The Bioeconomy - What makes an investable project?

On 30 September 2021, KTN hosted a virtual event as part of our Bioeconomy Cluster Builder (BCB) to provide insight into how investment companies search out, assess, select, and invest in the bioeconomy sector. Further details on the BCB project can be accessed here.

Everybody likes numbers, so let’s throw in a few for good measure. This event brought together an impressive 94 delegates and delivered presentations from 5 industry experts plus a very knowledgeable chair:

• Kim Cameron, BCB, IBioIC, Chair
• Michelle Kinnaird, Head of Investment Management, Scottish Enterprise
• Marta Chrusch, BP Bio Energy Venture
• Cam Ross, COO, Green Angel Syndicate Ltd
• Dr Marc Leduc, Investment Manager, BASF Venture Capital GmbH
• Dr Sarah Hardy, Director and Head of New Investments, Archangel Investors Ltd

You can find the detailed account of the event as you can watch the webinar here. Meanwhile, I am going to give you my take as a specialist on the various presentations delivered on the day.

Scottish Enterprise were the first in line to deliver their presentation. Their role is to support early-stage companies through accessing a range of funding to include bank funding, equity funding, loan funding and grants.

What they really want to see coming from industry are ambitious projects that create jobs and address the Net Zero targets. If you find yourselves talking to Scottish Enterprise, they will look at your business from a growth and export potential. Of equal importance is that there must be a significant economic benefit and operational presence in Scotland.

In principle Scottish Enterprise are willing to make a financial investment in a business with no expectation of turning a quick profit (i.e. Patient Capital). They may also consider a business from a ‘Values Based’ investment perspective. What this refers to is the practice of looking beyond a company’s balance sheet, which is great for new SMEs with little or no financial footprint. Instead, they may consider the economic and social impact a company has. So, to summarise, if you’re a Scottish based company looking to develop and exploit from Scotland, Scottish Enterprise is worth approaching.

Next on the stage was BP Bio Energy Venture, who approach investment from a Net Zero ambition perspective driven by three focus areas. These include (i) low carbon and energy, (ii) convenience and mobility and (iii) resilient and focused hydrocarbons. You can read more about them here.

During the presentation Marta drew down on something I simply couldn’t dismiss. BPs ambition to tackle 450 million tonnes of emissions and to cut the carbon intensity of BP products by a massive jaw dropping 50%, in a bid to pivot from an oil company to an energy company. This in my mind presents a massive open opportunity for our innovators in the Bioeconomy especially for those who have solutions that could be exploited across BP’s business verticals.

Working with the likes of BP is not limited to just funding your project. They can also help you to access in-house expertise and capability in the adoption of bioprocesses and bioenergy as well as provide access to their global network.

Fourth in line to present were the Green Angel Syndicate. They are one of the largest angel syndicates in the UK, and the only one specialising in the fight against Climate Change. They are made up of a syndicate comprising of 300 high net worth members and as they are private investors, they want to actively get involved in the companies they invest in.

Green Angel Syndicate provided some solid examples of companies they have helped, e.g. Nature Metrics, Oceanium, The Scottish Bee Company and Better Origin to name but a few. They aim to see twenty-five pitch presentations per calendar year where companies present their case to raise early-stage capital to develop their businesses. If your solution aims to address the Net Zero targets, they are a valuable contact to reach out to.

BASF Venture Capital (BASF VC) were next to step into the limelight. They approach investment in start-ups from an open innovation perspective and are more likely to connect if your solution aligns with one of BASF’s segments.

BASF Segments:

• Chemicals (Petrochemicals & Intermediates)
• Materials (Performance Materials & Monomers)
• Industrial Solutions (Dispersions, Resins & Performance Chemicals)
• Surface Technologies (Catalysts & Coatings)
• Nutrition & Care (Care Chemicals, Nutrition & Health)
• Agricultural Solutions

What BASF are seeking are innovators / innovations around new processes, technologies, and products with a specific focus on sustainability.

This sort of investment is ideal for those start-ups seeking Series A and B investment. BASF Corporate Venture Capital are actively investing in businesses that are strategically aligned with BASF priorities and already have a current portfolio of direct investments comprising of approximately 20 companies within the areas of sustainability, AI / Digital Farming, Advanced Materials, 3D-Printing and most importantly for this audience Biotechnology.

Finally, we heard from Archangel Investors Ltd. Archangels are sector agnostic and are keen to engage with companies at any stage. Their only stipulation is that the companies reside and exploit from Scotland.  They don’t consider high capex projects and to give you a feel in terms of success rates, they typically invest in 2 to 3 companies every year from 200 applications. If you engage with Archangels you will need to make sure your value proposition, business model and timelines are all in-order to make any conversation meaningful.

Concluding Remarks

To summarise, I have given you a whistle stop tour of our BCB: The Bioeconomy – An Investor’s Perspective event. This clearly highlights there are exciting investment opportunities beyond grant funding. You just need to know where to look, who to ask and which door to knock on.

Before you start approaching investors, please make sure you have the basics in place, in terms of an executive summary, elevator pitch, pitch deck, business plan and financials. Investors often refer to this collection of information as a ‘data room’. Do your due diligence as the investors surely will. This will make any conversations with potential investors more meaningful.

If you are keen to engage with the bioeconomy activities across the UK, but don’t know where to start, KTN is here to help connect you with the research base, experts in scale-up, industrial partners and funding (private and public). Contact Rajesh Mistry if interested.

About the Bioeconomy Cluster Builder (BCB)

BCB is a European Regional Development Fund (ERDF) funded collaboration between the Industrial Biotechnology Innovation Centre (IBioIC), KTN and Scottish Enterprise.  Its purpose is to support the delivery of the National Plan for Industrial Biotechnology. Further details on the BCB project can be accessed here.

The recording of the event can be accessed here.