What makes a sustainable chemicals business investable?
For an early-stage sustainable chemicals business, proving the technology works is only part of raising funds. Investors also want to know who will buy it, whether it can be made at scale, and whether the numbers add up.
These questions matter more as a company moves towards the market. Regulation, customer qualification, capital needs and how it will compete on cost all affect how fast it can grow and how much funding it will need.
On 22 September, Innovate UK Business Connect held a Sustainable Chemicals Innovation Network webinar on this topic. It brought together views on fundraising, investment and running a company, and looked at what early-stage businesses need to show when seeking private investment.
Investment starts with the case for raising it
Equity suits some businesses at some stages. It will not suit all.
Innovate UK Business Connect set out how early-stage fundraising works with a sector agnostic overview. This covered when equity finance may be suitable, the main sources of capital, how investor processes work, and why some opportunities are turned down.
A key part of getting ready is being clear on what the money is for. Founders see the most success when they can link the amount they are seeking to specific tasks and results, so the raise has a clear purpose.
That leads to a clearer question: what will this funding let the company achieve that it cannot evidence currently? For sustainable chemicals, those next steps are often linked to the risks investors are looking at. The investment case should explain where the company is going and what the next stage of work will prove.
Seeing the business from the investor’s side
A representative from Zero Carbon Capital gave the investor view.
Technical potential matters, and investors weigh it alongside the wider business. That includes the market, the offer to customers, the team and how it will get to market.
This is important when a company has been built around a strong technical idea.
Evidence of technical performance is important, but separate evidence is needed on who will buy the product, why they will choose it over existing alternatives and how the business can scale commercially.
In sustainable chemicals, the business case also has to answer questions on scale-up, regulation, customer testing and capital needs. These points are linked. How a company plans to make more product affects costs and future funding, while early customer interest still has to turn into sales.
Looking at these questions early can highlight areas that need more work before an investor raises them.
What fundraising looks like in practice
A member of the Holiferm team shared a company perspective, drawing on their experience in the industry.
They spoke about the prep, staying power and flexibility needed to raise money in a tough market. What investors expect can change as a company grows, so it helps to keep testing ideas, building proof from customers and getting ready for due diligence.
Choosing an investor is part of that prep. The amount on offer matters. So do expectations, timeframes and aims, and how they fit with where the company is likely to go next.
Building the case as the business develops
These views point to the same lesson. Fundraising works best when it grows with the business, not apart from it.
For sustainable chemicals companies, that means linking technical progress with proof on customers, manufacturing, costs and route to market. It means being open about risks that remain and clear on what the next funding round will achieve.
The focus for businesses should be on showing the company knows what questions count, has proof for what it claims, and is clear on what it needs to do next to achieve growth.
