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Chemical Start-Ups As A Guarantee For Innovation

Time of change: The climate is changing, and the earth’s population is growing rapidly. Urbanization and mobility demand housing and lightweight construction, just as the energy transition demands new materials and storage media, not to mention digitization. Finite resources, geopolitical constraints and sustainable circular economy need creative solutions. Innovations in chemistry are more in demand than ever before.

The challenges are global: the world is changing. Important developments influencing our lives are unstoppable. Not only when it comes to switching to decentralized energy supply or digitization to Industry 4.0, regardless of whether it is about printed electronics or the additive manufacturing of components or entire houses via 3-D printing, chemistry is involved. It will provide important solutions in the form of new materials while also being part of the cross-industry reorganization of value chains. Sensational blockbuster innovations barely take place; Many small material, technical or procedural innovations are today intrinsic to the system; At the same time, the chemical industry is changing from a material manufacturer to a problem-solving provider.

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Is that enough given the challenges of global competition? No, say the corporations themselves. After years of concentration in the low-margin chemicals business on the core competencies, a rethinking is now required – in a short time. New partners and new forms of cooperation become mandatory. What has been established between smart biotech companies and Big Pharma for decades in partnerships for the development of new drugs must now be repeated in chemistry. According to the study “Pave the way for innovation” on behalf of the VCI, one third of large companies in Indian assess the lack of start-ups as a strong obstacle to innovation. That is a clear warning signal. Altana, BASF, Bayer, Evonik and Lanxess are already involved in High-Tech Gründerfonds,Merck Accelerator launched to support start-ups. BASF is investing in young companies through its EUR 175 million fund. The managers look at over 1,200 business plans annually and invest in two to three start-ups, not just in India. To appear on the radar of investors, risk minimization is required: Chemists must learn to approach customers early. At first, technical perfection from the laboratory is not in demand: banana projects mature together with the customer.

There are good examples

Anyone who wants to establish himself as a partner for large-scale industry relies on well-patented technology. The optimization of the business model and its financing are further challenges. An example of this is the Hydrogenious Technologies GmbH from Erlangen with a storage technology for hydrogen. By participating in start-up competitions such as the Science4Life VentureCup, the team contributed entrepreneurial knowledge and built cross-industry networks. With the investor now the distribution is established. The example of Cysal GmbH in Münster, a start-up developing the manufacturing process for dipeptides for use in the food, animal feed and cosmetics industries, shows the biggest pitfall in biotechnology foundations: the choice of business model. The company started with the idea To be a developer, producer and distributor. But today, the developed processes are out-licensed directly: The high investments in equipment and personnel were unbreakable. As the IoLiTec Ionic Liquids Technologies GmbH from Heilbronn proves, the step to start selling in the home market is logical, but growth only happens on the international stage. With the founding of the US subsidiary, sales of ionic liquids and nanomaterials increased tenfold. The explanation for this is as simple as understandable: With products requiring explanation, one is better off directly with the customer, especially as Americans prefer to buy from Americans and pay dollars in their home currency. Good business only with products? Not at all. The Polymaterials AG from Kaufbeuren is a successful service provider for the development of new polymer materials and practices the business model “Innovation Tandem”: Chemical companies benefit in the development cooperation from the accumulated in the start-up specialist knowledge, similar to the pharmaceutical industry in the development of diagnostics with specialists cooperates. In chemistry, the junior partner can also start the market entry for a new material until the senior partner takes over production and logistics of the large quantities.

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You can learn about success stories, but there are no entrepreneurial self-starters. Entrepreneurship needs to be broadened and there is a need to promote a better entrepreneurial climate: while venture capitalists may be aware of and add value to the biotech sector’s clinical value creation, investors are struggling with individualized chemistry business models. At the same time, too few ideas find their way from science into business because of the widespread thinking in projects rather than in products. This requires much more interdisciplinary networks as well as a stronger appreciation of the interdisciplinary degree program in Chemistry.

Conclusion

The challenges are there and insight is growing: we need more small, flexible chemical companies paired with unorthodox and fresh-looking chemistry entrepreneurs. Our technical and methodical competence is undisputed worldwide. What is still lacking in this country in the field of chemistry, is the entrepreneurial ideas and the start-up mentality. If the car industry has to re-park, then the chemical industry has to “re-experiment”. The cultural shock at the meeting is reported by both sides, young entrepreneurs and industrial founders. Now it’s time to meet more often to find a common language. The “Innovation Engine Chemistry” was and is a long overdue event that one could wholeheartedly wish for a continuation.

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Shivam Singh
Founder of the TechGrits, has always looked at technology as a piece of knots. From an early age connected to the technological world, this is literally your dream job.