European Circular Bioeconomy Growth Fund

Scaling commercially proven advanced bio-based materials and sustainable speciality chemicals

Overview

Spun out from High-Tech Gründerfonds (a German venture capital investment firm with c.$800m AuM and 490 companies in its portfolio), ECBF is an emerging fund manager focused on the European bioeconomy.

ECBF Management is currently raising a €250m European circular bioeconomy fund – ECBF I.

The resource economy is undergoing a paradigm shift due to an accelerated demand for sustainable products, raw materials, and waste valorisation. Changing consumer demand and tightening regulation is shifting the way natural resources are converted to products, and waste materials are processed. An emerging opportunity is presented for innovations that allow for continued economic growth in a more circular, sustainable fashion.

The fund will invest in c.20 European companies delivering advanced bio-based material and sustainable speciality chemical innovations at technology readiness level 6-9 / Series C and beyond. Focusing on scaling commercially proven technologies the fund seeks a target return of 23% gross IRR.

The target size of the fund is €250m, with €175m committed at second close held in December 2020. Final close is scheduled for 4Q 2021.

Strategy

The Opportunity
Driven by changing consumer preferences and tightening regulation, huge increase in the demand for sustainable raw materials is forecast in the coming years:

– Food-tech projected to grow by $65bn by 2025
– Bio-based materials projected to grow at 26% per annum (+$40bn by 2025)
– White biotech projected to grow at 10.5% per annum

Despite burgeoning demand for sustainable material and chemical inputs from multinational corporations, few investors and CVCs are deploying capital into late stage companies of the European bioeconomy.

Following the intensive research report “Access-to-finance conditions for Investments in Bio-Based Industries and the Blue Economy“, the European Investment Bank anchored ECBF I with a €100m cornerstone commitment to scale European bioeconomy companies. This first-loss anchor commitment provides private investors with enhanced IRR, preferred returns of 4% and downside risk mitigation very rarely available on commercial fund strategies. The EIB’s capital offers private investors participation in the upside of a commercial growth equity strategy, whilst minimising exposure to potential downside risks.

Target Investments
The Fund’s strategy is to make 20-25 investments according to the following criteria:

–  Verticals:  Ag & Food-tech, Bio-based Materials, White Biotech and Bio-based Chemicals
–  Ticket Size:  €3m – €8m initial investment
–  Stage:  Series C+, TRL6-9
–  Capital Allocation:  60% initial, 40% follow-on
–  Target Stake:  Significant minority, leading transactions
–  Geography:  Pan-European

Investments and Dealflow Pipeline

Following reaching first close in 2020, the fund has already made two initial investments:

Peel Pioneers B.V.
PeelPioneers’ proprietary pioneering technology provides a fully circular solution for fruit peels that are typically destroyed in an incinerator. The company extracts orange oil and other much-wanted raw materials that food manufacturers use in products such as beer, lemonade, muffins and chocolate. The raw materials that PeelPioneers derives from orange peels are also sold to manufacturers of non-food products such as detergents and cosmetics.

Prolupin GmbH
Prolupin has developed a lupin processing technology which enables the isolation of lupin protein. Lupin-based protein is the European-based substitute for soy, as it is equally high in protein while delivering superior characteristics in terms of food consistency and taste. Prolupin’s consumer brand offers yoghurts, milk, ice cream, cream cheese and much more, delivering healthy foods with a reduced environmental footprint.

The ECBF team has a strong deal pipeline and expects to close additional transactions in the coming months.

Team

  • Michael Brandkamp

    General Partner

    – Managing Director, High-Tech Gründerfonds
    – Director Tech Investments, KFW
    – Managing Director, tbg

  • Michael Nettersheim

    General Partner

    – Investment Manager, BASF VC
    – Senior Investment Manager, High-Tech Gründerfonds
    – Head of Corporate Finance, M&A and IR, MediGene AG

  • Dirk Saßmannshausen

    General Partner

    – CFO, La Famiglia GmbH
    – Senior Controller, High-Tech Gründerfonds
    – Specialist Structured Finance, Commerzbank AG

Contact

 

Key Facts

Size €250m
Asset Type Growth Equity
Geography Pan-European
Impact Multi Sector
Target Return 23% IRR
Fund Structure Closed-Ended
Fund Term 10 years
First Close €85m
First Close Date 4Q 2020
Final Close Date 4Q 2021
Committed Capital €175m