On May 31st, 2017 Pangaea Ventures hosted its third Advanced Materials Commercialization Summit. The summit was attended by entrepreneurs representing some of the world’s most innovative, leading edge start-ups along with senior thought leaders from dozens of the world’s largest chemical and materials companies. Discussions focused on mission critical topics around advanced materials commercialization.
The hottest field in the world of advanced materials today is 3D printing. But this has been a long time coming. Hideo Kodama of Nagoya Municipal Industrial Research first developed additive manufacturing equipment and materials in1981. This original work closely resembles the stereolithography technique pioneered by Charles Hull that remains a dominant technique today. Despite the promising future at the time of this original work, it wasn’t until 27 years later, in 2008, that the additive manufacturing industry finally surpassed one billion dollars in revenue, a key threshold in becoming mainstream. Borrowing from Silicon Valley, I’ll use the term “revenue unicorn” for this milestone. Since that time, there has been no looking back.
“The manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products”.1 From the early days of simplistic tooling to the mechanization approach for textile mills in Britain followed by Henry Ford’s assembly line, manufacturing practices continue to evolve, impacting every aspect of our lives. Advanced manufacturing systems are not only needed to support job creation but also to meet the needs of a growing population. By 2040, it is estimated that there will be around 9 billion people requiring the basic necessities of life! Pangaea Ventures’ focus on advanced materials provides a unique view on emerging manufacturing technologies. We like to see advantaged features, such as, sustainability, low cost, robustness, energy efficiency and scalability.
With Google's $3.2 billion acquisition of Nest, and Apple's recent acquisition of Israeli 3D sensor company PrimeSense, sensors are making quite the splash these days. Increasingly, sensors are being deployed all around us measuring, interpreting, and transmitting troves of actionable data. Whether it's for a smarter building where an occupancy sensor detects if anyone is in a room, a manufacturing environment where sensors ensure tight process control, or in a car where rotation sensors detect a slipping wheel, sensors impact most major industries today.
The advanced materials industrial value chain incorporates activities that range from securing input materials to transformation processes into output products with all the supporting functions. Not just intermediate products for additional conversion but all the way to the final product in the hands of the end user. Primary activities include raw materials management, production processes, intermediate products and end-user products. This in turn involves a large array of support tasks, such as supplier control, product design, engineering, research and development, testing and quality management, product qualification, marketing and sales, regulatory compliance, life cycle management, and customer satisfaction. It should be noted that the concept of value chain management received a lot of attention following Michael Porter’s seminal work on "Competitive Advantage: Creating and Sustaining superior Performance". For over a decade, Pangaea Ventures has been building advanced material startup companies and this experience has allowed us to establish some best practice approaches that include industrial value chain management.
3D printing is a set of additive manufacturing processes that creates physical objects from digital models one layer at a time. Unlike traditional manufacturing techniques (casting, drilling, machining, etc.), which tend to be subtractive in nature, 3D printing additively builds up an object instead of cutting it down from a larger block of material. While 3D printing dates back to the 1980s, the last decade has seen swift growth and excitement in the sector across the globe. As the various printing approaches improve and the materials palette grows, 3D printing is starting to move from just low volume, highly customized rapid prototyping applications to some final products and post-production customization.
LED lighting has the potential to be one of the true blockbuster clean tech markets. A 2011 report by McKinsey & Company forecasts the global lighting market to reach €108BB($140BB) by 2020 with LEDs taking €64BB($83BB) of that share. This is a 10X increase from the LED lighting market size today. Technology is advancing as well; with Cree producing a record 254 lumen-per-watt device in 2012 - almost a 3X increase over the last decade. Exciting stuff for VCs indeed!!! At Pangaea Ventures we share in the excitement but worry that current thinking just won’t take us far enough.
Nanotechnology has always been around but got a big boost with Richard Feynman’s lecture titled “There’s plenty of room at the bottom” in 1959. The introduction of the scanning tunneling microscope in 1981 and bucky balls (60 carbon atoms) in 1985 further ramped up the interest level. Then came the ambitious predictions and amazing forecasts. Everyone, including me, wanted to get some action. The rush generated lots of activities in terms of startup companies and investments and naturally, there was the inevitable disappointment. These days, the decibel level is lower but make no mistake, nanotechnology is now integrated into conventional technologies and making a difference. Both startups and large corporations are introducing nano-enabled products in the marketplace across industries that include energy, chemicals, environmental, electronics/semiconductor, personal care, textiles, agriculture, transportation, biomedical/biotechnology, and packaging. Already, over 800 everyday products (Nano.gov) rely on nanoscale materials and processes and this will surely continue to expand.
Over the past two or three years, a consensus view has developed that the capital inefficiency of clean tech startups makes them incompatible with the venture capital funding model. Many investors with their feet half in are delegated to invest only in business model innovation, efficiency software, controls technology, grid optimization and so forth. It’s hard to disagree with these folks when reflecting on the colossal quantities of risk capital that has been deployed to support innovation such CIGS solar - without commensurate returns. Unfortunately, this ignores the fact that the change-the-world type innovation occurring in labs around the world is exactly the type of technology that has scared many investors away.