Commercialization of technologies developed by well-connected multinational corporations

Many multinational corporations spend billions of dollars a year on research and development. However, they ultimately commercialize very little of this work, usually because it does not fit their core mission.

That’s the situation at the heart of Innventure, a nine-year-old company that aims to take the most promising, sidelined technologies and turn them into businesses while reducing the risks typical tech startups face. “We help multinationals commercialize technologies that have strategic value but are distracting from their core mission,” says Bill Haskell, CEO of Innventure.

The company is also in the process of going public via a special purpose acquisition company. (TO SLEEP).

Focus on Sustainability

The innovations Innventure has focused on so far are all about sustainability – from packaging that emits less carbon dioxide to improved data centre cooling.

An example is PureCycle, which uses a process developed by Procter & Gamble that turns plastic waste into clean, recycled polypropylene. In 2015, Innventure obtained a perpetual license for the technology from P&G and built a large-scale plant that is in the process of being up and running. The startup went public in 2021. Haskell said he also sold all of his plant’s output for 20 years before the work began.

Risk reduction

The Innventure model, Haskell says, is based on five factors designed to reduce startup risk. The first is working with multinational corporations that have a sense of potential market interest. “Most inventors focus on what they’re interested in, not what the market needs,” Haskell says. “But these multinational corporations have sales and marketing people crisscrossing the planet every day.”

Innventure then buys or licenses the technology developed by these large companies, thereby avoiding the time, risk, and money it would otherwise have to spend. In addition, these MNCs can help drive adoption of the technology in the market. Innventure funds startups, which are usually initially run by its own executives with the right expertise.

That approach began in 1993, when Haskell and John Scott, an astrophysicist, physicist, and serial entrepreneur, founded a company that sourced product ideas from multinational corporations. They refined the model over the years. (They closed the company in 2010.) In 2015, Scott and co-founders Mike Otworth and Rick Brenner founded Innventure, drawing on their experience at their previous company and the long-standing relationships they had already developed with multinational corporations.

Specifically, that meant finding promising technologies in development, navigating a rigorous vetting process, and building companies with the potential to reach $1 billion in market value to commercialize those innovations. In 2020, Haskell joined as CEO when Otworth, founder and CEO of Innventure, moved on to run their first startup.

Key to the company’s model is the vast amount of resources that multinational corporations spend on developing technologies that they end up shelving. According to Haskell, the world’s 100 largest spenders on research and development spend more than $700 billion a year on research and development. “Only a fraction of that goes into a commercial product,” he says. Also important is the nature of these technologies, which typically come with sustainability concerns. “These multinational corporations have made commitments to their shareholders and customers to meet sustainability goals,” Haskell says. “That’s a real concern for them.”

Three startups

PureCycle was Innventure’s first startup, born out of regular conversations with P&G about technologies that might be interesting to develop. The consumer goods giant had spent years developing a process that could separate color, odor, and contaminants from plastic waste feedstock, turning it into clean, recycled polypropylene; P&G had also developed the system to the point where it could do the job in small quantities.

In 2015, Innventure obtained a perpetual license for the technology and ramped up production, building a plant capable of producing about 1 billion pounds of recycled polypropylene per year. Haskell says the company is now worth about $1 billion. PureCycle, still in the early stages of commercialization, has about a dozen plants in the planning stages. After two years as CEO, Innventure co-founder Otworth returned to Innventure as executive chairman.

P&G has a small equity stake and a sales licensing agreement. But more importantly, “they’re more interested in access to the technology,” says Roland Austrup, chief development officer. “They think it helps them meet their sustainability goals. They can also increase their market share, because many customers want their product in sustainable packaging.” Austrup says P&G has also helped Innventure find other customers for the product around the world.

Their second company, AeroFlexx, founded in 2018, also uses technology from P&G. It makes recyclable, flexible liquid packaging that uses about 70% less virgin plastic than a typical rigid bottle for everything from oils to shampoos, according to Haskell. It also saves money in the supply chain because the packages are shipped to the customer as flat films, so there’s much more room in each truck. Overall, the process uses up to 85% less virgin plastic, according to Haskell. The company is now getting the plant ready for production.

The latest startup, Accelsius, founded in 2022, is addressing a particularly timely need: cooling electronics in data centers without air conditioning, using technology acquired from Nokia Bell Labs. “You can reduce the energy requirement by about 40%,” Haskell says. Because Haskell and his colleagues identified a significant, immediate need for the technology, they took a different approach to hiring. Instead of initially moving one of their own to lead the company, they hired a former Dell executive with relevant industry and startup experience, who built a team of 60. The product is available now.

Four-step due diligence

Innventure currently works with about 36 international corporations, about a dozen of which regularly share information about technologies in development. Most of those companies have contacted Innventure, Haskell says. “We see dozens and dozens of technologies through these companies,” he says.

The due diligence team conducts the review. The four-step process includes everything from assessing the technology’s potential to developing a business model that the team believes is feasible. Haskell estimates that the company accepts one of every 30 technologies it sees. “We don’t have to accept many,” he says. “We just have to do a few and do them very well.”

Entry to the stock exchange

The company is also in the process of going public via a SPAC, Learn CW Investment Corp. It signed a deal late last year and is expected to go public within the next quarter, according to Austrup.

The plan is to use the capital raised to fund Innventure’s operating companies. “We want to build, own and operate these companies for the long term,” Haskell says.