Author: Nick Arnold

Europe is a hotbed of innovation, and the Hello Tomorrow global summit in Paris has emerged in recent years as one of the cornerstone gatherings of those working on game-changing technologies. HG Ventures’ Nick Arnold shares his take-aways from this year’s event.

The 9th Hello Tomorrow global summit, in Paris, brought together more than 3,000 attendees and 100+ speakers from around the world for a two-day program encompassing advancements in energy transition, clean mobility, the decarbonization of manufacturing and construction, climate resilience, healthcare, advanced computing and more.

Of particular interest to me, representing HG Ventures, was the Global Startup Challenge, which is a centerpiece of the event and featured entrants with innovative concepts for making our economy more circular and solving many of the world’s more complex challenges. I could not help but be impressed by the passion and determination of these entrepreneurs, and excited by the future potential of some of these technologies.

A European Ecosystem Promoting Excellence

HG Ventures has made a number of investments in European startups, and as we have explored this region, I have been impressed with the strength of the technology ecosystem. Many of the industry bodies that foster connections within that ecosystem were represented at the summit, including the Deep Tech Alliance, which promotes collaborations between startups and corporates; and the European Innovation Council, established by the European Commission and with a budget of €10.1B to support game-changing innovations from early stage research, to proof of concept, technology transfer, and the financing and scale up of start-ups and SMEs.

The European Institute of Innovation and Technology (EIT), meanwhile, is a collaborative network designed to break down barriers between sectors and connect academia, business and innovators. The EIT Community, with its visionary initiatives, serves as a dynamic force driving innovation and entrepreneurship across Europe; together, these entities form a powerhouse of support for the next generation of disruptors.

Emerging Trends in Deep Tech

Hello Tomorrow provided a glimpse into the future of deep tech, highlighting key trends shaping industries worldwide. Of great relevance to HG Ventures, it was encouraging to see sustainable construction and infrastructure emerge as focal points, with an emphasis on carbon-neutral practices and eco-friendly materials.

Additionally, efforts to bridge the critical mineral supply gap through recycling and alternative materials garnered significant attention.

The growing corporate commitment to sustainability, which is particularly evident in Europe, underscored an increasing willingness to invest in environmental solutions, signaling a promising shift towards a greener economy.

The Hello Tomorrow global summit serves as a rallying point for innovators, investors, and ecosystem builders alike.

The potential for Sustainable Aviation Fuels (SAFs) is attracting a lot of interest and excitement, and HG Ventures recently made a new investment in this space. Here, Nick Arnold outlines the technology involved, and our rationale for investing in INERATEC.

In the global challenge to reduce carbon emissions, airlines loom large. Aviation accounts for around 2% of CO2 emissions, and this number is only likely to increase as demand for air travel rises in populous markets like India and China: Air travel demand is expanding massively, with the number of daily flights expected to double between now and 2035.

While there are a number of options for carbon reduction in road transport, such as battery electrification and hydrogen, the same alternatives are much more challenging to deploy for aviation, not only because of the weight of the vehicles and length of the journeys involved, but also because of the major changes that would need to be made to the way aircraft are designed and built, as well as to airport infrastructure, to accommodate battery- or hydrogen-powered planes.

This is why attention has focused on sustainable aviation fuels (SAFs) as a way forward. The International Air Transport Association (IATA) favors this route, as a major plank of its Fly Net Zero commitment, and many of the major airlines have been competing to assume a leadership position by making various commitments to switching to SAFs.

What is Sustainable Aviation Fuel?

The U.S. Department of Energy defines SAFs as an alternative fuel that reduces emissions from air transportation, made from non-petroleum feedstocks. So far, so simple, but there are a number of different routes to production, and the Department of Energy summarizes these here. Each is a highly complex, multi-step process, and none represents a ‘silver bullet’ solution. One of the key challenges with the production of SAFs is the ability to do so at scale, economically. That is where INERATEC comes in.

INERATEC and the e-fuels revolution

INERATEC is a German power-to-liquids (PtL) company that has developed a micro-structured reactor (MSR) technology to transform electricity and recycled CO2 into high-value products. The company’s Fischer-Tropsch, Methanol, and Reverse Water Gas Shift reactors are 80x more compact than conventional reactors and 2x as efficient.

Power-to-liquid fuel is seen as one of the most promising alternatives to today’s aviation fuel; it describes a type of Sustainable Aviation Fuel (SAF) that only contains renewables, instead of using waste or biological materials like plants. To make it, a facility takes the hydrogen out of water, carbon dioxide from the air and electricity from renewable energy, and puts it through a refinement process. In facilities that use INERATEC’s MSRs, CO2 and hydrogen are combined into e-fuels, which then go through further processing to obtain SAFs. Deploying INERATEC’s MSRs enables the ability to ramp production up and down quickly, to leverage renewable power cost efficiency.

While there are several emerging competitors that are developing technologies for an e-fuel to SAF pathway, INERATEC is the market leader in technology readiness, with more than 28,000 hours of operation and commercial development progress. The company is able to produce e-fuel at the highest energy efficiency yield today, with the potential to replace crude oil over the long-term.

A growing market

SAFs, which represent less than 0.1% of jet fuel consumption today, must scale by a factor of 100x by 2030 and 1,500x by 2050 to meet aviation industry goals. The total global e-fuels market, estimated at $6B in 2023, is expected to grow to $49B by 2030.

This growth is in part propelled by legislation such as Europe’s ReFuelEU Aviation legislation, which requires fuel suppliers to all flights originating or ending in Europe to blend a minimum ratio of SAF starting in 2025. The blend ratio starts at 2% in 2025 and increases to 70% SAF by 2050. Similarly, the U.S. Inflation Reduction Act (IRA) provides a SAF blending credit if the SAF reduces emissions from fossil kerosene.

We believe INERATEC will play a major part in this growing market.

The company has over 30 contracts with well-known customers from Europe, Chile, and Japan across various industries including aviation, maritime, automotive, and oil and gas. Working with industry partners, INERATEC has already installed 7MW of its MSR units, equating to a total annual production capacity of 1 million gallons and the ability to recycle 8,000 tons of CO2 into e-fuel products.

A world-leading team

INERATEC’s co-founders, Tim Böltken and Philipp Engelkamp have already built an impressive leadership team: CEO, Tim has a chemical engineering background with ten years of professional experience; CCO, Philipp has a background in consulting and marketing, and leads the sales and business development function of the business. They are joined by COO, Ingo Katz, a manufacturing and operations expert with more than 30 years of industry experience, and CFO, Caspar Schuchmann, with experience in corporate finance, including investing and fund raising in shipping and renewable energy industries.

We are proud to be working with such an exceptional group, whose technology will be at the heart of the e-fuels revolution.

HG Ventures’ Nick Arnold recently attended the Cleantech Forum North America, which brings together leaders in the sustainable innovation ecosystem – start-ups, scale-ups, investors, corporates, government and more. Here, Nick shares his observations and insights from the three-day event.

Investments in cleantech show no signs of slowing down in the way that some other sectors have. Fueled by the 2022 Inflation Reduction Act, which made the single largest investment in climate and energy in American history, the cleantech sector attracted more than $200B of investment in 2022/23, a 37% increase on the previous 12 months.

It was against this backdrop that delegates gathered in San Diego for the Cleantech Forum North America, recently. While investments in this space need to increase further if the U.S. is to meet its aim of limiting global temperature increases, there is still much reason to be bullish.

Sustainable Aviation Fuels Take Off

In the realm of sustainable aviation fuel, the tide is turning towards electrofuel applications as a beacon of hope for a greener future. With multiple technical pathways reaching maturity in the e-fuel space, the viability and sustainability of such solutions are becoming a tangible reality.

We recently invested in INERATEC, a pioneering e-fuel company, and expect to see many more opportunities emerging as this technology matures.

Eliminating Supply Chain Bottlenecks

The challenges caused by bottlenecks within complex supply chains, and the pressing need to dismantle them, emerged as a key theme over the course of the conference.

As the world grows increasingly interconnected, the resilience of global supply chains becomes paramount, and it is encouraging to see the convergence of innovation, government incentives, and venture capital helping to establish North America as a trailblazer in localizing these supply chains, simplifying them and removing the bottlenecks that are barriers to progress.

An Evolving Venture Capital Landscape

Notwithstanding the high levels of investment in the cleantech sector, it remains the case that the landscape of venture capital funding is undergoing a profound transformation. Tightened funding and terms that favor the investor have become the norm. Despite this shift, however, many promising companies continue to secure funding, underscoring the resilience of innovation and the enduring allure of ventures that hold the promise of both profitability and sustainability.

Recognition for HG Ventures Investments

The 2024 Global Cleantech 100, announced at the Forum, recognizes the leaders in the field of cleantech, and it was a proud moment to see three of HG Ventures’ portfolio companies included in this list.

INERATEC, in whose Series B funding round we recently invested, is a pioneer in e-fuels, while  Circulor provides a leading solution to industrial, complex supply chain traceability, based on AI and Blockchain technology; exactly the type of solution required to solve those supply chain challenges. Finally, 6K operates in the advanced materials space and is transforming legacy industrial processes with high efficiency plasma technology. These companies’ inclusion is a testament to their ingenuity, and we are proud to back them.

I left the Forum with great optimism, and the sense that productive dialogue delegates shared there will continue.

In August 2023, HG Ventures led a €10M investment round in German biotech company, Bind-X. Here, Nick Arnold, Principal at HGV, details the rationale, and why this is such a strong fit for our portfolio. 

In industries such as mining and road building, dust is a fact of life. But it is also a major challenge.

Not only is dust a cause of health and safety problems, it is also responsible for environmental pollution and loss of production.

Current methods of dust control include simply spraying water, or using costly chemicals that are themselves also often harmful to the environment. Government institutions are enforcing increasingly strict regulations on these methods and the search has been on for some time for a technology-led solution to the problem of ‘fugitive dust’.

The team at Bind-X has developed a microbe-based binding technology that is able to control fugitive dust from roads and other open areas in a significantly more cost-effective and environmentally friendly way than existing alternatives, enabling customers to control dust and pollution through a long-term solidification of the source of the problem.

An alternative to chemicals

Most existing solutions for suppressing fugitive dust rely on the use of chemical compounds such as calcium chloride, magnesium chloride, bitumen and lignin sulfonate. But these solutions are criticized for their detrimental environmental impact: Rainfall can cause chloride-based chemicals to run off the roadbed, polluting the water table. And calcium chloride can also cause gradual but severe damage to the underside of vehicles; over time it erodes metal and steel, causing brakes, wiring, and other vital vehicle components to fail.

Bitumen-based products inject long-term, non-bio-degradable residuals in the soil causing challenges in the renaturation of the areas and also cause difficulties in product handling and equipment maintenance.

Lignin sulfonate has been promoted as an environmentally acceptable and cost-effective alternative to chloride-based dust suppression agents. However, it does not achieve lasting results, and must be reapplied frequently, making it a less practical solution.

By contrast, the solution developed by Bind-X is based on a completely new mode of action by inducing a natural solidification process within the surface.

This method wins for a host of reasons, both performance-wise and environmental: Its use means less fuel, less maintenance, and less labor for reapplication; and it means a significant reduction in environmental impact, with less water used, less pollution, and less CO₂ emitted; the company’s overall KPI is to save its customers megatons of CO₂ emissions. Less dust also means better health and safety for construction workers and communities.

And the potential market is sizable.

A growing market

Market intelligence consultancy, Mordor Intelligence reported that the global market for dust suppression chemicals reached a volume of 10.6Mt in 2022 and is projected to grow to 11.9Mt by 2027, with an estimated value of $5.9B.

The mining and construction industries account for 70% of the market’s end-use applications, driven by demand for mining and construction activities, and the need for those activities to be sustainable and compliant with increasingly stringent environmental standards.

Opportunities beyond construction

While mining and construction are multi-billion dollar market opportunities, the Bind-X technology also has multiple other potential applications.

Bind-X’s technology platform Bind-Tech® can also be used to prevent the growth of weeds, replacing the use of conventional, chemical herbicides in agriculture. And the global herbicide market is valued at more than $30B.

It’s a global market, too, and Bind-X already has customers operating in Africa, Australia and South America.

Immediate opportunities

As with all of our investments, we enlisted the support of colleagues from across The Heritage Group of companies in our assessment process who identified new potential market applications for their technology.

Beyond all of this, it is particularly exciting to have invested in a German business. Germany is a global center of excellence for industrial biotechnology, and while HG Ventures has a number of investments outside of North America, this is our first in Germany.

We are thrilled to be backing such an innovative business, and looking forward to working with the team on applying their binding technology to other industries and bringing many more new products to the international market.