Call to the New Cabinet: Unlock 1 Billion in Patient Risk Capital for Game Changers in Green Chemistry

11-12-2023

On November 29 and 30, the event "Financing the Transition" took place in Geleen, organized by Chemelot Circular Hub and supported by Green Chemistry, New Economy. The importance of this conference cannot be underestimated in achieving the industrial transition towards sustainable green manufacturing chemistry in the Netherlands.

Several entrepreneurs at the conference were present, hoping to shape the new economy through predominantly disruptive breakthrough initiatives. Over the past year, the GCNE platform conducted research into the barriers entrepreneurs face in obtaining financing. Angelique Erkenbosch presented the findings of this study carried out by the affiliated ROMs, TNO, and GRITD.

The key finding is: it is extremely difficult for entrepreneurs to get through the pilot and demo phases. This delays the transition towards green chemistry in the Netherlands.

When we look at the financing landscape, we see the following causes:

  • There is an absolute shortage of venture capital for pilots and demos (Technology Readiness Level 5 - 8).
  • The financing landscape is fragmented with relatively small tickets (<€5m) compared to the capital needs of entrepreneurs (averaging €50m).
  • Financing in green chemistry requires a long time horizon (15-20 years). Money is only made at the first commercial factory. This does not match the relatively short time horizon of most venture capital funds (approximately 7-10 years).
  • The risk profile of scaling in green chemistry is high. Expected profits do not match the requirements of a venture capital fund.
  • There is a significant gap in technical knowledge between financiers and entrepreneurs. There is also a lack of best practices. This makes it difficult for financiers to assess the technical and financial feasibility of a case.

The above is aside from market movements and regulations. Oil and gas remain too cheap alternatives for the time being. Government involvement is absolutely necessary to realize green chemistry in the Netherlands.

Despite discussions at the conference about what is already possible through the European Investment Bank (EIB) and Invest-NL, the participants in the meeting "Boosting finance for green chemistry" called on Arnold Stokking to urgently request the Ministry of Economic Affairs and Climate to unlock €1 billion in patient venture capital in tickets of approximately €50 million for game changers in the scaling phase (TRL 5-8).

Jacqueline Vaessen from the Top Sector Chemistry emphasized at the closing of the conference that it should not only be about volume scaling but also about smart investments where knowledge and initiatives can be shared among each other.