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Leading materials investors from Sofinnova, Planet A, Regeneration.VC, Archipelago Eco Investors, Astanor Ventures and Beiersdorf Corporate Venture Capital share their forecast for 2024.
From biodegradable plastics and eco-friendly textiles to renewable feedstocks and circular manufacturing processes, the scope for investment in climate-smart and sustainable materials has grown exponentially.
Against a challenging economic and regulatory backdrop, there is much to celebrate in 2023. We saw some incredible funding news from our network, such as Erthos raising $11.2 million for their plant-powered plastic substitute, and Traceless successfully closing €36.6 million to build their first industry plant. We have seen the formation of strategic partnerships from across the supply chain: 2M and Xampla; Avantium and Pangaia; ADM and Solugen; and a new coalition of innovators forming the Natural Polymers Group. There have been many talks about progressing regulation, including the UN Global Plastic Treaty negotiations, the US government’s pledge to replace 90% of plastics with bio-based materials within 20 years, and the recent EU move to ban ‘forever chemicals’.
In 2023, enthusiasm, excitement, and the need for innovation in sustainable materials is undeniable. But what does the future have in store?
We asked this very question to leading investors, as we shape the agenda for the 4th edition of Rethinking Materials, taking place on May 14-15 at the Hilton London Bankside, to find out the technologies they are excited about, and predict investment trends for 2024, AI and digitalisation, to valorising waste streams, and unlocking the potential of biomaterials at scale.
Janina Zippel, Senior Scientist Start-Up Scouting, BEIERSDORF, says: “Excitement is high at Beiersdorf about the opportunities AI and digitalisation bring to the value chain of sustainable packaging. From quantum computing for new molecule design, to smart packaging applications, AI based waste traceability, digital trading platforms for recycled materials and software solutions for supply chain transparency. We expect VC and CVC investment strategies will follow these innovation trends and allocate rising amounts of funding to the fast-growing business opportunities.”
Michael Krel, Partner, SOFINNOVA PARTNERS sees a continuing interest in the capability of new biotech materials to improve durability as well as sustainability: “Using microorganisms to produce sustainable materials or to create additives to improve materials durability is particularly exciting. By leveraging certain highly sought-after properties, even at very low inclusion rate, one can produce high-value products added in mass markets, having significant positive environmental impact. Textiles that are bio-sourced or more sustainable will be a strong trend for sustainable materials in 2024. Being able to produce low emission textiles or the ability to provide existing textiles with better performance through sustainable or bio-based dopants will become more mainstream.”
Looking at the popularity of bioplastics and recycling trends, Tobias Seikel, Co-Founder and General Partner, PLANET A, gives us his lowdown of what we can expect to see more of in 2024: “Reusable concepts (fuelled by incoming Proposal Packaging and Packaging Waste (PPWR) and EU’s focus on reusable packaging); Recycling as a whole is gaining more and more attention; Intelligent machinery for the recycling industry; and software to help manage Extended Producer Responsibility fees across all materials in all markets in Europe.” He is particularly interested in bioplastics: “I believe that the bioplastic PHA – also from waste streams – harbours great potential as a substitute material for mass plastics, particularly in packaging and coatings. Combinations of natural polymers to create high performance barriers are also exciting.”
Echoing Tobias, Lucy Mortimer, Partner, ARCHIPELAGO ECO INVESTORS, sees the scalability of innovations designed with end-of-life in mind: “Technologies focused on designing materials for end-of-life (for example mono-materials) and identification (such as enhanced sorting, tracking, tracing) are all unlocking quick-start opportunities and may face lower barriers to adoption.” Speaking more broadly about investment trends, she goes on to say, “We’re seeing more innovation in approaches to investment in the sector both at the investor level, with alternative, targeted vehicles, and within start-ups establishing paid partnerships to extend funding runways and build on collaborative approaches to supporting systemic change.”
Conveying his forecast for the year ahead, Michael Smith, General Partner, REGENERATION.VC discusses the need for a focus-shift to move to upscaling viable solutions on a large scale, and the regulatory road ahead. “2024 will see more emphasis on innovations aimed at unlocking biomaterials at scale. Increasing resource constraints and global climate agendas are now central matters for governments and corporates alike. This will both facilitate the entrance of new players and support the most promising biomaterial companies to get from pilot to proper commercial production, on their way to reach a level of market adoption that makes the redesign of entire supply chains inevitable.” He elaborates further: “Solutions that reimagine raw materials and commercialise alternative supply streams to these essential inputs are crucial to building supply chain resiliency and diversity and accelerating our response to the climate crisis.”
Unsurprisingly, challenges lie ahead for the still-young materials space. Adrian Friederich, Impact VC, ASTANOR VENTURES shares his guidance for those who want to be successful: “Through 2024 the sustainable materials sector will continue to navigate a tough financing environment. Biotech innovations, particularly those involving the use of microorganisms, are expected to attract attention, but the journey from lab to market is fraught with financial and logistical challenges.” He continues: “The shift towards turning organic waste into materials is promising, yet the road to commercial viability and widespread market acceptance is not guaranteed. The sector will likely see cautious and selective investment trends. Start-ups will have to be even more clever at finding strategic partnerships and non-dilutive ways to funding to industrialise their innovative technologies. While this particular fundraising landscape is still nascent, there are increasing opportunities to pursue.”
Senior stakeholders from across consumer product and packaging value chains will join us in London on May 14-15, 2024 for the next Rethinking Materials summit.
The event connects pioneers of new materials and circular technologies with investors, brands and manufacturers scouting and scaling sustainable alternatives. We address the issues most crucial to innovators in this space and accelerate commercial collaborations through research-led debates and targeted networking sessions.
Find out more at www.rethinkingmaterials.com and sign up for newsletter updates when the programme is revealed in January.