Sirris Materials Day 2010 - Sustainable investments - Capricorn venture partners

Capricorn Venture Partners

Sustainable investments
about materials based ventures and cleantech

Marc Lambrechts

Sirris Materials Day 2010

Heverlee – 29 April 2010


Agenda

 About us, cleantech and materials ventures
 Business models
 Value chain
 Some examples
 Materials ventures – watch out for ....

2 Sirris Materials Day 2010 - Sustainable Investments 2010-04-29


Your speaker today

 Dr ir Marc Lambrechts
 research in microsystems and PhD on biosensors
at KU Leuven
 industrial R&D experience at Terumo Europe
 RTD programme management experience at IWT
 + 10 years experience as senior investment manager in early
stage venture capital
 technology fusion as special area of interest
 board member Boondoggle, fluXXion, Neosens, Leuven.Inc
 Capricorn Venture Partners
 founded in 1993
 independent and partners-owned
 pan-European activity, located in Leuven, Belgium
 hands-on, early stage & technology focus
 investing out of Capricorn Cleantech Fund – € 112 M
 raising the Capricorn Health tech Fund



Portfolio examples



Materials related portfolio examples



Advanced Materials = Cleantech

Cleantech is not something “new“
but a regrouping of topics
that are and will remain important
at least for the next decades

“more with less”


Photovoltaic energy = materials



Energy storage = materials



and also wind energy, desalination, ...



Cleantech investments in 2009

HSBC estimate : green stimulus package $ 521 billion worldwide



Are all tech SMEs born equal?
SMEs
 Consultancy company
 Start as a one-man band
no/low tech companies
 Self supporting

 Life style ventures life style
 Growth profile - 1 FTE per year ventures
 knowledge and experience based, little IP
 20 persons – a few million € in sales - profitable

 ‘High growth potential DNA’ ventures
 Technology as long term competitive advantage
 Capital intensive
 International ambition – substantial markets
 High growth - high value – high risk
 Exit orientation


The Venture Capital model

€
IP
knowledge €€€€
experience
+ €€€€
proof of concept
business plan €€€€
+
market €€€€
customers ..
entrepreneurs and team
investors



Tech VC’s prefer to invest in

 Entrepreneurs and a team
 Technology as sustainable competitive
advantage
 strong and clean intellectual property/capital
 proof of concepts exists and mode of action is
understood
 A business model we understand and like
 Growing and huge markets
 ‘Need to have’ proposals with ‘identified
customer pain’
 Focus combined with mutant potential
 Well funded and capital efficient companies
 Exit perspective @ 5 to 10 x multiple


Business model

 i.e. the architecture of revenue and profit
 The functions of a business model are to:
 articulate the value proposition , that is, the value created for users by the offering
based on the technology;
 identify a m arket segm ent , that is, the users to whom the technology is useful and
for what purpose;
 define the structure of the value chain within the firm required to create and
distribute the offering and determine the complementary assets needed to support
the firm’s position in this chain;
 to specify the revenue generation m echanism (s) for the firm and estimate the
cost structure and target margins of producing the offering, given the value
proposition and value chain structure chosen;
 describe the position of the firm within the value netw ork linking suppliers and
customers, including identification of potential complementary firms and competitors;
 formulate the com petitive strategy by which the innovating firm will gain and hold
advantage over rivals.
Based on : Open Innovation, Henry Chesbrough, HBS Press



Materials related business models
 IP licensing = €’s for use of patents
 Consultancy = €’s for hours of thinking and writing reports
 Services = €’s for hours of hard work
 Own production = €’s per kg material you produce
 Fabless production = €’s per kg material someone produced
 Toll manufacturing = €’s per kg material produced for someone
 Equipment = €’s per machine you deliver
 Gate fee model = €’s per kg waste you process
 Materials leasing = €’s per time unit for the use of a material
 Software = €’s for the use of your software code
 WEB 2.0 - media = €’s per pair of eyeballs
 ....


Choosing the business model

Leo Baekeland on the IP license business model
"I firmly intended to escape the recurrence of business occupations, as in my
Velox days. So I planned, instead of manufacturing myself, to grant licenses
to established manufacturing concerns, especially experienced in plastics.
But I soon was confronted with a repetition of my former experience with
Velox: that it was very difficult to teach new methods to men who had
acquired routine in older processes. The preparation of the new resinoid and
its molding compositions, which to me seemed very simple, appeared either
very difficult or needlessly complicated to others.
Reluctantly I had to start manufacturing the raw materials in a sufficiently
advanced stage so that the users had only to complete the operation of
molding and polymerization.“

See also ”The Baekeland story - Lessons for today’s ventures in new materials”
http://be.linkedin.com/in/marclambrechts

Sirris Materials Day 2010 - Sustainable Investments 2010-04-29
16


Generic materials value chain

feedstock molecules materials components system end user recycling



Concentrated PV value chain

Source : Emcore - Concentrix




solar cell
substrate epitaxy processing dicing packaging
testing

heat CPV module
solar cell optics
management manufacturing

inverter
CPV tracking turn key owner /
and grid
module systems installer operator
connection



Concentrator Optics



Avantium



Metallkraft



Metallkraft

 Business model is based on buy-back principle:
 Metallkraft takes full responsibility for the spent slurry
 Metallkraft sells recovered SiC and PEG back to the
wafer manufacturer
 Agreed quality parameters
 Joint R&D programme



Metallkraft



Materials ventures require ...

 ... pilot plants to be able to deliver sufficient material
for customer testing




 ... partners to scale up




 ... access to raw materials
 Resource constraints to be expected ?
 Lithium for batteries
 Indium for transparent conductors (e.g. LCD TV) and thin film solar
(e.g. CIGS)
 Rare earth metals for permanent magnets
 Platinum for catalyst and fuel cells
 ...

 = also an opportunity :
 for technologies based on renewable or abundant, cheap, safe, non
toxic raw materials
 for recycling
 for new business models – e.g. chemical or material(s) leasing



 ... understanding of competition (narrow & broad)




 ... understanding of the time line to market introduction




 ... more than good knowledge of material science

“Some chemists, who have little experience with industrial enterprises, are over-
inclined to judge a chemical process exclusively from the standpoint of the chemical
reactions involved therein, without sufficient regard to the engineering difficulties,
financial requirements, labour problems, market and trade conditions, rapid
development of the art involving frequent disturbing improvements in methods and
expensive changes in equipment, advantages or disadvantaged of location of the
plant, and other conditions so numerous and variable that many of them can hardly
be foreseen, even by men of great experience.
And yet, these seemingly secondary considerations become deciding factor for
success or failure of an otherwise well-conceived chemical process.”

From “Som e Aspects of I ndustrial
Chem istry – The Chandler Lecture” by
Leo Baekeland - 1914

Sirris Materials Day 2010 - Sustainable Investments 2010-04-29
33


For more information

Contact:
Dr ir Marc Lambrechts
marc(at)capricorn.be

Lei 19/1, B-3000 Leuven, Belgium
Tel. +32 16 28.41.00 Fax +32 16 28.41.08
http://www.capricorn.be

http://creativecommons.org/licenses/by-nc-sa/3.0/



CCF’s investment strategy

Companies meeting the following criteria:
Geography core activities in the heart of Europe and co-investments
in other areas alongside strong and return-driven local VC
partners
Financial instruments equity investments resulting in a significant minority stake

Technology stage minimum requirement: a proof of concept exists and the
mode of action is understood; with a strong preference
for defendable intellectual property

Company stage € 0.5 to 5 M initial investment in the first and second VC
rounds; reserve for follow-on investments
Exit perspective activities applicable to a growing market segment with an
exit window of 3 to 7 years after initial investment


Sirris Materials Day 2010 - Sustainable investments - Capricorn venture partners

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