02 October 2008 21:50 [Source: ICIS news]
By Feliza Mirasol
NEW YORK (ICIS news)--Chemical firms are increasingly investing venture capital into start-up companies whose technology and products offer attractive returns on investment and access to competitive niche markets, two European producers said on Thursday.
“Our survival has a lot to do with whether we can find the right niches - profitable niches - to position ourselves,” said Marc Schueler, managing partner of DSM Venturing, the corporate venturing unit of Dutch firm DSM.
DSM Venturing has €200m ($282m) at its disposal and makes five to six investments annually, Schueler said. It typically tries to take a 5-10% share in start-ups and to invest from €250,000 to €5m in each.
The company targets actively growing markets, Schueler said. In particular, DSM is looking to invest in material sciences, high-performance materials, biomedical materials, pharma- and food-oriented life-science businesses and some areas of “clean” technology where bio-renewable materials are used.
In comparison, BASF Venture Capital, a wholly-owned subsidiary of BASF Future Business in Germany, is vested with €125m.
BASF Venture Capital tries to make equity investments of €1m-5m, based on strategic objectives intended to open a "window on technology" for its parent company, said Josef Wuensch, chief technology officer of BASF Venture Capital.
At the same time, BASF Venture Capital imposes strict financial decision-making criteria, such as a risk-adequate return on investment, he said.
The division invests preferentially in start-ups that promise innovations for existing BASF Group activities and that work in project areas of BASF Future Business, Wuensch said.
It also looks for start-ups that are active in the five BASF Group growth clusters, he said. Those clusters include plant biotechnology, white (industrial) biotechnology, raw material change, nanotechnology and energy management.
BASF Venture Capital continuously screens 400-500 start-ups annually for potential investments, Wuensch said.
($1 = €0.71)
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