“Wood Is Our DNA”, Says Metsä Spring CEO Niklas von Weymarn On Investment Targets

Finland-based Metsä Group, a company with the purpose to advance bioeconomy and circular economy by efficiently processing northern wood into first-class products, has established its venture capital arm Metsä Spring to invest worldwide in promising startups and early-stage companies with a visible path to the Metsä Group business ecosystem. In addition to financing, the company also provides access to Metsä Group’s global network and expertise.

A little over a year has passed since we first spoke to Metsä Spring CEO Niklas von Weymarn – a good time to follow-up and see what has changed for the innovation company during this year, which priorities became apparent and which successful investments were made.

Niklas, since our last interview a little over a year ago: What was the biggest change for Metsä Spring from your perspective?

As a company, we have recently passed the 2-year milestone. Initially, I was alone, but now the Metsä Spring team comprises six experts. This also means that we are able to scan through more projects. During the past year, we have met and analyzed about 150 companies, predominantly from outside of Finland. As a result, Metsä Spring has initiated two new projects. Firstly, an equity investment in the startup Woodio Ltd. Secondly, setting up a joint development project with the global technology and service supplier Valmet that aims to develop a new wood-based 3D-product as replacement of similar plastic products.

Talking about recent changes, one can naturally not ignore the pandemic, which hit Finland in Mid-March. This has led to working from home and meeting the team members almost exclusively through various e-meeting applications – a situation that all businesses can relate to nowadays.

The investments you make via Metsä Spring have a hands-on approach. Can you elaborate on this approach?

Metsä Spring is essentially a strategic investor. In other words, our ability to invest is strongly dependent on identifying a (future) link from a new idea to the Metsä Group business ecosystem. In other words, with Metsä Spring, the broader Metsä Group is looking for new technologies and business ideas, which would, if successfully commercialized, improve the group’s ecosystem. This criterion steers our investments to such companies and projects that will benefit from other help that Metsä Group can provide them with. This other help ranges from supporting the partners in technical issues to, for instance, aiding in building up professional occupational safety procedures. We follow a very hands-on approach in this sense.

Metsä Spring often works with companies that utilize Metsä Group’s current industrial side streams as the raw material. What are some of your side-streams?

The circular economy is key for realizing our goal of making clever use of the tree. Although Metsä Group is a notable company, we cannot achieve this alone and are therefore actively looking for strong partners. Examples of Metsä Group side-streams include wood dust, small wood chips, bark, and sludge.

You mentioned that during the last year, Metsä Spring has invested in and joined forces with Woodio and Valmet. Why did you decide to go for these projects?

Woodio’s business model is based on a new biomaterial technology with several potential application areas. The main raw material in Woodio’s products is small wood chips. Here, we saw a clear material sourcing link to Metsä Group’s side-streams. In fact, the first product based on our chips has already been launched under the sub-brand Woodio New Natural. We also liked the team and the fact that they had sales before we met them.

The collaboration with Valmet began from an idea developed within Metsä Group. With this product, we did not lack market insight, but rather technology/machine development competence. Thus the collaboration with Valmet. In the Valmet collaboration, we are, in fact, developing both a new product and in parallel also a new production process to make that product.

More recently, Metsä Spring has a leading role in a brand new 50M€ R&D program between Metsä Group and Fortum. What is the purpose of this program?

The new R&D program, ExpandFibre (sic!), is built mission-based. In other words, we know the direction – new value-added products from pulp – and the various projects within the program study and develop the technology needed for the mission. Importantly, this is not only about two companies. Hence, Metsä Group and Fortum want to stand as examples for a much larger innovation ecosystem on the same mission. In other words, we hope to inspire other organizations, globally, to invest in the development of new pulp-based products in parallel with us. More information can be found on the program’s website expandfibre.com.

The forest-based sector is the cornerstone of the European bioeconomy and as such is a major contributor to climate change mitigation – what does it take for this sector to develop and improve further in terms of climate change mitigation?

In terms of climate change mitigation, Metsä Group – with a cooperative structure as a backbone – is committed to improving its operations in three areas:

1. Increasing the carbon bound in the trees owned by the cooperative owner-members (including in the soil beneath the trees),
2. phasing out the use of fossil energy and other fossil resources in our factories, and
3. increasing the substitution effect of our products.

One focus for Metsä Spring is to connect with and invest in startups that develop new materials with a link to wood as the original raw material. What kind of materials are you looking for and what characteristics should it have?

Indeed, wood is our DNA and the materials of interest originate from, especially, Northern wood species. From a product perspective, one could say that the materials of interest tend to be of high demand in growing markets. An easy example is various materials that can replace fossil/plastic-based products, e.g. in packaging applications. Another example of interesting material is new wood-based textile raw materials. In general, we mainly seek materials, which enable high-volume applications. Finally, one should not forget ‘building with wood’. Sawn timber products and wood-based panels, like laminated veneer lumber, have an established position in the construction sector. Together with startups, we want to answer the question “What else could be manufactured from wood, which would end up in future buildings?”.

If you have the answer to this question or develop another material that could be interesting, visit Metsä Spring’s website & get in touch with Niklas and his team!

 

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