INDUSTRIAL BIOTECHNOLOGY:As RD&I Director for AkzoNobel Specialty Chemicals, you are instrumental in administering the Imagine Chemistry innovation challenge program. Can you briefly describe Imagine Chemistry and what led AkzoNobel to establish the program in 2017?
PETER NIEUWENHUIZEN: Imagine Chemistry is a combination of an online phase in which we share with the world what I would call our unmet technology needs—be it something our customers or we ourselves have identified—with an accelerator event. For the first, online portion, we describe quite precisely what our technology need is, for example, low-salt waste water, water solutions, or biobased and renewable surfactants. Startups, scaleups, but sometimes even existing chemical companies then submit their ideas. We select the top 20 and then we have the second element of the program, and that is an accelerator event. We bring startups together with a hundred AkzoNobel people all across the organization—so not only R&D but also sales and marketing, integrated supply chain, finance, product safety, and IT. We put them together for a 3-day event and at the end of that event, we really understand which startup, scale up, which technology has a lot of potential to help us with these technology needs.
We've done that because we know we've got a pretty sizeable, pretty capable R&D and innovation team, but even with a pretty sizeable team, you have to admit that 99.9% of the world's innovative capability is outside our company. And so it's, I would say, just smart business sense to see if we can tap into that potential and where we can strike up a partnership. We have a route to market and we know applications, customers, safety, regulatory aspects, and scale up. Startups have a passion for their new technology and they have the new idea that we may not have looked into. So we're really looking for that marriage between I would say experience and passion.
IB:Can you describe AkzoNobel's business and the main sustainability challenges for its biobased operations and products?
NIEUWENHUIZEN: Yeah, so if I go from big to small, there are three sustainability themes that we invest heavily in. One is power to product, so renewable power and making circular economy products. The other one is what I could call circular plastics. And then the third one is biobased materials. And in biobased materials there are two elements that we find our customers find important. The first one is almost classical chemistry—that is just new functionality. With biobased materials, you get slightly different functionalities. For example, itaconic acid and polyitaconates. These have different properties from our chelates and surfactants and that just may open up new applications that our customers find important.
The other aspect about biobased is of course carbon footprint reduction or circular chemistry. So you actually start to set up a circle of where you might take CO2 and an algae or bacteria that absorbs the CO2 and turns it into an intermediate molecule that gets turned into a chemical product that eventually will become CO2 again. So those I think will be the two most important levers that we're looking at.
IB:The 2017 Imagine Chemistry challenge yielded development agreements with three industrial biotechnology firms: Industrial Microbes, for its biocatalysis of ethylene to ethylene oxide; Ecovia, for its BioGel polyglutamic acid, a sustainable path to polyacrylates; and Renmatix, for its soluble and insoluble cellulose oligomers from supercritical water hydrolysis. Can you discuss AkzoNobel's portfolio and chemistries and how renewable solutions factor into your company's sustainable goals?
NIEUWENHUIZEN: Yeah, and I think looking back at the 2017 program gives a very nice indication of what you typically encounter with a program such as this.
So the first is Renmatix. We recently issued a press release that we signed a joint development agreement with Renmatix. Following that Imagine Chemistry event, we sat down, and said, okay, we want to really structure this in a formal partnership. So we asked a series of questions. What do you need, what do we need, what does the program look like, where would we apply your product, and very importantly, what's the business case underneath it. And that eventually resulted in this joint development agreement.
We did the same with Ecovia. And Ecovia actually got some additional interest from another party. And I would submit that's probably not unrelated to them becoming a finalist in Imagine Chemistry. And they talked with us and tried to find a fit. They talked also with this other party and as it happens, their technology actually has a better fit in the other party, which is not really a competitor of ours, and it made sense for them to sign up with this other party. We probably would have wanted a different outcome but at the same time, we knew that this is how it goes. Partly our program is also genuinely about helping chemical startups make the next step, and if it makes more sense for them to work for another party for their development trajectory, you know, that is also what we want for them to had.
And then the last one, the third one is iMicrobes [Industrial Microbes]. With iMicrobes we identified a target to make biobased ethylene oxide through a particular power. It looked promising, but as you have often in innovation, when you start to dig into it and you start weighing what the pros and the cons, where could it go wrong, and what will it cost, eventually we determined we shouldn't pursue it. It was a mutual decision to end the partnership. But, as it happens, we are now talking to them about two other routes that show promise.
So, I think we've had a mixed bag in terms of outcomes, as you would expect working on the cutting edge.
IB:How about the 2018 winners. The accelerator event was in June. Any promising partnerships there?
NIEUWENHUIZEN: Yes, there were a few. One was Green Lizard out of the University of Belfast together with Dixie Chemical in the US. We're talking about using their chemistry to create new biobased surfactants. This is early days, but we are discussing in pretty good detail what working together would involve, what is the business case, and what is the role of Green Lizard. What is our role, our contribution, and Dixie Chemical's contribution.
IB:Imagine Chemistry is only 2 years old, but can you describe the impact it has had on your operations and R&D strategy so far? How did AkzoNobel identify appropriate partners in the past?
NIEUWENHUIZEN: Yeah, two years is a short time in innovation and of course, the decision to set up Imagine Chemistry and to start focusing much more on using outside sources of knowledge and of expertise, that actually came before. So we made the decision that we needed more partnering and one of the ways that we executed that is Imagine Chemistry. We also have set up a collaborative venture fund as well as an open innovation center in the Netherlands that we call Spark. We have developed a number of collaborations with Universities as well. So I think that is really good to start.
What Imagine Chemistry has done, is helped identify quite a number of projects and collaborations that we are working on or that we are shaping as a formal collaboration. That's one impact of the program. Two years is not a long time as you know in the chemical industry. It takes seven years, my boss always says, and then some, to bring something rather new to the market. But we have these projects running.
The other thing that it has done, and which I think is very important, is that it is changing the culture of innovation. Initially when we said ok, we're going to find startups, there were a number of researchers in the group that said, well that's all nice and dandy, but if there is something out there we would have known about it already because we have been in this area for 30 years. But I think internal people were surprised by how much new chemistry was out there that they simply didn't know about. They started to appreciate the importance of working with outsiders.
This program has really gotten a lot of great feedback internally. The depth and knowledge, particularly amid startups with really new chemistry, is generating a lot of excitement. So I think that's almost, if I may say so, the most important achievement. We at AkzoNobel have the researchers, but they are starting to look differently at their job, and at their role, not only developing everything themselves which they can but to actually say, “I am also a scouter of technology. I should be looking for what are other people are doing and how I can use that as a building block and fit it into our technology base.” It's a different mindset.
IB:As a company, should you not develop biobased chemistry internally, by yourself, and without startups and partners?
NIEUWENHUIZEN: Before we decided to go this route, we did an analysis of what biobased could mean for us in our industry. Then you have to make a make-or-buy decision. If you look at the biobased field, and break it down, there are many different routes. One is enzymatic conversion. So you take a molecule and you convert it with an enzyme into something that you want to have. You also have fermentation, either anaerobic and aerobic. And these are 2 pretty different tools. And then you've got things like biomass torrefaction. Then you have making sugars out of cellulose. So this biobased word actually captures a lot of different technologies. And then if you look at our chemistry and our businesses, you pretty quickly come to the conclusion that, “I don't know where the solution for my customers will come from.” So I can't decide to invest everything into fermentation, let me become the fermentation expert, because maybe 90% of my solution is not coming from fermentation, it is a field that is very quickly developing. So no, we don't have biobased I would say technology experts. We do have biobased technology generalists. We have people that scout, that's why we're at BIO's World Congress on Industrial Biotechnology. We want to see what's happening, and what could be a building block that fits into our technology portfolio and will help our customers.
This is a win-win. So I focus with our people on understanding the application of our customers. And I link that with somebody who has the technology, fermentation technology or torrefaction technology to make a molecule that is of interest, and now you have a win-win.
IB:How do you, as a large chemical company, manage the development process with partners that range from academics to small startups?
NIEUWENHUIZEN: So we have a number of people with some experience in setting up these collaborations. If you talk to an entrepreneur, that is her creation, that's his baby you're talking about, and if you don't talk in a nice way about the baby, that probably won't help develop that relationship. So we have people who understand that, who are diplomatic and effective at this. Then at some point they get together with the business people, because in the end it needs to land in a certain technology area. So it starts with a small group of a people capable of nurturing the relationship with the startup and then moves to a somewhat larger group of people ultimately needed to codevelop the technology.
Of course there's legal involved as well, and we're bringing finance in so we can understand what we're talking about in terms of the value. Then it takes time. It has to ferment a bit. Everyone has to sit together. And at some point, you reach a development agreement.
IB:What makes a good Imagine Chemistry candidate? What do you look for in that initial application and in speaking with them for the first time?
NIEUWENHUIZEN: I think first of all, it needs to be a technology that's interesting to deliver a customer benefit. Otherwise there's absolutely no point. Then we need to be able to do a financial assessment that this can potentially fly. You don't want to start with something that's three times the price of what it is today.
And then the second thing, maybe the most important next step, is to ask, “Can we work together?” Do they have a mindset or willingness to collaborate? Are they set up to share the revenues? If we're going to invest that means we have to be able to make some money. But if you have a vision that you want to keep all the value for yourself, then obviously we cannot collaborate. So we talk quite a bit about what's the size of the pie that we can create together, what does this pie consist of, what does each partner contribute to it, and how do we divide the pie in the end? If you cannot articulate the pie and you cannot articulate how to divide the pie, then it's not a good collaboration.
IB:What does it mean to be equal partners with the Imagine Chemistry winners?
NIEUWENHUIZEN: If you look at some of the startup challenges that are out there, it's actually quite interesting that most of them demand something. So they say you are a startup, you should be very happy you can participate in this activity and in recognition of that, you have to give up 5% of your equity or you have to give up your intellectual property. I don't think that is collaborating as equals. I think that is the same as saying, “We don't understand the value of a startup.” They have tremendous value, with energy, drive, and new ideas.
First, they don't need to pay anything to bring that to our accelerator event. We collaborate as equals. We're not the same but we are equal. They come to the table and don't have to give away anything. And by the same token, we come to the table, and we‘re not giving away anything. We're just having a good event together and then at some point, we decide how do we create this pie together. We're not presuming that because we are big and established, that we are in any way better. We are just big and established, that's what we are. But that doesn't mean that we are better. The one who is better for passionate innovation in many cases is actually the startup.
IB:Do you think this mentality is giving you the edge in finding the best partnership candidates?
NIEUWENHUIZEN: I think it is essential that we create such a setting. And the partnerships we are getting are pretty darn good. I would only add that we will launch the next edition in late December, early 2019.
