Materials Matter: Why We’re Bullish on Sustainable Materials
Materials Matter: Why We’re Bullish on Sustainable Materials
At b2venture, we believe a new era of making is emerging - one where biology and materials science drive technological progress. From concrete and plastics to packaging and textiles, materials are at the heart of every product, industry, and system we touch. And yet, the materials economy is still largely linear, fossil-based, and unsustainable. However, a transformative shift is underway, as innovation in materials and technology is reshaping how we design, produce, and consume.
Biology, engineering, and computation are converging to create materials that surpass existing solutions in terms of cost, performance, and sustainability. At the same time, supply chain vulnerabilities, evolving regulations, and changing consumer demands are driving a powerful commercial pull. This is why we are building conviction in the sustainable materials space - a movement aimed at reimagining the materials that power our world.
However, the journey is not without its obstacles. Scaling production from the lab to industrial levels, achieving cost competitiveness at scale, navigating complex regulatory landscapes, and ensuring consistent performance across diverse applications are key challenges that must be overcome. These hurdles will shape the next generation of market leaders.
Additionally, we observe a global countershift that could slow the pace of the industrial transition towards regenerative materials. Political movements, particularly in the US, have sparked pushback to the swift adoption of sustainable practices. Right-wing politics, climate skepticism, and entrenched reliance on traditional energy sources remain significant challenges. Global efforts to combat climate change and reduce fossil fuel dependency face the complex realities of national policies and geopolitical dynamics that could delay or even reverse progress.
That said, even amid these challenges, a profound and necessary shift toward sustainability is taking root across industries worldwide. Innovative materials, sustainable business models, and increasingly sophisticated technologies are paving the way for a regenerative future.
Let’s break it down.
1. The Problem: The Materials Economy Is Broken
The materials economy is one of the most resource- and emissions-intensive systems on Earth. A few sobering stats:
- >90 billion tons of material are extracted every year - and that number is projected to double by 2060. (Source: OECD, 2019)
- Materials account for over two-thirds of global greenhouse gas emissions. (Source: IPCC, 2022)
- Only 7.2% of materials are reused, leaving massive value - and environmental damage - on the table. (Source: Circle Economy, 2023)
In short: the way we make and use materials is fundamentally unsustainable. A full rethink is overdue.
2. The Opportunity: Reinventing the Materials Stack
As sustainability becomes a non-negotiable across industries, a new wave of alternative material startups and innovators is emerging - working to replace, upgrade, and rethink the very building blocks of our physical world. We call this movement the Sustainable Materials Stack.
This stack isn't just about inventing a few greener products - it's a systemic reinvention of how materials are sourced, developed, applied, and optimized. Crucially, the transformation spans both the physical and digital realms: it often begins with biology or chemistry, but increasingly ends with software.
The Building Blocks
We break down the space into three dimensions:
To help make sense of this rapidly evolving landscape, we structure our thinking around three key dimensions: material type & technological process, industry use case, and the enabling software layer that can underpin them all.
(1) Material Type & Technological Process
The foundation of the stack is, of course, the materials themselves. Here, we’re seeing innovation across four core categories:
- Natural & Bioengineered Materials are derived from renewable biological sources and are gaining traction as viable, lower-impact alternatives to petroleum-based materials. This includes:
- Plant-Based Materials such as bamboo, hemp, and jute - natural fibers and composites that are not only biodegradable but can often outperform synthetics in durability and renewability.
- Algae-Based Materials, which offer impressive growth efficiency and versatility. Algae-derived bioplastics, fibers, and even biofuels are opening up new pathways for closed-loop manufacturing.
- Microbial Materials, cultivated through fermentation or fungal growth, include high-potential innovations like mycelium-based packaging, bacterial cellulose textiles, and even fungi-derived bioleather.
- Plant-Based Materials such as bamboo, hemp, and jute - natural fibers and composites that are not only biodegradable but can often outperform synthetics in durability and renewability.
- Recycled & Upcycled Materials are essential for closing the material loop. Whether it’s recycled textiles, plastics, metals, or glass, these materials help reduce virgin resource extraction and carbon intensity - and are increasingly viable thanks to improved processing tech and growing demand from brands and consumers.
- Waste-to-Value Materials flip the problem of waste on its head. These solutions repurpose agricultural byproducts, organic residues, or industrial waste into usable, often high-performance materials. From biochar to biogas, these approaches represent circularity in action.
- Advanced & Smart Materials push the frontier of what materials can do. These include nanocomposites, self-healing polymers, graphene, and shape-memory alloys - often combining high performance with sustainability advantages, especially in energy storage, construction, or mobility.
(2) Industry Use Case
While material innovation is foundational, real-world impact happens through application. We assess materials innovation through the lens of specific verticals, where use cases and market forces determine feasibility and traction. Some key industries, though not exhaustive, include:
- Packaging: One of the first major markets expected to shift due to regulatory pressure and consumer demand. Bioplastics, compostable materials, and mycelium-based foams are driving change here.
- Consumer, Lifestyle & Home Goods: The push for planet-friendly everyday goods is spawning new markets for sustainable personal care, home goods, and leisure products.
- Construction & Buildings: A carbon-heavy sector with immense potential for sustainable transformation - from eco-cement to green insulation and structural biocomposites.
- Fashion & Textiles: A notorious contributor to waste and emissions, the industry is adopting bio-based fibers, upcycled garments, and waterless dye technologies.
- Automotive & Mobility: Lightweight composites, bio-based interiors, and energy-efficient materials are becoming crucial to the next generation of vehicle design.
- Healthcare & Medical: Despite stringent regulatory requirements and the need to prove long-term safety, biocompatible and smart materials show promise in improving medical devices and implants.
- Food: From biodegradable packaging to algae-based protein additives, materials are enhancing both sustainability and food innovation.
- Energy & Batteries: Advanced materials, including organic photovoltaics, hydrogen storage, and recyclable battery chemistries, are critical to the future of energy systems.
- Electronics & ICT: Eco-friendly circuit boards, biodegradable casings, and innovative materials like graphene are reshaping electronics sustainability.
- Cosmetics & Personal Care: A fast-moving, high-margin industry that serves as a testing ground and offers rapid commercialization potential for novel materials like bio-based ingredients and functional additives.
However, while the application fields for sustainable materials, such as cosmetics, textiles, and construction, may vary, it's crucial to consider the underlying chemistry independently of these uses. The chemical processes driving material innovations can often be universal. The same chemical principles that apply to creating a new Alzheimer's drug can also be used in developing materials for asphalt or concrete. This highlights the potential for breakthroughs that transcend specific industries, focusing instead on the molecular mechanisms that drive innovation.
(3) Enabling Software Layer
The Sustainable Materials Stack would not be complete without the digital infrastructure that underpins it. This software layer plays a critical role in accelerating materials discovery, de-risking adoption, and supply chain integration, and is the connective tissue that makes the system scalable, adaptive, and intelligent.
This includes:
- Material design, process simulation and AI-driven discovery tools, which compress R&D timelines and unlock novel compounds and combinations.
- Supply chain traceability platforms, ensuring materials are sourced, certified, and moved sustainably.
- Circular economy platforms, which optimize product lifecycles, facilitate reuse, and streamline recycling or takeback schemes.
- Databases and analytics tools, helping companies identify sustainable material alternatives at scale.
We consider the software layer as horizontal - it cuts across material types and industries - and is often what unlocks the speed, scalability, and transparency needed to move from pilot to mass adoption.
Together, these three dimensions, i.e., what materials are made from, where they’re used, and how they’re enabled, help us map and evaluate the emerging ecosystem:
3. Our Sustainable Materials Market Map: What We’re Seeing
Across Europe and the US, a new wave of startups is emerging in every corner of the renewable materials landscape, including both hardware (materials innovation) and software (platforms enabling sourcing, lifecycle, or optimization):
Funding activity is growing as well, with several mega rounds and a long tail of early-stage bets. Check out some of the most relevant players in Europe:
4. Our Investment Focus: Where We’re Placing Our Bets
As the landscape of sustainable materials innovation evolves rapidly, it’s paramount to have a clear and grounded approach to identifying high-potential opportunities. Our investment strategy is shaped by five core principles that guide how we build conviction and where we decide to place our bets.
1. Go Where Regulation Meets Readiness
A key focus for us is targeting markets where the regulatory pressure to decarbonize or close material loops is not just a trend but a tangible, urgent reality. These markets are experiencing growing demands for solutions that reduce environmental impact - and technologies that are either already viable or close to commercialization are crucial to meeting these needs. This dynamic presents a clear market opportunity for companies and innovations that are both in the right place at the right time.
In particular, we are excited about sectors like construction, where innovations such as carbon-negative concrete, CO2-absorbing additives, and sustainable insulation materials are gaining significant traction. The packaging industry is another key area, with developments in bioplastics, mycelium-based foams, and plant-based films taking center stage as sustainable alternatives. Finally, energy and batteries offer substantial promise, especially with closed-loop recycling technologies and next-generation storage materials that are vital for a circular economy and low-carbon energy grid. That said, the sector is not without its risks - supply chain volatility, shifting raw material prices, and geopolitical tensions (as seen in recent export restrictions and price collapses) all pose significant challenges. At the same time, these very dynamics underline the strategic importance of building resilient, regionally independent material systems - particularly for Europe, in an increasingly protectionist global landscape.
2. Bet on Proven Tech, Not Science Projects
While the potential of cutting-edge science is exciting, we prioritize investing in proven technologies with a clear path to commercialization. Our focus is on companies and innovations that have already moved past the research phase and are in pilot or production stages. This includes, for example, microbial fermentation, which is used to produce sustainable materials like bioplastics, and mycelium-based materials, which are being explored for everything from packaging to building products. Additionally, biocomposites - made by combining natural fibers with polymers - are showing promise in industries ranging from automotive to construction. These technologies are already demonstrating their ability to scale, which is essential for achieving meaningful impact in the near term.
3. We’re Hyped for Hardware - But Capital Efficiency Matters
While we’re deeply excited by the hardware innovations taking place in sustainable materials, we also recognize that the journey from prototype to full-scale deployment can be long, capital-intensive, and resource-heavy. It’s easy to get swept up in the allure of building revolutionary physical products, but we are equally focused on models that bring innovative hardware to market with capital efficiency in mind.
We’re particularly drawn to businesses that operate in an asset-light manner, such as those that leverage platforms, licensing models, or strategic partnerships to scale without the need for massive capital expenditures, thus reducing funding risk. These models can allow companies to capture value across multiple industries, from automotive to food packaging. We also look for ventures that are not just solving isolated problems but are cross-vertical, with applications that span multiple industries, thus enabling broader impact.
4. Don’t Sleep on Software
While we don’t shy away from hardware - especially with our Direct Investments track - we see software as a huge enabler of progress in the materials space. Software isn’t just a tool for managing operations - it's a fundamental part of discovering, scaling, and optimizing sustainable materials. From AI-driven material discovery to the use of digital twins for supply chain management, software solutions are unlocking entirely new capabilities and efficiencies in the circular economy.
We’re particularly excited by platforms that support material sourcing, lifecycle management, and circularity. Software that enables real-time supply chain traceability and material simulation can drastically reduce the time it takes to bring sustainable products to market, making it easier for businesses to meet stringent regulatory demands and consumer expectations. Think of companies that are creating the SAP, Palantir, or Databricks equivalents of the circular materials world. These solutions are poised to become critical infrastructure for industries working to transition to more sustainable practices.
5. Built for Buyers, Not Just Believers
When we think about the landscape of sustainable materials, we deliberately look beyond what’s currently trending in policy or regulation. While political momentum can help accelerate change, our focus is on solutions that are commercially viable in their own right - materials that are economically more attractive to customers than the status quo. This means identifying technologies that offer better performance, lower costs, or other clear advantages, without relying solely on subsidies or mandates. It’s a perspective rooted in our broader DeepTech investment thesis: true transformation happens when innovation wins on its own merits and delivers value that stands independently of external pressure. DUDE CHEM is a great example here - making pharma-chemical production both more competitive and sustainable through their green chemistry platform.
With our principles in mind, we’re actively looking to double down in areas where we believe the opportunity is most ripe:
- Carbon-negative construction materials: Waste-to-value solutions in construction are one of the biggest levers for decarbonizing the built environment. Innovations in carbon-negative concrete and CO2-absorbing additives are proving to be not just a conceptual possibility, but a practical and scalable reality. Our portfolio company Headmade Materials, for example, is developing innovative metal 3D printing solutions that enable lightweight, resource-efficient components for industrial applications.
- Biodegradable packaging innovations: We are particularly focused on technologies that combine microbial or plant-based materials with economically scalable production methods. This intersection is where we see significant potential for mass-market adoption, offering both sustainability and cost-effectiveness.
- Enabling software: The software layer across the materials stack, including tools for material discovery, circularity, and supply chain traceability, is an area where we are investing heavily. These software platforms are not just helping companies optimize their operations but also transforming the entire ecosystem’s ability to scale sustainably. Atlas Metrics is building the sustainability data infrastructure for enterprises, while HQS Quantum Simulations is laying the groundwork for the next generation of material simulation and discovery - leveraging quantum computing and fusion research to unlock entirely new material capabilities.
5. The Outlook: Still Early, Still Hard - But Getting Real
Materials innovation remains one of the toughest sectors to crack. This isn’t SaaS and certainly not what is considered the obvious VC case - scaling physical products is slow, complex, and capital-intensive. Despite growing attention, most sustainable materials companies still face steep technical, regulatory, and commercial hurdles. However, we’re seeing real momentum:
- Policy tailwinds - alongside political headwinds: Regulatory momentum is building. Initiatives like the EU Green Deal, plastic bans, and embodied carbon regulations are pushing sustainability higher on the agenda. However, political resistance remains a challenge: in markets like the US and elsewhere, right-wing movements and climate skepticism are slowing progress, creating an ideological divide that keeps parts of the economy tied to fossil fuels. Implementation of policies varies widely, but overall, the long-term trajectory remains positive.
- Corporate demand is real, with players like Unilever, Adidas, and BMW actively exploring and piloting sustainable materials. Many efforts are still early-stage, but signal a shift in mindset.
- Technologies are maturing, especially in targeted applications. Industrial scaling remains a challenge, but it's no longer a distant ambition.
- A new generation of founders is tackling these problems with scientific depth, cross-disciplinary fluency, and a long-term view - moving beyond hype toward operational readiness.
It’s still early days, and success won’t come fast. But the pieces of the Sustainable Materials Stack are starting to come together.
If you’re a founder rethinking materials - let’s talk.
Whether you're working on microbial plastics, carbon-capturing cement, or the software layer to connect it all - reach out.
At b2venture, we believe a new era of making is emerging - one where biology and materials science drive technological progress. From concrete and plastics to packaging and textiles, materials are at the heart of every product, industry, and system we touch. And yet, the materials economy is still largely linear, fossil-based, and unsustainable. However, a transformative shift is underway, as innovation in materials and technology is reshaping how we design, produce, and consume.
Biology, engineering, and computation are converging to create materials that surpass existing solutions in terms of cost, performance, and sustainability. At the same time, supply chain vulnerabilities, evolving regulations, and changing consumer demands are driving a powerful commercial pull. This is why we are building conviction in the sustainable materials space - a movement aimed at reimagining the materials that power our world.
However, the journey is not without its obstacles. Scaling production from the lab to industrial levels, achieving cost competitiveness at scale, navigating complex regulatory landscapes, and ensuring consistent performance across diverse applications are key challenges that must be overcome. These hurdles will shape the next generation of market leaders.
Additionally, we observe a global countershift that could slow the pace of the industrial transition towards regenerative materials. Political movements, particularly in the US, have sparked pushback to the swift adoption of sustainable practices. Right-wing politics, climate skepticism, and entrenched reliance on traditional energy sources remain significant challenges. Global efforts to combat climate change and reduce fossil fuel dependency face the complex realities of national policies and geopolitical dynamics that could delay or even reverse progress.
That said, even amid these challenges, a profound and necessary shift toward sustainability is taking root across industries worldwide. Innovative materials, sustainable business models, and increasingly sophisticated technologies are paving the way for a regenerative future.
Let’s break it down.
1. The Problem: The Materials Economy Is Broken
The materials economy is one of the most resource- and emissions-intensive systems on Earth. A few sobering stats:
- >90 billion tons of material are extracted every year - and that number is projected to double by 2060. (Source: OECD, 2019)
- Materials account for over two-thirds of global greenhouse gas emissions. (Source: IPCC, 2022)
- Only 7.2% of materials are reused, leaving massive value - and environmental damage - on the table. (Source: Circle Economy, 2023)
In short: the way we make and use materials is fundamentally unsustainable. A full rethink is overdue.
2. The Opportunity: Reinventing the Materials Stack
As sustainability becomes a non-negotiable across industries, a new wave of alternative material startups and innovators is emerging - working to replace, upgrade, and rethink the very building blocks of our physical world. We call this movement the Sustainable Materials Stack.
This stack isn't just about inventing a few greener products - it's a systemic reinvention of how materials are sourced, developed, applied, and optimized. Crucially, the transformation spans both the physical and digital realms: it often begins with biology or chemistry, but increasingly ends with software.
The Building Blocks
We break down the space into three dimensions:
To help make sense of this rapidly evolving landscape, we structure our thinking around three key dimensions: material type & technological process, industry use case, and the enabling software layer that can underpin them all.
(1) Material Type & Technological Process
The foundation of the stack is, of course, the materials themselves. Here, we’re seeing innovation across four core categories:
- Natural & Bioengineered Materials are derived from renewable biological sources and are gaining traction as viable, lower-impact alternatives to petroleum-based materials. This includes:
- Plant-Based Materials such as bamboo, hemp, and jute - natural fibers and composites that are not only biodegradable but can often outperform synthetics in durability and renewability.
- Algae-Based Materials, which offer impressive growth efficiency and versatility. Algae-derived bioplastics, fibers, and even biofuels are opening up new pathways for closed-loop manufacturing.
- Microbial Materials, cultivated through fermentation or fungal growth, include high-potential innovations like mycelium-based packaging, bacterial cellulose textiles, and even fungi-derived bioleather.
- Plant-Based Materials such as bamboo, hemp, and jute - natural fibers and composites that are not only biodegradable but can often outperform synthetics in durability and renewability.
- Recycled & Upcycled Materials are essential for closing the material loop. Whether it’s recycled textiles, plastics, metals, or glass, these materials help reduce virgin resource extraction and carbon intensity - and are increasingly viable thanks to improved processing tech and growing demand from brands and consumers.
- Waste-to-Value Materials flip the problem of waste on its head. These solutions repurpose agricultural byproducts, organic residues, or industrial waste into usable, often high-performance materials. From biochar to biogas, these approaches represent circularity in action.
- Advanced & Smart Materials push the frontier of what materials can do. These include nanocomposites, self-healing polymers, graphene, and shape-memory alloys - often combining high performance with sustainability advantages, especially in energy storage, construction, or mobility.
(2) Industry Use Case
While material innovation is foundational, real-world impact happens through application. We assess materials innovation through the lens of specific verticals, where use cases and market forces determine feasibility and traction. Some key industries, though not exhaustive, include:
- Packaging: One of the first major markets expected to shift due to regulatory pressure and consumer demand. Bioplastics, compostable materials, and mycelium-based foams are driving change here.
- Consumer, Lifestyle & Home Goods: The push for planet-friendly everyday goods is spawning new markets for sustainable personal care, home goods, and leisure products.
- Construction & Buildings: A carbon-heavy sector with immense potential for sustainable transformation - from eco-cement to green insulation and structural biocomposites.
- Fashion & Textiles: A notorious contributor to waste and emissions, the industry is adopting bio-based fibers, upcycled garments, and waterless dye technologies.
- Automotive & Mobility: Lightweight composites, bio-based interiors, and energy-efficient materials are becoming crucial to the next generation of vehicle design.
- Healthcare & Medical: Despite stringent regulatory requirements and the need to prove long-term safety, biocompatible and smart materials show promise in improving medical devices and implants.
- Food: From biodegradable packaging to algae-based protein additives, materials are enhancing both sustainability and food innovation.
- Energy & Batteries: Advanced materials, including organic photovoltaics, hydrogen storage, and recyclable battery chemistries, are critical to the future of energy systems.
- Electronics & ICT: Eco-friendly circuit boards, biodegradable casings, and innovative materials like graphene are reshaping electronics sustainability.
- Cosmetics & Personal Care: A fast-moving, high-margin industry that serves as a testing ground and offers rapid commercialization potential for novel materials like bio-based ingredients and functional additives.
However, while the application fields for sustainable materials, such as cosmetics, textiles, and construction, may vary, it's crucial to consider the underlying chemistry independently of these uses. The chemical processes driving material innovations can often be universal. The same chemical principles that apply to creating a new Alzheimer's drug can also be used in developing materials for asphalt or concrete. This highlights the potential for breakthroughs that transcend specific industries, focusing instead on the molecular mechanisms that drive innovation.
(3) Enabling Software Layer
The Sustainable Materials Stack would not be complete without the digital infrastructure that underpins it. This software layer plays a critical role in accelerating materials discovery, de-risking adoption, and supply chain integration, and is the connective tissue that makes the system scalable, adaptive, and intelligent.
This includes:
- Material design, process simulation and AI-driven discovery tools, which compress R&D timelines and unlock novel compounds and combinations.
- Supply chain traceability platforms, ensuring materials are sourced, certified, and moved sustainably.
- Circular economy platforms, which optimize product lifecycles, facilitate reuse, and streamline recycling or takeback schemes.
- Databases and analytics tools, helping companies identify sustainable material alternatives at scale.
We consider the software layer as horizontal - it cuts across material types and industries - and is often what unlocks the speed, scalability, and transparency needed to move from pilot to mass adoption.
Together, these three dimensions, i.e., what materials are made from, where they’re used, and how they’re enabled, help us map and evaluate the emerging ecosystem:
3. Our Sustainable Materials Market Map: What We’re Seeing
Across Europe and the US, a new wave of startups is emerging in every corner of the renewable materials landscape, including both hardware (materials innovation) and software (platforms enabling sourcing, lifecycle, or optimization):
Funding activity is growing as well, with several mega rounds and a long tail of early-stage bets. Check out some of the most relevant players in Europe:
4. Our Investment Focus: Where We’re Placing Our Bets
As the landscape of sustainable materials innovation evolves rapidly, it’s paramount to have a clear and grounded approach to identifying high-potential opportunities. Our investment strategy is shaped by five core principles that guide how we build conviction and where we decide to place our bets.
1. Go Where Regulation Meets Readiness
A key focus for us is targeting markets where the regulatory pressure to decarbonize or close material loops is not just a trend but a tangible, urgent reality. These markets are experiencing growing demands for solutions that reduce environmental impact - and technologies that are either already viable or close to commercialization are crucial to meeting these needs. This dynamic presents a clear market opportunity for companies and innovations that are both in the right place at the right time.
In particular, we are excited about sectors like construction, where innovations such as carbon-negative concrete, CO2-absorbing additives, and sustainable insulation materials are gaining significant traction. The packaging industry is another key area, with developments in bioplastics, mycelium-based foams, and plant-based films taking center stage as sustainable alternatives. Finally, energy and batteries offer substantial promise, especially with closed-loop recycling technologies and next-generation storage materials that are vital for a circular economy and low-carbon energy grid. That said, the sector is not without its risks - supply chain volatility, shifting raw material prices, and geopolitical tensions (as seen in recent export restrictions and price collapses) all pose significant challenges. At the same time, these very dynamics underline the strategic importance of building resilient, regionally independent material systems - particularly for Europe, in an increasingly protectionist global landscape.
2. Bet on Proven Tech, Not Science Projects
While the potential of cutting-edge science is exciting, we prioritize investing in proven technologies with a clear path to commercialization. Our focus is on companies and innovations that have already moved past the research phase and are in pilot or production stages. This includes, for example, microbial fermentation, which is used to produce sustainable materials like bioplastics, and mycelium-based materials, which are being explored for everything from packaging to building products. Additionally, biocomposites - made by combining natural fibers with polymers - are showing promise in industries ranging from automotive to construction. These technologies are already demonstrating their ability to scale, which is essential for achieving meaningful impact in the near term.
3. We’re Hyped for Hardware - But Capital Efficiency Matters
While we’re deeply excited by the hardware innovations taking place in sustainable materials, we also recognize that the journey from prototype to full-scale deployment can be long, capital-intensive, and resource-heavy. It’s easy to get swept up in the allure of building revolutionary physical products, but we are equally focused on models that bring innovative hardware to market with capital efficiency in mind.
We’re particularly drawn to businesses that operate in an asset-light manner, such as those that leverage platforms, licensing models, or strategic partnerships to scale without the need for massive capital expenditures, thus reducing funding risk. These models can allow companies to capture value across multiple industries, from automotive to food packaging. We also look for ventures that are not just solving isolated problems but are cross-vertical, with applications that span multiple industries, thus enabling broader impact.
4. Don’t Sleep on Software
While we don’t shy away from hardware - especially with our Direct Investments track - we see software as a huge enabler of progress in the materials space. Software isn’t just a tool for managing operations - it's a fundamental part of discovering, scaling, and optimizing sustainable materials. From AI-driven material discovery to the use of digital twins for supply chain management, software solutions are unlocking entirely new capabilities and efficiencies in the circular economy.
We’re particularly excited by platforms that support material sourcing, lifecycle management, and circularity. Software that enables real-time supply chain traceability and material simulation can drastically reduce the time it takes to bring sustainable products to market, making it easier for businesses to meet stringent regulatory demands and consumer expectations. Think of companies that are creating the SAP, Palantir, or Databricks equivalents of the circular materials world. These solutions are poised to become critical infrastructure for industries working to transition to more sustainable practices.
5. Built for Buyers, Not Just Believers
When we think about the landscape of sustainable materials, we deliberately look beyond what’s currently trending in policy or regulation. While political momentum can help accelerate change, our focus is on solutions that are commercially viable in their own right - materials that are economically more attractive to customers than the status quo. This means identifying technologies that offer better performance, lower costs, or other clear advantages, without relying solely on subsidies or mandates. It’s a perspective rooted in our broader DeepTech investment thesis: true transformation happens when innovation wins on its own merits and delivers value that stands independently of external pressure. DUDE CHEM is a great example here - making pharma-chemical production both more competitive and sustainable through their green chemistry platform.
With our principles in mind, we’re actively looking to double down in areas where we believe the opportunity is most ripe:
- Carbon-negative construction materials: Waste-to-value solutions in construction are one of the biggest levers for decarbonizing the built environment. Innovations in carbon-negative concrete and CO2-absorbing additives are proving to be not just a conceptual possibility, but a practical and scalable reality. Our portfolio company Headmade Materials, for example, is developing innovative metal 3D printing solutions that enable lightweight, resource-efficient components for industrial applications.
- Biodegradable packaging innovations: We are particularly focused on technologies that combine microbial or plant-based materials with economically scalable production methods. This intersection is where we see significant potential for mass-market adoption, offering both sustainability and cost-effectiveness.
- Enabling software: The software layer across the materials stack, including tools for material discovery, circularity, and supply chain traceability, is an area where we are investing heavily. These software platforms are not just helping companies optimize their operations but also transforming the entire ecosystem’s ability to scale sustainably. Atlas Metrics is building the sustainability data infrastructure for enterprises, while HQS Quantum Simulations is laying the groundwork for the next generation of material simulation and discovery - leveraging quantum computing and fusion research to unlock entirely new material capabilities.
5. The Outlook: Still Early, Still Hard - But Getting Real
Materials innovation remains one of the toughest sectors to crack. This isn’t SaaS and certainly not what is considered the obvious VC case - scaling physical products is slow, complex, and capital-intensive. Despite growing attention, most sustainable materials companies still face steep technical, regulatory, and commercial hurdles. However, we’re seeing real momentum:
- Policy tailwinds - alongside political headwinds: Regulatory momentum is building. Initiatives like the EU Green Deal, plastic bans, and embodied carbon regulations are pushing sustainability higher on the agenda. However, political resistance remains a challenge: in markets like the US and elsewhere, right-wing movements and climate skepticism are slowing progress, creating an ideological divide that keeps parts of the economy tied to fossil fuels. Implementation of policies varies widely, but overall, the long-term trajectory remains positive.
- Corporate demand is real, with players like Unilever, Adidas, and BMW actively exploring and piloting sustainable materials. Many efforts are still early-stage, but signal a shift in mindset.
- Technologies are maturing, especially in targeted applications. Industrial scaling remains a challenge, but it's no longer a distant ambition.
- A new generation of founders is tackling these problems with scientific depth, cross-disciplinary fluency, and a long-term view - moving beyond hype toward operational readiness.
It’s still early days, and success won’t come fast. But the pieces of the Sustainable Materials Stack are starting to come together.
If you’re a founder rethinking materials - let’s talk.
Whether you're working on microbial plastics, carbon-capturing cement, or the software layer to connect it all - reach out.
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