00:14:02.764 --> 00:14:04.234 Is it chemically possible? 00:14:04.774 --> 00:14:06.694 And then what you get, does it make sense? 00:14:06.724 --> 00:14:09.814 And the does it make sense question is, Is business? 00:14:11.049 --> 00:14:14.699 but for instance, also complexity of manufacturing, you know, 00:14:14.699 --> 00:14:19.049 it's, it's, it's like, you also have a chemistry background. 00:14:19.049 --> 00:14:24.409 So, you know, with, with 25 synthesis steps, you can make almost any molecule 00:14:24.409 --> 00:14:28.979 you want, you know, but, but outside the pharmaceutical industry probably 00:14:28.979 --> 00:14:30.219 doesn't make any sense at all. 00:14:30.539 --> 00:14:30.749 Victoria: Yeah. 00:14:30.809 --> 00:14:32.579 You can't actually afford it at that point. 00:14:32.989 --> 00:14:33.259 Rob: Yeah. 00:14:33.259 --> 00:14:36.729 And, and, and then the other question is towards the market. 00:14:36.804 --> 00:14:42.524 It doesn't make sense for the customer to buy this or use 00:14:42.524 --> 00:14:43.924 this product or technology. 00:14:44.389 --> 00:14:44.629 Victoria: Yeah. 00:14:44.764 --> 00:14:48.464 Rob: And, and that's the, that's the most critical thing to look at. 00:14:48.914 --> 00:14:52.624 And anything else, you know, uh, the political correct answer 00:14:52.624 --> 00:14:55.664 is of course that I really like the team and blah, blah, blah. 00:14:56.374 --> 00:15:01.334 But if you have a bad idea, even with a good team, it's hard to make 00:15:01.334 --> 00:15:03.154 that work in the chemicals world. 00:15:04.014 --> 00:15:08.004 If you get to software and SaaS, it's, it's a different thing, but, 00:15:08.064 --> 00:15:13.644 but in, in the, in the engineering chemical tech world, you know, you 00:15:13.644 --> 00:15:16.844 cannot have a product that works 95%. 00:15:16.849 --> 00:15:17.179 Victoria: Hmm. 00:15:17.924 --> 00:15:21.014 Rob: I mean, still today, Microsoft Windows is not perfect. 00:15:22.084 --> 00:15:22.614 Yeah, but, 00:15:22.839 --> 00:15:23.474 Victoria: Tell me about it. 00:15:24.174 --> 00:15:29.054 Rob: But, but yeah, but, but the chemicals plant that that's not perfect 00:15:29.094 --> 00:15:37.224 can explode or, or, or when you don't get your cost, you know, over variable 00:15:37.224 --> 00:15:39.004 costs, it's, it's a money sink. 00:15:40.214 --> 00:15:43.104 And that's, that's one thing I really learned in Shell. 00:15:43.114 --> 00:15:46.894 Like this, this cost focus is, is an enormous thing. 00:15:47.274 --> 00:15:48.934 And a lot of people underestimate that. 00:15:49.664 --> 00:15:53.294 And, and, and so we, we want to have, does it make sense to do it? 00:15:53.604 --> 00:15:55.564 Does it make sense for the customer to buy it? 00:15:55.974 --> 00:16:02.034 And doesn't it make sense to manufacture it now that that's the short version. 00:16:02.034 --> 00:16:05.464 Victoria: And, yeah, , I guess the question for me maybe isn't a question 00:16:05.464 --> 00:16:08.764 I think for a lot of people is like, you know, why venture capital? 00:16:09.034 --> 00:16:10.064 How does it work? 00:16:10.104 --> 00:16:13.954 And, and so you talk about going in and investing a lot of series A, which means 00:16:14.304 --> 00:16:19.504 in my, uh, very simple point of view, it, it tends to be companies that are. 00:16:20.084 --> 00:16:23.824 The technology has been developed to a certain degree, and then 00:16:23.844 --> 00:16:27.964 it's ready to start moving into some degree of commercialization. 00:16:28.154 --> 00:16:29.914 Small scale, probably initially. 00:16:30.324 --> 00:16:32.254 Um, but there's still so many unknowns. 00:16:33.424 --> 00:16:36.324 And I guess the question is, , why do people go to venture 00:16:36.324 --> 00:16:38.264 capital to make this happen? 00:16:38.734 --> 00:16:41.514 Versus some other form of funding. 00:16:41.574 --> 00:16:46.754 How do you guys fit into the ecosystem of innovation, um, and business development? 00:16:47.454 --> 00:16:53.704 Rob: Um, well, so, so a lot of corporates are good at evolutionary progress. 00:16:54.919 --> 00:16:56.589 When they have a product, they can improve it. 00:16:56.619 --> 00:16:58.299 When they have a technology, they can improve it. 00:16:59.199 --> 00:17:03.539 But if they want to try something new in a big corporate, there's hardly space. 00:17:03.579 --> 00:17:05.779 There's no room to do real new things. 00:17:06.569 --> 00:17:11.549 So startups are there to kind of promote that, that ecosystem. 00:17:12.329 --> 00:17:17.199 Now they are in this ecosystem supported by accelerators and hubs and whatever. 00:17:18.259 --> 00:17:20.199 And with these startups, you can work out ideas. 00:17:21.314 --> 00:17:22.504 It's trial and error. 00:17:23.604 --> 00:17:29.924 And so the startups, they need finance and there's a lot of say governmental 00:17:29.924 --> 00:17:35.894 regional finance, but the, the, the, say the chemistry based world is, 00:17:35.934 --> 00:17:42.074 is quite, um, not that many people that have the knowledge in that. 00:17:42.934 --> 00:17:46.154 And if you look at life sciences, there, it's a developed 00:17:46.594 --> 00:17:48.784 ecosystem of, of startups. 00:17:49.504 --> 00:17:53.684 . And it's a very common model to go to venture capital for your research 00:17:54.294 --> 00:17:59.644 and then large pharmaceutical companies, they are basically selling 00:17:59.654 --> 00:18:01.974 marketing and regulatory machines. 00:18:03.324 --> 00:18:03.584 Victoria: Hmm. 00:18:03.734 --> 00:18:05.894 Rob: So they need new molecules in their pipeline. 00:18:05.904 --> 00:18:08.194 They don't develop a lot of molecules themselves. 00:18:08.759 --> 00:18:13.199 Because it's very costly, high risk takes a long time, but once there is a molecule 00:18:14.159 --> 00:18:19.539 that there is an acquisition model, in the pharmaceutical world, there's an existing 00:18:19.539 --> 00:18:25.199 acquisition model where you can invest in, in clinical trial, phase one, phase two, 00:18:25.199 --> 00:18:29.249 phase three, there's certain valuations related to that in terms of the size of 00:18:29.249 --> 00:18:31.299 the market in the chemicals industry. 00:18:31.299 --> 00:18:32.979 We don't have that yet. 00:18:33.814 --> 00:18:33.934 Victoria: It 00:18:33.939 --> 00:18:34.959 Rob: chemicals industry. 00:18:35.144 --> 00:18:36.194 Victoria: that direction though. 00:18:36.224 --> 00:18:36.504 Right. 00:18:36.504 --> 00:18:38.974 If I think about what's going on in biosurfactants, 00:18:39.049 --> 00:18:39.499 Rob: hope so. 00:18:40.134 --> 00:18:41.224 Victoria: let's say, right. 00:18:41.264 --> 00:18:42.324 The, that, 00:18:42.509 --> 00:18:45.149 Rob: surfactants is, is, is a good example. 00:18:45.159 --> 00:18:46.719 That's where it starts to happening. 00:18:47.524 --> 00:18:53.774 Um, yeah, but, but so we get into the series A, as, as a 00:18:53.864 --> 00:18:58.434 specialized investor that helps co investors to put money in it. 00:18:58.464 --> 00:19:00.564 Like, they have some trust in us 00:19:01.364 --> 00:19:01.684 Victoria: Got it. 00:19:01.684 --> 00:19:02.774 Rob: Because at least we 00:19:02.974 --> 00:19:05.164 Victoria: of provide the vetting process, I suppose. 00:19:05.494 --> 00:19:07.474 Rob: Yeah, we can draw the molecule, you know, that's 00:19:07.484 --> 00:19:09.834 that helps and, and, and, yeah. 00:19:10.624 --> 00:19:15.914 And, uh, and then we can estimate like, you know, we can kind of do an evaluation. 00:19:15.914 --> 00:19:17.174 Is this scalable or not? 00:19:17.184 --> 00:19:18.094 And how would you do it? 00:19:18.094 --> 00:19:19.654 And how much risk is involved? 00:19:20.794 --> 00:19:23.954 You know, and, and, and then kind of call for the other investors 00:19:23.984 --> 00:19:25.674 like, Hey, this, this has a chance. 00:19:25.724 --> 00:19:26.354 This, this is, 00:19:28.069 --> 00:19:32.299 and the role of venture capital is then really to, to take that, say 00:19:32.299 --> 00:19:36.709 first three to seven years in a company to, to bring it to a stage where, 00:19:37.379 --> 00:19:42.569 you know, you, you get to the either large scale demo, or you, you get to 00:19:42.569 --> 00:19:44.179 the real commercialization phase. 00:19:44.644 --> 00:19:44.914 Victoria: Okay. 00:19:44.914 --> 00:19:48.844 So you maybe answered my question, which is what's your investment horizon 00:19:48.844 --> 00:19:51.564 when you guys put money into a startup? 00:19:52.514 --> 00:19:55.734 How long, how soon, how long do you plan to stay with that startup? 00:19:56.829 --> 00:20:02.869 Rob: Uh, well, most venture capital funds have a 10 year horizon now, but, 00:20:02.919 --> 00:20:08.139 but they have plus one, plus one, or plus two, plus two as, as extensions. 00:20:09.024 --> 00:20:14.204 And, and actually the 10 years is too short really for most. 00:20:14.859 --> 00:20:18.319 But the way we balance that is by investing. 00:20:19.029 --> 00:20:24.639 We only do early stage investments at the early phase of a fund, you do 00:20:24.639 --> 00:20:26.289 some later stage investments, too. 00:20:26.329 --> 00:20:29.369 So you balance your portfolio between early and later stage. 00:20:30.309 --> 00:20:35.069 So that means that at some companies, you'll stay three, five years. 00:20:35.749 --> 00:20:39.299 Other companies, you, you stay, you know, five to eight, 10 years. 00:20:39.829 --> 00:20:40.279 That depends. 00:20:40.304 --> 00:20:40.564 Victoria: Got it. 00:20:40.564 --> 00:20:41.084 Got it. 00:20:41.094 --> 00:20:41.294 Yeah. 00:20:41.294 --> 00:20:44.184 And your point about it, you maybe even need longer. 00:20:44.234 --> 00:20:48.744 Um, I know like the LanzaTech story, which Is... 00:20:48.814 --> 00:20:52.299 , It's a great success story, right? 00:20:52.299 --> 00:20:57.489 I, it's gotten, um, a lot of investment, it's getting a lot of success, et cetera. 00:20:57.929 --> 00:21:01.529 And for those that hadn't followed their story, they don't realize 00:21:01.589 --> 00:21:03.239 this is 20 years in the making. 00:21:03.339 --> 00:21:05.119 This was not overnight success. 00:21:05.119 --> 00:21:06.759 This was not five years success. 00:21:07.139 --> 00:21:09.629 It was 20 years to get to 00:21:09.629 --> 00:21:10.359 Rob: Well, and, 00:21:10.429 --> 00:21:12.369 Victoria: substantial commercialization. 00:21:13.139 --> 00:21:18.839 Rob: and, and, uh, uh, our story is Avantium Capricorn invested early 00:21:18.839 --> 00:21:24.669 stage in Avantium and, and we've been in the, we just sold our last portion of 00:21:24.669 --> 00:21:26.639 shares because we liquidated the fund. 00:21:27.249 --> 00:21:27.629 Victoria: Okay. 00:21:27.669 --> 00:21:29.059 Rob: So we could not keep the shares. 00:21:29.059 --> 00:21:30.969 And otherwise we may have, we may have hang on. 00:21:31.909 --> 00:21:36.169 But, um, I think we've been, uh, 16 years in a Avantium 00:21:37.119 --> 00:21:37.749 Victoria: No kidding? 00:21:37.749 --> 00:21:42.189 Rob: Now and, and, and, and yeah, but, but if you think about it in that 00:21:42.189 --> 00:21:44.489 timeframe, we've had the financial crisis. 00:21:44.639 --> 00:21:52.629 Uh, as, as, as one big thing, you had low oil, high oil prices, um, 00:21:52.669 --> 00:21:56.949 the whole development of wind, electricity, solar, uh, and COVID. 00:21:58.029 --> 00:22:02.389 Uh, so, so the people at Avancium, Tom van Aken, really, you know, the, 00:22:02.399 --> 00:22:06.949 the persistence of these people is, is admirable, you know, but, but hey, 00:22:06.949 --> 00:22:08.599 they're, they're building the plant. 00:22:08.659 --> 00:22:13.399 And I think opening is scheduled October, November, so great. 00:22:14.879 --> 00:22:15.229 Yeah. 00:22:15.949 --> 00:22:18.579 Victoria: so Rob, as you mentioned that I hadn't realized that you 00:22:18.579 --> 00:22:20.639 guys were part of Avantium as well. 00:22:20.659 --> 00:22:24.099 So I'm going to have to, so when people are listening to this or reading this, 00:22:24.099 --> 00:22:28.799 I'm going to end up linking all of the episodes of executives I've talked to that 00:22:28.799 --> 00:22:30.699 are somehow affiliated with Capricorn. 00:22:30.769 --> 00:22:31.069 So. 00:22:31.404 --> 00:22:37.434 I talked to Tom Van Aken, Avantium, uh, I've spoken with Corey Tyree of Trillium, 00:22:37.434 --> 00:22:39.234 I think you, you made that intro. 00:22:39.234 --> 00:22:41.934 James Gibson, Void Technologies. 00:22:42.294 --> 00:22:47.094 Uh, and then of course Keith, uh, um, Keith Wiggins. 00:22:47.094 --> 00:22:47.454 There we go. 00:22:47.454 --> 00:22:50.514 Keith Wiggins from, uh, from Econic Technologies. 00:22:50.514 --> 00:22:54.894 So there's a whole lot of, uh, clean tech energy investment that, uh, 00:22:55.384 --> 00:22:58.324 we can, that I've managed to talk to and that we'll link to this, 00:22:58.324 --> 00:23:00.064 that have a Capricorn connection. 00:23:01.239 --> 00:23:01.839 Rob: Definitely. 00:23:01.849 --> 00:23:02.629 Victoria: Great. 00:23:02.929 --> 00:23:06.829 So, so Rob, how do you contrast, um. 00:23:07.399 --> 00:23:11.869 What you guys do from a venture capital perspective versus. 00:23:13.154 --> 00:23:16.514 Private equity or versus some of the big venture capital? 00:23:16.534 --> 00:23:23.214 Cause it sounds like you're coming in very early stage, relatively small investments. 00:23:23.224 --> 00:23:27.354 When we think about, um, just heck, let's be honest, the scale of what it 00:23:27.354 --> 00:23:31.364 costs to build and develop a chemical plant or chemical product, relatively 00:23:31.364 --> 00:23:35.644 small investments, but how do you contrast what you, what you, um, are 00:23:35.644 --> 00:23:40.584 doing versus what like a private equity firm might do or a bigger VC firm. 00:23:41.669 --> 00:23:41.929 Rob: Okay. 00:23:41.979 --> 00:23:42.219 Yeah. 00:23:42.219 --> 00:23:48.089 So when we enter, we do a smaller ticket, but at that point in time, 00:23:48.089 --> 00:23:51.089 the valuation of the company is still on the, on the lower side. 00:23:51.549 --> 00:23:53.289 So we get a decent share package. 00:23:54.179 --> 00:23:57.849 And then when the company grows, we, we continue to invest. 00:23:58.399 --> 00:24:00.889 So we stay until there's a growth phase where. 00:24:01.329 --> 00:24:06.349 We cannot no longer follow and then we start to dilute, but by that time, 00:24:06.349 --> 00:24:11.099 you hope that the valuation has gone up sufficiently and that your dilution 00:24:11.099 --> 00:24:12.999 is compensated by valuation increase. 00:24:13.474 --> 00:24:13.864 Victoria: Got it. 00:24:14.309 --> 00:24:18.939 Rob: And of course, at some point, we need to sell it now, um, and that 00:24:19.209 --> 00:24:24.189 that's what I tell all the people you just mentioned to James and Keith and 00:24:24.189 --> 00:24:28.139 others, like, you know, we, we invest to sell at some point, you know, 00:24:28.229 --> 00:24:31.079 so, um, you have to agree to that. 00:24:31.349 --> 00:24:34.389 The difference between venture capital in the early phase is. 00:24:35.124 --> 00:24:38.404 We get pretty actively involved in, in the board 00:24:38.964 --> 00:24:39.334 Victoria: Okay. 00:24:39.434 --> 00:24:41.384 Rob: where, where we use our network. 00:24:42.864 --> 00:24:47.864 Uh, uh, we, we can help the, the, the management team on, you know, 00:24:47.864 --> 00:24:49.274 look at this, think about that. 00:24:49.424 --> 00:24:54.384 Um, you need to make changes to, to people or to processes procedures. 00:24:55.134 --> 00:25:00.774 Um, we help the connection, uh, you know, not to strategic 00:25:00.804 --> 00:25:04.964 partners, to service partners, but, but also syndicates to invest. 00:25:06.214 --> 00:25:11.264 When, when we look at a company in, in our first investment round, we also 00:25:11.264 --> 00:25:13.124 look at investability down the road. 00:25:14.504 --> 00:25:17.614 are there co investors that are interested in this space? 00:25:18.034 --> 00:25:22.404 And of course, are there potential exit parties interested in this space. 00:25:22.404 --> 00:25:27.824 But then our role is really in that, that syndication and private equity 00:25:28.024 --> 00:25:31.824 and, and say, late stage venture capital really comes into play 00:25:32.504 --> 00:25:34.224 when the technology risk is out. 00:25:34.949 --> 00:25:37.059 And when the initial business risk is out. 00:25:37.659 --> 00:25:38.049 Victoria: Got it. 00:25:38.049 --> 00:25:43.329 Rob: And, and they come in and, and they're really good at growth, you know, 00:25:43.339 --> 00:25:48.149 when, when you then say, all right, we, we, we put in chunks of 50 million, a 100 00:25:48.169 --> 00:25:50.889 million, and we got to make this work. 00:25:51.284 --> 00:25:51.754 Victoria: Yeah.. 00:25:52.249 --> 00:25:53.659 Rob: But that, that's not our role. 00:25:53.789 --> 00:25:58.169 You know, we, we do that pre work and when it comes to then the, the financial 00:25:58.169 --> 00:26:03.859 reengineering and, and, you know, and the growth finance, uh, that that's for, but. 00:26:04.789 --> 00:26:06.999 But we like to be at that beginning of that part. 00:26:07.464 --> 00:26:07.724 Victoria: Right. 00:26:07.724 --> 00:26:12.644 And so you're really in a lot of the derisking of, of derisking and 00:26:12.644 --> 00:26:17.519 validation, I guess, of the technology, of the markets, of the investment to 00:26:17.519 --> 00:26:20.334 help it progress to the next step. 00:26:21.179 --> 00:26:21.549 Rob: Correct. 00:26:21.549 --> 00:26:21.679 Yeah. 00:26:21.679 --> 00:26:23.909 It's, it's de risking of technology and business. 00:26:23.909 --> 00:26:29.439 Yeah, that's, and, and in some startups, you have to do it at the same time. 00:26:29.439 --> 00:26:30.529 You know, you do it parallel. 00:26:30.529 --> 00:26:31.829 And then it's like, how do you do that? 00:26:32.374 --> 00:26:32.694 Victoria: Yeah. 00:26:32.839 --> 00:26:32.889 Rob: Yeah. 00:26:32.899 --> 00:26:38.049 I'll be, because it's, it's, if you take, for instance, business development, you 00:26:38.049 --> 00:26:43.559 know, um, business development for an existing business is very different than 00:26:43.559 --> 00:26:45.359 business development for a new business. 00:26:46.834 --> 00:26:49.574 You know, in business development for a new business, you really have to look 00:26:49.574 --> 00:26:55.584 at customers where do they understand that we're not completely finished and 00:26:55.594 --> 00:26:58.194 do they accept that this is not perfect. 00:26:59.694 --> 00:27:04.274 um, and, and also when it doesn't work, is, is it not a 00:27:04.274 --> 00:27:06.014 failure to us in the market? 00:27:07.304 --> 00:27:11.764 You know, it's, it's sad, uh, it's, it's like your first new surfactant, you may 00:27:11.764 --> 00:27:13.234 not want to talk to Procter and Gamble. 00:27:15.034 --> 00:27:17.294 You may want to wait till you're a little bit more developed. 00:27:17.604 --> 00:27:22.984 And also, and rightfully so for these kinds of companies, they will only be 00:27:22.984 --> 00:27:30.294 interested If you have a pathway to large scale, you know, they're not interested 00:27:30.314 --> 00:27:32.554 in a tiny little bit of something. 00:27:33.134 --> 00:27:36.704 If you want to sell to these type of customers, you have to be able to scale. 00:27:37.314 --> 00:27:41.174 If you're in a niche market, You can work with different customers. 00:27:41.179 --> 00:27:45.034 So in the business development phase early on, you have to think about that. 00:27:45.644 --> 00:27:49.514 You know, where do we have to prove, what do we have to prove? 00:27:50.394 --> 00:27:52.134 You know, and, and how do you go about it? 00:27:52.139 --> 00:27:55.874 And then, and then you balance your risk profile on that. 00:27:56.064 --> 00:27:56.374 Victoria: All right. 00:27:56.374 --> 00:28:01.424 And I am calling a pause right here on the first half of my conversation with Rob. 00:28:02.024 --> 00:28:03.324 I hope you got a lot out of it. 00:28:03.354 --> 00:28:09.174 I know I really did, so much wisdom about the role of venture capital, 00:28:09.574 --> 00:28:14.394 how small innovative companies really are critical for driving innovation. 00:28:14.564 --> 00:28:18.524 Innovation and development and the future of chemicals and the 00:28:18.524 --> 00:28:19.824 role that venture capital plays. 00:28:19.864 --> 00:28:20.934 So stay tuned. 00:28:20.934 --> 00:28:22.164 Thank you for listening today. 00:28:22.604 --> 00:28:26.364 Next week, part two, you are not going to want to miss that. 00:28:26.414 --> 00:28:30.334 Rob dropped some great bombshells that are going to be hugely valuable to you. 00:28:30.744 --> 00:28:31.954 Thanks for listening today. 00:28:32.014 --> 00:28:33.074 We'll talk to you again soon. 00:28:35.875 --> 00:28:37.655 voiceover: We've come to the end of today's podcast. 00:28:38.065 --> 00:28:40.615 We hope you enjoyed your time with us and want to learn more. 00:28:41.024 --> 00:28:43.284 Simply visit TheChemicalShow. 00:28:43.294 --> 00:28:46.044 com for additional information and helpful resources. 00:28:46.734 --> 00:28:50.784 Join us again next time here on The Chemical Show with Victoria Meyer.