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Borski Fund backs innovations in pharma-chemical and EV battery manufacturing

Published: 23 February 2024

The investments in green chemistry startup DUDE CHEM and deep tech startup CarbonX aim to support the development of sustainable alternatives in the manufacture of EV batteries and chemicals used in medication.

CarbonX has developed a patented carbon anode material that can replace synthetic or natural graphite anodes used in the manufacture of electric vehicle (EV) batteries | CarbonX

Gender-lens investor Borski Fund has invested €1.1m as part of a €6.5m funding round in German green chemistry startup DUDE CHEM and €1m as part of a €10m fundraising in Dutch deep tech startup CarbonX.

DUDE CHEM, which launched in Berlin in 2021, has developed more sustainable chemical processes in the manufacture of pharmaceutical ingredients and chemical compounds in medication. The company operates by outsourcing the manufacturing of its patented recipes to European chemicals manufacturers and supplies the ingredients to pharmaceutical companies, who directly contract their production with them.    

The seed round in DUDE CHEM, which was co-led by VC firms Vorwerk Ventures and b2venture, with additional commitments made by Frontline, Auxxo, Push Ventures and Borski Fund, will be used to expand the company’s team of experienced scientists and scale the production of a chemical with one of its clients, an unnamed European generic drug producer.

Supply material for EV batteries

Launched in Delft in in the Netherlands in 2014, CarbonX has developed a patented carbon anode material that can replace synthetic or natural graphite anodes used in the manufacture of electric vehicle (EV) batteries. The company has partnered with carbon black manufacturing plants to produce the powder-like material, which it supplies to EV battery cell manufacturers and OEMs . It said it would use the investment to focus on securing tenders for active material supply in EV batteries and on managing its data in support of clients in their product development cycles.

Borski Fund led the funding round, which also included investments from Innovation Industries and Innovation Quarter.   

Speaking to Impact Investor, Simone Brummelhuis, director and partner of Borski Fund, said: “You cannot drive more sustainable systems change by only investing in digital propositions. At some point, there also needs to be investment into the hardware and this is what these companies offer.”   

Brummelhuis said that importantly, both companies were also concerned with reshoring supply chains to Europe, thereby securing the supply of essential products for the future, and that both were co-led by exceptional female co-founders, a reference to Daniela Sordi, chief technology officer of CarbonX and Sonja Jost, chief executive officer of DUDE CHEM.

“At the head of both DUDE CHEM and CarbonX are these super scientific female minds who are  commercialising patents, which is quite a rarity for women, although increasingly the case in the area of climate tech,” she added.

These latest investments in the €40m Borski Fund increase the portfolio to 16 companies, with plans to add a further five investments. The fund’s investment thesis applies a triple-diversity lens with investments made by a predominantly female team into companies founded or co-founded by female tech entrepreneurs or with a focus on products and services for women with a positive impact on women.

Brummelhuis also revealed that Borski Fund II was on the cards with a first close planned by the end of this year or by early 2025.

Sustainable chemical manufacturing for pharma

According to DUDE CHEM, the pharmaceutical industry produces hundreds of millions of tonnes of chemical waste and is a major contributor to greenhouse gas emissions. Quoting figures from a 2019 academic study, the company said the industry generated 48.55 metric tonnes of CO2 equivalent per $1m (€926,000) of revenue, which was 55% higher than the automotive industry.

The company currently has two patents for producing active pharmaceutical ingredients (APIs), the components in medication that produce their intended health effects, and intermediates, the chemical compounds that form the building blocks of the APIs. It says its patented processes can reduce chemical waste by up to 70% and CO2 emissions by 40% when compared to current best practices, making production more cost-effective too.

“Crude oil based organic solvents account for 56% of all material used in API production, which eventually end up as CO2 in the atmosphere,” said Jost, explaining the process to Impact Investor. “With our patented innovation, these solvents can be substituted with up to 100% water in the production of complex drug substances for the first time. This also enables the re-use of expensive, industrially available noble metal catalysts since it can be extracted without any activity loss.”

Improving battery performance more sustainably

CarbonX has developed a new feedstock technology that can be used by carbon black manufacturing plants to locally produce a conductive carbon anode material that can replace graphite in EV batteries.  The production of its eponymous material is said to generate two and a half times less CO2 emissions than natural graphite anodes and five times less than synthetic graphite anodes. The volume of base oil used in the feedstock has also been reduced, with plans to use more circular sources of oil in the near future.

“CarbonX solves the 2D limitations of graphite by improving both electron and lithium-ion transfer when used as active materials in lithium-ion batteries,” Sordi told Impact Investor. “The production of graphite is a very energy intensive process but our CarbonX material take just three milliseconds to produce, massively reducing the energy intensity of the production process and carbon emissions generated. The cost of producing CarbonX is also below that of synthetic graphite anodes and on a par with natural graphite anode production.”

The company originally developed its CarbonX product for use in tyres, before recognising the potential to adapt and scale production for EV batteries. Brummelhuis said this was a major selling point.

“The biggest risk to any investment in deep tech is the move from a solution that has been proven in a lab environment to one that works in the market. Having already manufactured their product in large quantities for tyres, CarbonX knew how to scale their product for EV batteries,” said Brummelhuis.

More secure supply chains

DUDE CHEM and CarbonX both say that their patented processes can be easily and cost-effectively plugged into existing European infrastructure. Bertrand van Leersum, investment director at Borski Fund, told Impact Investor that this offered another benefit in the face of rising geo-political tensions, by ensuring uninterrupted supply and in the case of medication, greater assurance around product safety.

According to a 2022 report, Europe produced only 25% of APIs in 2020, down from a 53% market share in 2000, increasing the risk of shortages and supply chain issues in the manufacture and supply of medications in Europe in the future.

van Leersum said the issue of traceability was also becoming increasingly important.

“Health insurers in the Netherlands and elsewhere are starting to demand greater transparency from pharma on the manufacturing origins of all their medicines. Having medicine produced in Europe results in better predictability of supply as well as greater assurances around the quality of their ingredients,” he said.

In EV, the problem of supply chain security appears even more critical. With demand for EV expected to grow significantly, recent data points to one-third of all EVs produced by 2030 facing a graphite shortage. According to CarbonX this adds up to about one million tonnes of anode material globally and an $8bn (€7.4bn) market opportunity.

At the same time, supply shortages are at risk of being exacerbated by geopolitical tensions as witnessed in November last year, when China, the world’s leading producer and exporter of graphite, announced export restrictions sending jitters through the EV industry globally.  

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