Bio-based technologies, especially polymers and chemicals were the center of attention at the bio-based start-up day in Cologne yesterday that I attended. Several start-ups introduced their ideas and it was a way for them to get in touch with industry and investors and for all of us to network. Combining start-ups with bio-based technologies means to deal with “everyday start-up topics” like investments, market entry and growth strategies but also with very industry-specific topics like funding, technology specifics and market developments.
Start-ups and their challenges in bio-based technologies
Generally start-ups are faced with challenging expectations of bringing the market into the future and inventing the technologies that are truly innovative and groundbreaking. Start-ups often start out with great ideas, but then, and that’s the tricky part, they have to make it through. And here’s the catch: roughly only 1 out of 10 start-ups survives. Recently a study from Harvard suggested that it’s especially reliable to predict success for start-ups with research-intensive and life science technologies. Here it’s most important to have documented intellectual capital within the company and/or through initial mentor interest. Of course, in addition to that, a strategic market approach is necessary and a realistic assessment of steps and time frame, structures and complexity to enter the market and succeed in it.
Often an especially challenging part is the evaluation of the IPO and the time that goes into the preparations. This time also generally creates quite a distance from the operative business and requires patience with a lot of factors that can’t be influenced. The earlier the IPO is set for a Bio-start-up, the greater the risk for investors – meaning: a great financial risk for the founders.
Markets for biotechnology – let’s look at bio-based polymers
The Life Sciences market is rather large, so let’s have a look at the bio-based polymers to see where start-ups come in. It’s definitely a growing market and production capacities have to adapt to the growing need. The world market shares are expected to shift dramatically in this area within the next 5 years. Asia is already playing the biggest role in the production and is predicted to play an even bigger role. Looking at Europe and North America in comparison shows that they will lose even more shares while Europe in particular shows the strongest demand for bio-based technologies. It doesn’t really help that there’s no real political framework within the EU to support bio-based polymers and chemicals – other than bioenergy and biofuels – leading to underinvestment from the private sector. Investors tend to go where it’s attractive and safe to invest in bio-based polymers and that, at the moment, clearly is Asia, South America and even North America.
“While Europe talks, Asia builds” – now what?
But the bio-based start-up day also showed not to overemphasize the Asian market and concentrate on innovation and development that start-ups can achieve right where they are. Cluster-activities in Europe are a great way to support these developments and innovation is clearly a way to go in the race for the next big thing in bio-based technologies.