Many multinationals spend billions of dollars a year on R&D. But they end up commercializing very little of the work, typically because it doesn’t fit with their core mission.
This situation lies at the heart of Innventure, a nine-year-old company that aims to vet the most promising of those technologies put on the back burner and turn them into businesses, while also reducing the amount of risk the usual tech startup faces. “We’re helping multinationals to commercialize technologies with strategic value, but that distract from their core mission,” says Bill Haskell, Innventure CEO.
Bll Haskell
It’s also in the process of going public through a Special Purpose Acquisition Company (SPAC).
Sustainability Focus
The innovations Innventure has focused on so far target sustainability, anything from less carbon-intensive packaging to improved ways to cool data centers.
A case in point is PureCycle, which uses a process developed by Procter & Gamble that turns plastic waste into pure recycled polypropylene. In 2015, Innventure licensed the technology in perpetuity from P&G and built a large-scale plant, which it’s in the process of getting up and running. The startup went public in 2021. It also pre-sold the entire output of its plant for 20 years before even breaking ground, according to Haskell.
Reducing Risk
Innventure’s model rests on five factors aimed at reducing startup risk, according to Haskell. First is to partner with multinationals that have their finger on the pulse of potential market interest. “Most inventors focus on what they’re interested in, not what the market needs,” says Haskell. “But these multinationals have sales and marketing people roaming the planet every day.”
Then Innventure buys or licenses technology developed by those major companies, thereby avoiding the time, risk, and money it would otherwise need to expend. In addition, those multinationals can help drive adoption of the technology in the market. Innventure funds the startups, which are typically run initially by its own executives with appropriate expertise.
That approach had its genesis back in 1993, when Haskell and John Scott, an astrophysicist, physicist, and serial entrepreneur, founded a company that sourced product ideas from multinationals. Over the years, they refined the model. (They wound the company down in 2010). In 2015, Scott and co-founders Mike Otworth and Rick Brenner formed Innventure, drawing on lessons learned at the previous business, as well as on the long-standing relationships they’d already developed with multinationals.
Specifically, that meant scouting for promising technologies in development, going through a rigorous vetting process, and forming companies with the potential to become $1 billion in market value to commercialize those innovations. In 2020, Haskell joined as CEO when Otworth, Innventure’s founding CEO, moved over to run their first startup.
The lynchpin of the company’s model is the massive amount of resources multinationals spend developing technologies they eventually put on hold. The top 100 global R&D spenders devote over $700 billion a year on R&D, according to Haskell. “Only a fraction of that ends up in a commercial product,” he says. Also important is the nature of those technologies, which typically involve sustainability concerns. “These multinationals have made commitments to their shareholders and customers to meet sustainability targets,” says Haskell. “It’s a major problem for them.”
Three Startups
PureCycle was Innventure’s first startup. It came about thanks to regular discussions with P&G about technologies of possible interest in development. The consumer goods giant had spent many years creating a process able to separate color, odor, and contaminants from plastic waste feedstock, turning it into pure recycled polypropylene; P&G had also developed the system to a point where it could do the job in small quantities.
In 2015, Innventure licensed the technology in perpetuity and scaled up production, building a plant capable of producing about 1 billion pounds of recycled polypropylene annually. The company is now worth around $1 billion, according to Haskell. Still in the early stages of commercialization, PureCycle has about a dozen plants in the planning stage. After two years as CEO, Innventure co-founder Otworth returned to Innventure as executive chairman.
P&G has a small equity stake and a royalty agreement on sales. But more important, “They’re more interested in having access to the technology,” says Roland Austrup, chief growth officer. “They believe that helps them meet their sustainability goals. But they also can increase their market share because many customers want their product in a sustainable package.” P&G also helped Innventure find other customers for the product globally, according to Austrup.
Their second company, AeroFlexx, founded in 2018, also uses technology sourced from P&G. It makes a recyclable flexible packaging for liquids that uses about 70% less virgin plastic than a typical rigid bottle for anything from oils to shampoo, according to Haskell. It also results in supply chain savings, because packages are shipped as flat film to the customer, thereby fitting a lot more of them in each truck. In total, the process uses up to 85% less virgin plastic, according to Haskell. Now the company is getting a plant ready for production.
The most recent startup, Accelsius, founded in 2022, meets a particularly timely need: cooling electronics in data centers without the use of air conditioning with a technology bought from Nokia Bell Labs. “You can reduce power requirements by around 40%,” says Haskell. Because Haskell and his colleagues identified a significant, immediate demand for the technology, they took a different approach to staffing. Instead of moving one of their own over to head the company initially, they hired a former executive at Dell with relevant industry and startup experience, who put together a 60-person team. The product is already commercially available.
Four-Phase Due Diligence
Innventure is now working with about 36 or so multinationals, about a dozen of which regularly share information about technologies in development. Most of those companies reached out to Innventure, according to Haskell. “We see dozens and dozens of technologies through these companies,” he says.
A due diligence team does the vetting. The four-phase process encompasses everything from evaluating the technology’s potential to developing a business model the team establishes is viable. Haskell figures the company accepts one technology for every 30 it sees. “We don’t have to accept a lot,” he says. “We just have to do a few and do them very well.”
Going Public
The company is also in the process of going public through a SPAC, Learn CW Investment Corp. It signed the agreement at the end of last year and is expected to go public over the next quarter, according to Austrup.
The plan is to use the capital that’s raised to fund Innventure’s operating companies. “We want to build, own, and operate these companies for the long-term,” says Haskell.
