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August 16, 2023

Unicorns, puppies and pieces of pie: A guide to venture capital and trends in sustainable investment

HG Ventures’ senior director, Ginger Rothrock recently delivered a keynote address at the SP Innovation Summit, organized by the automotive industry’s Suppliers Partnership for the Environment. Here, Ginger outlines some of the insights into the world of venture capital that she shared with the Summit’s delegates.

Ask me what we do at HG Ventures and you will have a hard time getting me to stop talking.

It is easy to forget that not everybody inhabits the same world, where scientific innovation meets venture capital, so it is sometimes necessary to boil things down to their essence:

  • We buy a piece of the pie, with the aim of growing the pie: Most entrepreneurs get to the point where they need an injection of capital in order to scale their business, and that’s where venture capital comes in. In the simplest of terms, we buy a share of the business, based on a current valuation and an assessment that by putting that capital to use, that business will eventually grow to become much larger. Everybody wins.
  • High reward often comes with high risk: We are looking to invest in businesses that have the potential to deliver a high return on our initial investment. Generally speaking, that means taking a risk, and very often the higher the risk, the greater the reward.
  • They are called unicorns for a reason: In the world of venture capital, a ‘unicorn’ is a venture-backed business with a valuation of $1B or more. Needless to say, these are exceptionally rare; for every 1,000 deals done, less than 1% will go on to achieve that sort of valuation. Less than 1% will exit between $500 million and $1 billion; another 100 or so have some sort of exit that at minimum returns an investor’s capital. That leaves us 900 companies.
    Yes, nine out of ten VC-funded companies fail. But the ones that succeed make up for all the failures.
  • Entrepreneurs are our customers: The entrepreneur is the creator of all the value in the venture capital business.  If there were no entrepreneurs, there would be no venture capital. So we treat the entrepreneur like our customer; we are in the services industry, and invest heavily to make sure entrepreneurs get appropriate attention and resources.
    That said, HG Ventures has probably 20 new deals a week out of over 100 inbound that are relevant to our investment interests.  We invest in about five per year, which means about 995 entrepreneurs (customers) are turned away.
    We work hard to make quick decisions and be forthcoming on reasons why we pass.  Often our response includes a “not now” – we never want to close the door to possibly investing in an entrepreneur in the future. You can easily see how the ratio of companies inbound to companies funded makes for a challenge in customer relations.
  • Startups are like puppies: Just like adopting a puppy (which our family recently did – see gratuitous puppy picture with my youngest daughter), we must actively nurture and support startups. At HG Ventures we do everything we can to help, providing our investments with access to our resources, our contacts and our customers. Anyone can make an investment; generating a meaningful return by growing and exiting an investment is the tough part.

Bouncing back from a tough year

Valuations of venture-backed startups have mostly declined since Q1 2022, causing VCs to be a lot more discerning about how, where and when they invest.

But 2023 is shaping up to be different from 2022. Every stage, from seed to series D, saw the median pre-money valuation rise this last quarter (according to Carta). And four of those stages (seed, A, B, and C) have valuations above or just below Q1 2021.  I’m optimistic; however, the volume of deals is still considerably down from 2021 and early 2022.

There still remain startups that were funded during the “good times” that are now struggling with their inflated burn rate, have not really found product-market fit, have challenges achieving positive unit economics, or other factors.

These startups will struggle to raise capital, and most of them will fail. Yes, they are part of that 90%.

 Myths and facts about investing in hard tech

“Hardware is hard”, say investors, LPs, and even founders in this sector.

There are plenty of quips around the trials associated with building and funding companies commercializing physical objects and applied science; and that this sector is a much harder path than building software. Of course, HG Ventures believes that today’s scientist and engineer entrepreneurs are creating the next generation of unicorns. Happily, other investors are starting to align with this idea.

Over the past four years, B2B SaaS has dominated, accounting for 42% of all VC investment in priced rounds in 2019 and 30% in 2023. Consumer and fintech also were significant categories in 2019; both categories have experienced a decline in percent of invested capital through 2023.

On the uprise over the period of 2019 to 2023 are (according to Carta):

  • Energy (primarily cleantech) – which rose from 2% to 11%
  • Hardware – rising from 6% to 10%
  • Pharma and biotech – at 15% of all investment into startups, an increase over 12%

What of climate tech?

Well, the Inflation Reduction Act (IRA) will flow billions of dollars of capital into climate tech over the next decade, much of it matching and augmenting VC investment. Many leading VC firms have dedicated climate funds now, and we see these funds as new co-investors in the sectors in which we focus.

All in all, this is a great time to be innovating in climate tech.

What trends are driving innovation and investment?

As we see it, there are four key trends driving increased investment in the area of climate and sustainability tech:

  • Economics: Investing in sustainability has to be a “yes and…”. It cannot be just about being environmentally conscious; there must be a strong alignment of sustainability with economic incentives too, for successful investments.
    Automation plays into the economics of it, too, not just in traditional applications like automotive manufacturing, but also in adopting automation for in-plant circularity, wastewater treatment, and packaging processes, for example.
    The concept of decentralization is also gaining momentum, especially in the context of the circular economy, where the focus is on reusing materials, reducing supply chain uncertainties, cutting costs, and minimizing costly waste streams.

    And energy economics cannot be ignored, especially with the increasing discussions about the transition to electric vehicles (EVs) and alternative energy sources becoming mainstream (or cheaper).

    Future risks, such as the pricing of carbon and water (both increasing), are also on our radar, and we actively consider these factors in our investment decisions, avoiding water or carbon-intensive processes where possible.

  • Technology: In today’s fast-paced world, tools and technologies have become more powerful, user-friendly, and affordable than ever before. As an example, the growing popularity of ChatGPT showcases the capabilities of language models that can assist us in everyday tasks, like finding a recipe based on available ingredients. This is applicable in the realm of sustainability, too, where technology plays a crucial role in green chemistry. I mentioned during the conference the existence of a vast database containing every known chemical reaction, which enables us to explore more eco-friendly alternatives, such as using “available ingredients” like biobased feedstocks with low CO2 emissions.
    The advent of cloud storage, computing clusters, and democratization of machine learning further accelerates innovation and accessibility.
    When it comes to manufacturing, automation is just one piece of the puzzle; the industry is witnessing a transformative phase with the development of toll manufacturing, 3D printing, and other just-in-time manufacturing options. The possibility of outsourcing an entire supply chain, as demonstrated by the example of our portfolio company ZwitterCo, offers exciting potential for sustainable practices and efficient operations. Additionally, biotech and electrochemistry are now equipped with powerful tools like CRISPR, allowing scientists to move faster in their research and development. And the availability of affordable, user-friendly robotics makes it easier for startups to build and operate without the need for specialized engineers.
    And we recognize the value of investing in companies that align with the values and desires of Generation Z – to engage in meaningful work with autonomy while collaborating with like-minded individuals. We seek out startups where people are excited to work, knowing that passion and dedication are vital drivers of success.
  • Policy and Public Perception: The world of policy and public perception is constantly evolving, offering both opportunities and challenges in the sustainable investment landscape. Increased public awareness of air, water, and pollution issues has led to greater transparency and accountability from companies. Media attention on concerns like PFAS and water quality has drawn public attention to the state of drinking water across the country, driving more consumers to seek information about their local utility’s water quality.
    At the local level, communities are becoming more aware of the environmental impact of carbon-producing industries, pressuring cities, counties, and states to take action against environmentally concerning activities.
    Public companies are also responding to public opinion by setting carbon reduction and ESG-related targets, aligning with the growing interest in sustainability; 96% of the S&P 500 published a sustainability report in 2022.

    As we move forward, there’s a clear trend of decarbonization and sustainability mandates trickling down the supply chain. Companies like Intel are already requiring their suppliers to report on and improve their manufacturing, logistics, and waste practices to adhere to sustainability goals. Moreover, initiatives like the Inflation Reduction Act (IRA) provide a roadmap for the country’s decarbonization strategy through the 2020s, further influencing investment decisions in the renewable energy sector and beyond.

How do we make money?

That’s a fundamental question in any venture, and in the world of sustainable hard tech investments, it’s essential to understand the different strategies that can lead to profitable outcomes:

  • Taking more capital upfront for long-term gains: Investing in sustainable hard tech often requires a more substantial upfront capital investment, compared with traditional ventures. However, this upfront investment comes with significant benefits. One of the key advantages is the creation of Intellectual Property (IP) and establishing a competitive moat. Sustainable innovations often involve cutting-edge technologies and unique solutions, leading to the development of valuable IP. This, in turn, provides companies with a competitive advantage in the market, making it challenging for others to replicate their offerings easily.
  • Exploring capital-efficient models: Founders in the sustainable hard tech space are continuously exploring innovative and capital-efficient business models. They recognize the need to replace traditional software returns with solutions that align better with sustainability goals. One emerging concept is “{blank} as a service,” where companies offer a service-oriented approach to address specific sustainability challenges. Such models focus on providing sustainable solutions in a more cost-effective and resource-efficient manner, ensuring long-term viability for both the company and its customers.
  • Embracing smaller scale innovations: As supply chain disruptions and logistics challenges increase, there is a growing trend towards local solutions and smaller-scale innovations. Companies are exploring ways to integrate recycling processes within their facilities, reducing reliance on overseas supply chains. By producing input materials on-site from locally sourced raw materials, businesses can ensure greater control over their supply chain, increase resilience to external disruptions, and create a more sustainable and circular approach to production.
  • Leveraging the circular economy: By investing in companies that adopt circular economy principles, investors can tap into the growing market demand for sustainable products and services. The circular economy not only benefits the environment but also presents promising opportunities for revenue generation and cost savings.
  • Navigating the market transition: The market is undergoing a significant transition, driven by the increasing focus on sustainability and the urgency to address environmental challenges. Investors who can navigate and capitalize on this transition stand to gain substantial returns. As traditional industries face disruptions, sustainable alternatives offer attractive solutions. Investing in companies that lead the way in sustainable practices and eco-friendly innovations positions investors to capitalize on changing market dynamics and emerging opportunities.

Where we are investing

We continue to invest across a broad range of industries, but here are some of the key areas that were of interest to the participants in the conference focused on sustainable innovation in the automotive supply chain:

  • Sustainable Materials – Circular Economy: Investing in companies that contribute to the circular economy is a key focus. Examples of our investments in this area include Pretred, a company that repurposes waste tires into construction blocks and highway barriers. By diverting tires from landfills and finding new applications for them, Pretred not only reduces waste but also contributes to sustainable infrastructure development.
    Another promising investment is Vartega, a company specializing in carbon fiber recycling. Vartega’s innovative recycling process allows for the reuse of valuable waste carbon fiber, making it an essential player in the sustainable materials industry.
    Additionally, there are biobased materials companies like Biosynthetic Technologies, which produces biodegradable base oils and lubricants, providing environmentally friendly alternatives to traditional petroleum-based products.
  • Electrification: Investing in the electrification sector offers compelling opportunities to promote clean energy and reduce carbon emissions. A prominent company in this portfolio is Battle Motors, a leader in selling electric trash trucks. By electrifying waste management vehicles, Battle Motors contributes to cleaner and quieter communities while reducing greenhouse gas emissions.
    Another area of interest lies in technologies related to electric vehicle (EV) battery reuse and recycling. Companies like Titan Advanced Energy Solutions utilize ultrasound technology to measure the state of health and state of charge of EV batteries, enabling efficient battery management and extending their lifespan.
    Currents, meanwhile, operates an exclusive marketplace for original equipment manufacturer (OEM) battery packs, facilitating the recycling and repurposing of these essential components.
  • Environmental: Investing in companies that address environmental challenges is vital to creating a sustainable future. For instance, Puraffinity specializes in capturing per- and polyfluoroalkyl substances (PFAS) from water, addressing a significant water pollution issue.
    In the industrial wastewater treatment sector, companies like ElectraMet focus on the recovery of valuable materials like copper and chrome from industrial waste streams, promoting resource efficiency and reducing waste.
    Circulor is making strides in traceability solutions for supply chains, starting with battery materials. By providing transparency and accountability, Circulor helps ensure the responsible sourcing of materials and promotes sustainable practices across industries.
  • Infrastructure software solutions: Investing in software plays in infrastructure presents innovative ways to enhance sustainability and optimize asset management. Avenew, for instance, is pioneering road asset management plans, using software to optimize infrastructure maintenance and repair. By employing data-driven insights, Avenew enables better decision-making and resource allocation, leading to improved infrastructure efficiency and reduced environmental impacts. Such investments in infrastructure software contribute to building more resilient and sustainable urban environments.

There is an incredible amount of innovation taking place throughout the world, in many fields that have the potential to improve sustainability and mitigate the impact of the climate crisis.

Small wonder then, that if you ask about what we do at HG Ventures, it is hard to stop me.


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August 10, 2023

Building a greener future: Why we invested in Material Evolution

In June 2023, HG Ventures increased its investment in UK materials science firm, Material Evolution, as part of that company’s £15M Series A round. Here, senior director, Ginger Rothrock explains why we doubled down.

There are few construction materials as ubiquitous as cement. Global production is around 4.1B metric tons annually, and while this material is incredibly versatile, its manufacture is also highly carbon-intensive, accounting for 8% of the world’s CO2 emissions. For context, if cement were a country, it would be the world’s third largest emitter of CO2 (the U.S. produces 4.7B tonnes of CO2 annually).

So the search for ways to reduce or offset those carbon emissions has been on for some time. And while most of the discourse has been around cements that capture carbon, when we first met the founders of Material Evolution in 2020, they had a very different idea.

Cement, but not as we know it

Dr. Elizabeth Gilligan Headshot
Dr. Elizabeth Gilligan, Material Evolution CEO

Dr Elizabeth Gilligan had yet to complete her PhD at Queen University, Belfast, when she applied to participate in the Heritage Group Accelerator. The ‘business’ was really little more than an idea at that stage. There was no product. But she did have a groundbreaking idea: Manufacturing cement from recycled waste materials and no heat.

Material Evolution’s patented process takes waste materials from industrial byproducts (the first market is the metal and mining industry), and uses alkaline fusion, rather than traditional calcination and clinkerization, which requires heating the powder from crushed limestones to temperatures of 1,450°C (2,642°F). Material Evolution’s method results in an 85% reduction in CO2 emissions.

Elizabeth spent three months in our accelerator program, during which time she benefited from access to experts from Heritage Research Group and Milestone Contractors, who helped to validate their concept.

Following her return to the UK, we introduced Elizabeth to other investors, Playfair Capital and At One Ventures, and before long Material Evolution was a reality, with a scaling production facility and, crucially, contracted customers.

Building a greener future

We did not need any convincing to join those other investors in Material Evolution’s recent funding round. Not only is the traditional method of cement production highly carbon-intensive, it also uses a vast amount of raw materials – limestone, shale, gravel – which all have to be mined. The ability of Material Evolution to use materials that would otherwise go to waste is just one more benefit of their groundbreaking process.

The market for lower-carbon cement is enormous, and we are confident that Material Evolution has the potential to capture a significant share. We are excited to be on that journey with them.

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August 3, 2023

HG Ventures Participates in Transcend’s Series B Financing

Transcend Raises $20M Series B to Automate Critical Infrastructure Design

Investors in the round include Autodesk, Inc., PureTerra Ventures, HG Ventures, Riverstone Holdings LLC and Arosa Capital

Princeton, NJ, August 1st, 2023 /PRNewswire/ — Transcend Software Inc. (“Transcend”), the leading SaaS provider of generative design tools for critical infrastructure, announced today it has closed on its Series B financing round with participation from Autodesk, Inc., a leading software provider for the architecture, engineering, construction, manufacturing, product design, and media and entertainment industries. Existing investors HG Ventures and PureTerra also participated in the round, along with new investors Arosa Capital and Riverstone Holdings LLC.

The investment will allow Transcend to continue to expand its customer base, which already includes many of the leading infrastructure players in the world such as Arcadis, Black and Veatch, Brookfield Asset Management, Anglian Water, Xylem, and Veolia. In less than two years, designs generated through Transcend’s software have already positively impacted the lives of over 100M people in 65 countries around the globe.

Transcend’s market-leading generative design software, the Transcend Design Generator (TDG), fully automates the conceptual and preliminary design of critical infrastructure assets, enabling asset owners to reduce design costs and timelines and prioritizes the incorporation of innovative and sustainable technologies. TDG integrates process, mechanical, electrical, and civil engineering calculations and decisions to automatically generate complete and accurate preliminary engineering designs for a variety of water and power infrastructure projects. The outputs include 3D Building Information Modeling (BIM) models, carbon footprint estimates, equipment lists, operating and capital expenditure calculations, and many others.

“Autodesk feels strongly that new and better ways of designing and making can lead to a more equitable, resilient, and sustainable world for all. So we appreciate how Transcend is applying generative and outcome-based design to accelerate development of sustainable critical infrastructure,” said Theo Agelopoulos, Vice President of AEC Design Strategy at Autodesk. “This investment and our collaboration with Transcend will help make advanced technologies more accessible to a wide range of asset owners, engineering firms, and equipment suppliers, enabling them to achieve better outcomes faster.”

Transcend will use the investment to accelerate its go-to-market strategy and product roadmap, further establishing its market leadership in generative design software for critical infrastructure.

“We look forward to this next phase of growth as we continue our mission to help engineers, utilities, and technology suppliers design innovative and sustainable critical infrastructure,” said Ari Raivetz, Founder and CEO of Transcend. “Autodesk’s commitment to our business as part of this Series B is a clear indicator that the world is moving towards the automation of preliminary design activities to develop resilient infrastructure for the future. That is good news for everyone, because we must move faster to build the next generation of green infrastructure if we are going to solve the climate crisis.”

Autodesk customers and other users working with TDG can automatically generate complete, accurate preliminary designs for a variety of water and wastewater treatment facilities and electrical substations including editable design documents that are native to Autodesk products including AutoCAD®, and Revit®.

“This investment is not only a catalyst for the growth of our business, but a catalyst for our customers as well. We will continue investing heavily in product features that our users can leverage to build a better world for all of us to live in,” said Adam Tank, Co-Founder and Chief Customer Officer at Transcend.

To learn more about Transcend, visit

About Transcend

Transcend is a B2B Software-as-a-Service company focused on design and engineering automation for critical infrastructure. Their flagship product, the Transcend Design Generator (“TDG”), integrates process, mechanical, structural, electrical, civil, and architectural design disciplines into a hosted cloud-based software and generative design platform that permits users to input data and automatically generate a preliminary engineering design for critical infrastructure projects and vertical assets, including automatic generation of a wide variety of engineering documents and files. For more information, visit them at, or follow them on LinkedIn at

Transcend Media Contact
Simone Migliori

Autodesk, the Autodesk logo, AutoCAD and Revit are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders.


Link to the original press release: 

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August 1, 2023

HG Ventures Invests in Leading Industrial Biotechnology Company

Bind-X secures €10 million in financing as part of its Series B financing round

Specialist in biological binding of materials expands internationally and prepares further market entries in agriculture, mining, and infrastructure.

Martinsried, Germany / August 1 – Bind-X, a fast-growing industrial biotechnology company, has successfully closed a €10 million financing round. The funding was provided by renowned investors from Germany and abroad (HG Ventures, K&K 1, Greeneering Invest, Saxovent) and will help drive the decarbonization and biologization of established industries.

Bind-X’s further growth will focus on products for alternative weed control in agriculture, biological dust suppression in the mining industry, and the reduction of the use of bitumen in road construction.

“We are pleased to partner with Bind-X on their unique industrial biotechnology platform. We look forward to backing this team of experts to support this critical area of innovation and explore new product applications,” said John Glushik, Managing Director of HG Ventures, the corporate venture arm of Heritage Group, headquartered in Indianapolis, USA.

The latest investment round demonstrates investors’ continued confidence in Bind-X’s versatile technology platform, Bind-Tech®, and its pioneering commitment to making entire industries more sustainable and efficient. The company’s goal is to save its customers megatons of CO2 emissions through innovative binders.

“Our new shareholders are an ideal complement to the existing consortium. Their relevant industry experience will further increase the current momentum and lead to strong growth in our core markets,” says Kay Balster, Principal at High-Tech Gründerfonds (HTGF).

“We are thrilled about the strong interest in our Series B financing round and grateful for the trust our existing shareholders (HTGF and Vantage Value) and new investors place in Bind-X,” said Martin Spitznagel, founder and CEO of Bind-X. “This financing will allow us to continue our global expansion, increase production capacity, and expand our team further at three international locations.”


About Bind-X

Bind-X is an industrial biotechnology company based in Martinsried near Munich. Its mission is to increase the sustainability of established industries through the use of biobased products. Bind-X’s broad product portfolio includes innovative solutions for various industries and is based on the multi-patented technology platform Bind-Tech®. Currently, a multi-disciplinary team at three locations is working towards the goal of transforming the global agriculture, mining, and infrastructure sectors, thereby making a tangible contribution to a sustainable future today. In line with the company´s slogan: Turn solid into impact!

Press contact:  +49 89 2620 344 40,


About High-Tech Gründerfonds

The seed investor High-Tech Gründerfonds (HTGF) finances tech start-ups with growth potential and has supported more than 700 start-ups since 2005. With the launch of its fourth fund, HTGF now has about 1.4 billion euros under management. Its team of experienced investment managers and start-up experts support young companies with expertise, entrepreneurial spirit, and passion. HTGF’s focus is on high-tech start-ups in the fields of digital tech, industrial tech, life sciences, chemistry, and related business areas. To date, external investors have injected more than 4.5 billion euros of capital into the HTGF portfolio via more than 2,000 follow-on financing rounds. In addition, HTGF has already successfully sold shares in more than 170 companies.

Fund investors in this public-private partnership include the German Federal Ministry for Economic Affairs and Climate Action, KfW Capital, and 45 companies from a wide range of industries.


About HG Ventures

HG Ventures is the corporate venture arm of The Heritage Group, headquartered in Indianapolis, Indiana, USA. HG Ventures supports innovation and growth across The Heritage Group by investing and partnering with innovative, high-growth companies to support a sustainable future. The firm leverages the world-class expertise of The Heritage Group operating companies and research center to offer a unique value proposition to its portfolio company partners.