Interest is peaking in cleantech that not just offers cleaner and more sustainable solutions, but which can make money from actual pollution and waste. After all, the world has plenty of pollution and any way of monetizing it appeals to corporate finance. Demand is especially high in the Asian market, where pollution is at crippling levels.
This was exemplified this week as LanzaTech raised $60 million in a Series D round, with Mitsui, one of the largest industrial conglomerates in Japan, and a host of other Asian financiers looking to help develop the company further. LanzaTech makes carbon-efficient fuels and chemicals from pollution coming out of steels mills, oil refineries and chemical manufacturers, using a bacteria found in the intestinal tract of rabbits to convert carbon monoxide into fuels, such as ethanol or jet fuel, and chemicals, such as butadiene and propylene, for nylon and plastic. Crucially, this means waste is being converted into sellable and usable materials, presenting opportunities for added revenues. Aside from efficiency and green factors, there is genuine monetization potential. Unsurprisingly, the company had already raised $150 million of funding before this week.
It is unsurprising that interest in such cleantech projects is coming out from Asia in particular, where economies such as India and China are facing a critical level of pollution. Investments in clean solutions that can soak up carbon emissions are a matter of survival for states. China, the world’s leader in emissions, certainly has plenty of pollutants to monetize. And that was where LanzaTech saw its first commercial operation, launching in 2012 at Baosteel, one of China’s largest steel manufacturers. Greater demand is likely to come from the likes of South Korea, Japan, India and China.
“In places like China and India, it’s survival-driven, Andrew Chung, a partner at Khosla Ventures and a board member at LanzaTech, says. “You have a lot of corporate and governmental interest in doing whatever it takes to solve national problems.” There has now been a fairly intensive three-year old shopping and investment spree being conducted by Chinese and Asian companies for clean technology invented in the US. American companies are able to deliver on science, innovation and organisational structure, while Asia has the patient investors and capital to drive demand.
Solutions such as that offered by sustainable and energy efficient building design software company Sefaira, for which Acuity Advisors helped secure a $10.8 million A round venture capital investment from US and European investors in 2012, are applicable to more developed advanced economies, where design and function are in-trend and valued. However, in emerging markets, especially in rapidly industrialising Asia, gritty solutions for combatting pollution that can be applied immediately are vital. Business transfer agents are thus likely to tailor venture capital deals and exit strategies in cleantech specific to the Asian market.
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