Technology and market perspective for future Value Added Materials

The investors emphasised that work with
VAMs is a high-risk type of businesses.
Capital intensiveness, commercialization
risks, technology risks — all these factors
influence capital funds’ willingness to allocate
resources.
Quotations garnered from our interviews
reflect these factors:
‘There [are] a lot of interesting things in materials
science — the point is nevertheless to identify
the commercial need for it. It’s not that easy
to see it often. It could be a really light and
durable material, but you need 1 billion dollars
to commercialize it — the magnitude of money
is very large here — on billion scales — the risk
is tremendous and the time perspective is large.
The material may be cool, but the amount of
investments needed and the risks involved
outweigh its potential to pay off.’
‘You need to consider different commercial
needs that you believe in, that are not only
technically do-able, but also manufactured in
such a way that it brings a high yield, with notso-high
production costs and not-so-high risks.’
‘People come with new materials and technologies
all the time, but these produce small
changes in very complicated systems and require
[a] huge amount of money. It takes a long
time, depending on what they do. Even if in the
lab the results are good it may not be the same
when tested in the industry. Many don’t understand
how much time and money it takes to
bring a new technology to the market. It is
common that people put a lot of money in R&D
of a material and then they search for its applications:
i.e. start from the technical side and try
to match with some commercial needs. These
applications can pay for all [the] money you
need to invest, but one needs to start from the
commercial side.’
Reasons for not investing
Our informants revealed several reasons
for not investing in new developing businesses
in the area of materials industry.
The investors’ views can be summarised as
follows:
too capital intensive (example: hydrogen
storage);
political complexity (example: hydropower,
nuclear power);
limited market (example: wave energy);
market not ready (example: energy
storage);
technological challenges (example:
superconductivity facing complex
technical problems, fuel cells, batteries
— lot of R&D resources were invested
with little success, hydropower
— no mature technology);
lack of trust in market potential;
not profitable business (example:
transports, environmental related
businesses, unless policy regulates the
market);
investor doesn’t know much about the
specific market (example: prostheses
or biomaterials);
risky business (example: health effects
of nanotechnologies);
overinvested sector (example: ICT).
Many interviewed investors, especially
those who invest in clean tech and med
tech, are materials or technology experts
themselves or have other technical backgrounds.
They are updated with the research
and developments in their field—
they have a clear view on where the breakthroughs
are happening and the potential
of development in the field.
The decision of how to invest partly reflects
the companies’ current investment
portfolio and partly the respondent’s assessment
on the future of a potential in-
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