Investments in Innovative Technologies
Advanced Materials, Nanotechnology, Green Chemistry and Green Industry (Cleantech)
Trends and Characteristics of the Venture Capital Market, Startup Companies
and Leading Corporations
Part I – Segmentation and Trends
Dr. Dov Reichman
In September 2015, William Blair & Company, the global investments management company, published a report entitled: “Specialty Materials Investment Banking”.
According to this report, the investment trends in the field of advanced materials are on a constant state of increase, and this is nurtured by the quest of the large corporations for new engines of growth.
This process leads to acquisitions, mergers and investments in technology companies, in order to provide a response to the markets that are developing at a rapid rate in the fields of aviation, medicine, petroleum and gas, as well as other areas in which there are relatively high profit margins, together with technological challenges seeking solutions.
From an analysis of the investment and sales activity in the field of advanced materials by corporations and startup companies conducted by i3 Connect, it emerges that 19% of the companies in the field are in the product development stage and have not yet reached the sales stage, and that approximately 80% are in the stage of income, and of these, naturally, the large and leading corporations constitute a significant portion of the business activity in chemistry and advanced materials.
About 52% of the companies in the field report on everything from initial sales through to transactions to the extent of 5 million dollars annually. The remaining companies in this sector, mainly the corporations, report sales of 5 – 100 million dollars and more.
The extent of investments in the advanced materials is in the region of 150 – 200 hundred million dollars per quarter, both in 2014 and in the first half of 2015.
In the London Environmental Investment Forum report that was published in the first quarter of 2015, there is a reference to an increase in venture capital and corporate investments in advanced materials to the extent of 2 billion dollars over the past 5 years.
The Main Areas of Application of Advanced Materials and Nano Materials
There, is an ever increasing utilization of innovative materials in a wide variety of industrial products, which are not concentrated solely in any particular business sector and consequently the following applications should be emphasized:
Materials and components for electronics and optics.
Polymers and composite materials.
Materials for improvement of energetic efficiency and energy conservation.
Water treatment materials.
Advanced fertilizers and pesticides for agriculture.
Materials for digital printing, conductive ink and 3D printing.
Green alternatives for toxic materials, hazardous and polluting materials.
Active materials for medical purposes and advanced materials for medical devices.
In the list of the ten leading business investments in advanced materials over the past two years, as reported in August 2015 on www.i3connect.com one finds investments from 120 million dollars per company to 30 million dollars per company.
In the top ten, at the date of this report, there were seven American companies, one Dutch company, one British company and an Israeli company – StoreDot.
The worldwide investment in Energy and Fuel Alternatives was about 270 billion dollars in 2014 (not including large hydroelectric projects), as appears in the Bloomberg New Energy Finance Report that deals with global trends in investments in alternative energy (Global Trends in Renewable Energy Investment 2015), in a joint report conducted together with www.fs-unep-centre.org from Frankfurt.
This amount is 17% greater than in the previous year and derives, inter alia, from investments in the solar field in China and in Japan, as well as investments in wind energy in Europe.
The investments in alternative energy are expanding to many more countries, including the developing nations. Among the countries that have joined the billion-dollar investment club in alternative energy, one can mention Indonesia, Chile, Mexico, Kenya, South Africa and Turkey. In the range of investments of between one half billion and one billion dollars, one can find Jordan, Uruguay, Panama and others.
Chemicals and Plastics – The extent of chemicals production in the United States is anticipated to double. The drop in oil prices will affect the prices of ethylene, which constitutes a primary raw material in the plastics and polymers industry.
The trends towards development and consumption of green products and environmental preservation, naturally degradable product packaging, as well as advanced technologies for treatment of waste from various sources, will continue.
The American Cleantech Group, which also develops the platform for the i3 market research, reported at the end of 2014 that the investments in Food and Agriculture Technologies were made by both corporations and venture capital in the third quarter of 2014. The reference is to investments to the extent of 269 million dollars in 41 transactions, and in a significant increase in investments in this sector.
Investments were made equally in the various areas of agriculture and food:
7 investments were in companies dealing with the treatment of field crops, 6 were in hardware and software, while 6 additional investments were made in companies working towards improvement of safety and logistics in the food industry.
Furthermore large agricultural and food corporations were involved in the investments.
In the category of Opto Electronic Semiconductors, it was reported by ChiPortal that growth is anticipated as a result of new uses in the automobile industry and in computer vision, including body cameras, medical imaging, sensors and a variety of optic sensing auxiliary devices, which are supposed to be introduced into devices for the Internet of Things – IoT (Image Sensors, a Flourishing Branch/Avi Belizovsky).
Development and production of Conductive Ink constitutes an ever-growing market in the field of advanced materials and nanotechnology and the estimation of www.eetimes.com the extent of the market for ink for Printed Electronics will reach 2.2 billion dollars in 2015.
IDTechEx Research’s forecast is that this market is anticipated to grow to 3 billion dollars by 2025.
The utilization of conductive advanced materials is anticipated to become widely used in Wearable Electronics and the replacement of nano-silver by nano-copper will cause a considerable reduction in costs and the expanded use of conductive ink in photovoltaic cells for the solar and Touchscreen fields, as well as the integration of conductive ink in 3D printing. The area of 3D printers is a field that is growing both in Israel and worldwide. In April 2012 the Israeli three-dimensional printer manufacturer Objet merged with the American Stratasys Company.
Concerning Israeli startup companies – Israel is a world leader in the number of startup companies per capita, with approximately 1,000 new companies every year.
In an article published at the end of 2014 on the NoCamels site, there is a reference to the numerous successes in the high-tech sector and a forecast in various aspects is provided by a group of experts in all areas of advanced technology and venture capital fund investments.
The venture capital industry in Israel has, without doubt, realized the vision of a Startup Nation and the challenge today is, of course, growth and expansion, from startup companies to mature companies that employ more personnel, as well as generating income from sales of advanced products throughout the world.