Bengt Steinbrecher: If a startup is looking for a strategic partner regarding market access, to see how to go to the customers, how do we reach a large footprint, the network. If they are looking for support to test their technology somewhere in the process or if they are looking for support to still develop their solution, that's where we are best positioned.
Patrick Hypscher: My name is Patrick Hypscher and this is Circularity.fm the podcast about understanding, building and managing circular business models. Welcome to VC for circularity, the venture capital perspective on circular economy startups. In the last episode, we listened to Mark Windeknecht principle at World Fund. Mark discussed the connection between decarbonization and the circular economy. Today's episode will be about corporate venture capital strategy and circularity in the construction industry. But before we start, I have an offer for you. If you want to get the actionable one pager about this conversation, sign up for the Circularity.fm newsletter. You can find it at www.circularity.fm.
Patrick Hypscher: He studied economics and finance at University of Zurich and started his career at PwC as Manager Corporate Finance. This year, 2025, marks his 20th anniversary at Holcim MAQER, where he worked as assistant to the group CFO Manager, manager Corporate Strategy and Risk Management, and Head of Performance Navigation. For more than six years, he is Head of Digital Partnerships and Startup Partner at Holcim MAQER Ventures. Welcome, Bengt!
Bengt Steinbrecher: Thank you for having me. Patrick Hypscher: Bengt, let's start with a personal question. What was your career plan when you joined Holcim almost 20 years ago?
Bengt Steinbrecher: Yeah, I mean I had experience at that point in time in corporate finance, in doing M&A, corporate finance transactions, both on a consulting and banking side, but I was very curious to see a little bit how is this really happening in a corporate environment, right? And I thought an industrial environment is really hands-on, this is really still brick and mortar and you cannot go more brick and mortar than going into a construction business, right? So this is where I thought, okay, let's join Holcim and see a little bit how we work there.
Patrick Hypscher: It seems that you liked it. Bengt Steinbrecher: Absolutely. I mean, maybe my last name, Steinbrecher, which is in English translated stone breaker, is kind of leading already that I must work in this industry, right? Patrick Hypscher: Yeah. . Sounds like that. 20 years ago circularity was not as popular as it is right now. Let's look at circularity from today's point of view, so for Holcim MAQER what are the main circularity levers you see in the industry?
Bengt Steinbrecher: Well, I think in the end circularity is a huge topic for construction industry, right? Construction, demolition material flows make up something like 40% of global waste streams. And a lot is still going into landfill. At the same time, I mean, the materials will be ideally to use, reuse, and recycle. The main levers are that we are kind of replacing virgin materials in our production process, that we directly integrate that when we are producing cement, but also then concrete. And we reduce virgin materials, we reduce our embodied carbon, the footprint. And the other waste stream that we are using is to replace thermal energy, when we can use waste streams at their end of life to use as a thermal source.
Patrick Hypscher: Okay, that makes sense. And since now we are speaking from the perspective of the corporate venture entity, how does this translate into your venture strategy?
Bengt Steinbrecher: Yeah, so we are currently at 10 million construction demolition materials that we are reusing already in 2024. And we have an ambition to double that by 2030 to 20 million tons of construction, demolition materials being reused. What does that mean for our Holcim MAQER v enture strategy is, I mean, first point is we need to secure the sourcing of this material. So kind of any sourcing innovation is one first lever. Second lever would be around processing and screening. I think this is standard across many recycling activities, right? It doesn't matter what type of materials. And the third one is then to look into novel products, innovations on the product side. How can you upcycle waste streams into new construction products? I would say these are the three mainly levers we are looking at from a venture perspective.
Patrick Hypscher: And you said before, there's also the energy dimension on the group level. Is this also covered in your investment strategy somehow?
Bengt Steinbrecher: This is also covered. This is something which I would say is already more established. You mentioned before that 20 years ago, circularity was not yet so much a topic. I mean, replacing traditional fuels with alternative fuel types, that was already 20 years ago, a big thing in the cement industry. Um, there I would say, big topic is, is now to switch from using general waste streams to biomass. Super interesting, I mean that there is so much biomass out there and uh, we, we can replace up to almost theoretically a hundred percent of our energy and needs with biomass. And this is for sure also an interesting topic.
Patrick Hypscher: Okay. And let's do maybe even more one step back in talking about your investment strategy. So you already described a bit the circular aspect. Then there's the energy aspect. Does this cover your investment strategy or do you have other fields where you look into?
Bengt Steinbrecher: In general, we have uh split into three verticals that we are looking at. The first vertical is around sustainability, and this is obviously including the circularity aspect. It's a lot about decarbonization of our activities. The second vertical is around productivity and efficiency, and this can be in our operations, to become more efficient, on our production processes, but it can be also on the customer side. Productivity is a huge issue for the construction industry. If we can help as a supplier to our contractor customers to become more efficient, that's a lever where we would like to contribute. And the third vertical is completely around novel construction technology. So this can be from robotics to 3D printing to modular construction, where also circularity could have a component. Again, if we think about modular building deconstruction and so on.
Patrick Hypscher: Do these three pillars also reflect the balance in your portfolio? So do you, are they roughly equal or do you, do you have a focus point?
Bengt Steinbrecher: Very good question. No, I think we have currently a strong focus point on the sustainability side, on the first pillar where it's a lot about process innovation and novel materials. I mean, I would say this is historically a little bit also where we have the most expertise, where we feel the most comfortable. Which is also in some ways potentially easier to implement because it's directly in our operations in some cases. But we aim to balance the portfolio out more so there's also a lot of push internally to see how could we do all the things. Maybe just to add on this, um, I mean, we, we are a strategic investor, right? As a CVC, and I would say, when doing investment decisions, two thirds is strategic priorities, what can we do as a strategic partner with the startup, and one third is the financial side, is that super exciting story and our return on invested capital.
Patrick Hypscher: You mentioned the strategic criteria and you mentioned the financial criteria. So every startup you invest in has to meet certain growth and profitability expectations. The criteria you apply when looking at growth and profitability, are they somehow similar or significantly different from the traditional venture capital investors without a strategic background?
Bengt Steinbrecher: No, I think that that's where we aim to behave and to assess us as a financial uh, VC. um, I mean, that's where we are building to have such expertise in-house, to look at it also in the same way, to model the same way. That the difference is then, that for us it's maybe one third of the weight and we can balance it a little bit with other dimensions.
Patrick Hypscher: Okay, and let's look at the other two thirds, the strategic requirements. So can you tell us a bit more what are the criteria you apply when selecting investments? And then also of course later on, determine the success of your activities.
Bengt Steinbrecher: Yeah, so I mean there it's really about that as a strategic partner we can also add value to to the startup and also that somehow we as a partner, we benefit out of the collaboration. So the key aspect that we look at there is how is a technology, a solution being adopted in our organization. So if this is something which is focusing more in-house, a technology have we been able to test it and validate it in our plants? Has the first pilot plant started to adopt the technology under the latest stage? How are we progressing in a rollout of this technology? And then in some, to what extent is this helping us to drive productivity, efficiency, cost? Or if it's something which is more market focused to our customer, to what extent have we been able to bring such solutions to our customers, position it there increase revenues uh, by via positioning these products and so on. So it's very much about adoption and scaling, which means that at the point of an investment decision, we would like to have somehow this roadmap, how we get there. And the first key point in assessing this roadmap is ,have we already tested the solution in our business, and do we have already a proof point internally. If this is not the case, the risk for us is just increasing significantly about the success of such a strategic partnership, right? So this is kind of like our technical due diligence is tested in-house. And the second component to that would be then that we have internally a business owner who is kind of like a project manager taking such a solution on board and, and being responsible to execute on this expansion and rollout roadmap. These are the two things. If we have those things secured, we can demonstrate in our portfolio already with a limited track record that these are game changers to make such a partnership successful and to make this successful.
Patrick Hypscher: And I know that you're also next to the venture activities, you do have venture clienting activities. So to me it sounds like a bit that the venture clienting would be let's say the, the prior step and startups that um, demonstrate value there, that they qualify, also, then more for the venture stream is this, this sequence?
Bengt Steinbrecher: This is the ideal scenario. That's, that somehow this the venture clienting the testing of solutions, early exploration, that this is like a feeder channel to this pipeline. And we have we have such example cases where this worked super well. Obviously it's not always that easy to, to have it, to have this, this patience also both on our side and on the startup side to, to go through this cycle. I mean, if a startup is in a funding round now and you don't wanna miss out, you have not tested it. Sometimes it's difficult to do this pilot in advance, but this is the ambition, yes.
Patrick Hypscher: Okay. Okay, cool. And now let's turn it around and look at it from the startup perspective. So why should startups choose you as an investor?
Bengt Steinbrecher: I think that they should come to us if they would like to have a strategic partner. If they're just looking for money then we are definitely not the best one there. There are others who have more money who can also help them more on, I don't know, governance side strategic direction, whatever. But if a startup is looking for a strategic partner either regarding market access to see, hey, how do we go, go to go to the customers. How do we reach a, a large footprint, the network, if they are looking for support to test their technology somewhere in the process or if they are looking for support to still develop their solution. That's where, where we are best positioned. I mean, we have I would say leading R&D activities, we have an innovation center in, in Lyon with experts in many fields around product and process innovation. We have our global footprint, if they would like to test the solution somewhere in the UK or in Austria or in Latin America, in North America, then we are serving thousands of customers every day, so also this market access.
Patrick Hypscher: A common concern from the startup side when you bring in a strategic VC is that you're kind of locked in because, I mean, most startups who start the venture capital path know this will ultimately lead to some kind of exit at least in a traditional model. And if you bring a strategic VC on board, it feels like that it limits your possible exit targets because Holcim then has a seat on the table. For what kind of startups does it make sense? And what maybe it also is not so interesting because then competitors or other exit partners might not be attracted anymore.
Bengt Steinbrecher: Yeah, I mean, maybe first thing to say there is that we really aim to be a good professional venture capital investor in the sense that, that we are not coming with, with corporate clauses and, and limitations and restrictions, which would limit the startup growth, right? So, so I mean typically we aim to to get minority stakes somewhere, let's say between five and 10%. We are interested obviously in somehow helping to shape and grow the companies. So if there there is an opportunity for advisory board seats or a board seat is something that, that we are interested in. But the other side, I mean we are not requesting exclusivity, which would limit the startups. We are not, especially not, requesting right the first refusals, if the startup would like to do an exit, right, that there is always Holcim saying "oh look, we get out the first priority exit". And in this sense, all our deals are really at, at, at good VC market terms. Then on the other side, in each investment decision we need to defend, why do we want to invest in such a startup and why are we not just becoming a customer, right? I mean, all that we discussed so far, we could potentially also achieve by just having a strong customer relationship and do such a commercial partnership. And I think, I mean this is where we say, hey, we are investing in, in cases where we think that this can become strategically relevant for us, where we believe we can really make a big difference with our network, with our footprint, and where we also would like to somehow benefit from helping the startup to grow financially through the investment. And potentially still that we say, hey look, we get some first mover advantage, let's call it like that, which is potentially reflected in some commercial terms with the startup.
Patrick Hypscher: Mm-hmm. Okay. Let's look again deeper on your, let's say evaluation framework with the lens of circularity. Do you have any specific framework you, you apply when it comes to assessing the degree of circularity or how does this look like?
Bengt Steinbrecher: We would follow there the KPIs that the group is using to measure and to set our ambitions for the group. And we have a very comprehensive, I would say, reporting on these numbers for external purposes. But equally important is that the targets and the management is really incentivized or driven by certain numbers. And we've already talked about kind of this replacement of raw materials, right? Where we have this ambition now of 20 million tons, and this is kind of one thing where we say, okay, how can we support this ambition? The other one is what is called the thermal substitution rate, the TSR, which is really how much of your traditional fuel you're replacing with different energy sources. And then ultimately, if we look at our product, it's about the carbon footprint, right? If we are either using already decarbonated materials in as a raw material, this is reducing the CO2 footprint of the cement and the concrete, or we are also working with startups and technology to store CO2 in construction materials. So these would, I would say are the three key KPIs that we would be looking at from such a circularity framework. And then obviously I think each circularity use case needs to have either somewhere a top line or a bottom line. So revenue or cost impact. Which is obviously then also always important. How do we now financially benefit from that?
Patrick Hypscher: Mm-hmm. Can you give us an example from one of your portfolio companies? How this looks like and how this one specific portfolio company contributes to one or multiple of the indicators you mentioned?
Bengt Steinbrecher: Yeah, I mean, there are not that many circular startups currently yet in our portfolio. We have especially two which really fit very well in this category. One is Neustark, which is a Swiss ETH spinoff, which provides a technology to store CO2 in demolished concrete. So, really you take the CDM and, and they have a process then to carbonate demolished concrete, which we can use again then into fresh concrete as a, as a recycled product. This was really one of those cases which worked according to a school book with a venture client piloting this by our Swiss entity. Proving that the process was working, demonstrating that there is a market demand, customers are being keen to use such a recycled material, which is storing CO2 in their building. I mean, that's a really not just a cool story. It's really generating at least some impact. And from then on we have then decided that we would like to grow this offering across our footprint in Europe. We have invested at that point in time and now are already in the process of making installations in France. First customer projects in the UK. There are installations in Germany, Austria, so that's a quite exciting story on this side. How we are measuring now the impact there is kind of a little bit the, the business model. We, as a construction business, we provide concrete as a carbon sink, and we are kind of a CO2 storage provider, which where we get kind of being paid from the startup. And on the other side we have a product which is differentiated in the market and can be marketed as such. So we, we have there a kind of cost reduction and some have potentially a differentiation pricing opportunity.
Patrick Hypscher: You just said you're paid by the startup for being a carbon sink, if I get that right, can you elaborate more on that one? Yeah, exactly. I mean Neustark in this case, with their technology they are permanently storing CO2. And because this is a certified process, they have certified that with gold standard kind of one of those agencies looking at these carbon storage processes, and this allows them to issue carbon removal certificates, these CDRs. And the Neustark, the startup then is selling those certificates in the markets to companies which would like to offset their carbon footprint, like the banks of this world, the tech companies of this world and so on. And this is part of their business model, we are kind of being then paid by enabling that, by storing it. But we are out of the CDR business. Okay, nice, that's uh, a not so obvious uh. revenue stream then.
Bengt Steinbrecher: For us or for them. Patrick Hypscher: Yeah. I mean for you or for the let's say the construction, the building planner. So depending of course where the revenue hits in, so if you then, produce such a building. Then I guess you can, from a customer point of view, you can source this alternative material at a lower price or let's say at a competitive price that makes this also interesting.
Bengt Steinbrecher: Yeah, exactly. I think these, these CDRs I mean they can be a great business model for startups. I think for the industry, they are a good enabler to, to accelerate novel technologies, and to make this economically viable. I mean this is extra effort, this is still typically at, at smaller scale, so you need somehow a process which is fueling this to happen. And I think this is a super neat process to really bring new technology, decarbonized solutions to the market and yeah, making it economically viable.
Patrick Hypscher: Definitely. And let's go again one step back and look at your, let's say, venture investment strategy. There are multiple business models out there, so one is about advanced materials, another one is more about collection, identification, sorting there are digital platforms out there. Do you have any business model preferences when it comes to circularity or is it like a case by case assessment anyway?
Bengt Steinbrecher: It's for sure always case by case. But as a general rule of thumb, I would say it, it helps us if it's easy to connect to our business, to what we discussed before a little bit. We would like to see how we can benefit and add value to, to such a partnership. So the closer it is to our existing flows already, the easier, so things like sourcing can, can work quite well. Where we can immediately test it, we looked at solutions, for example, where startups came up with completely novel products like insulation, materials, out of construction, demolition waste. Which are super interesting, where we also would be somewhat interested, but we also realized it's maybe not that easy for us in our traditional sales channels to help now to sell these materials, right? And then it's a bit the question, okay, how much value add can we generate? I think what is also interesting is you mentioned platforms. You see novel business models evolving around the, the waste market. And I think this is something which is interesting for us to see how can this become relevant? Are there all of a sudden intermediaries, connecting us as a, as a receiver of such materials to, to demolition sites and so on, and how can we use such novel business models as partners or potentially also to venturing in ourselves.
Patrick Hypscher: Okay. And how do you handle more asset heavy startups that require building additional plans, facilities. I'm, I'm not so familiar with Neustark, but I mean there's also industrial process behind that. And traditionally as a VC, you don't wanna invest too much into the assets, more into the business opportunity. Is it something that you look at and shy away? Or is there also a combination with debt instruments you use?
Bengt Steinbrecher: I would say we are as, as an industry, we are very much used to asset heavy, right? I mean, we are definition asset heavy, so, so probably we, we have a little bit less fear than the, than the VC from these things. Asset heavy can sometimes, also mean that it's, it's a little bit more difficult to, to scale up. Uh, I think that's one thing where the VCs are potentially concerned and we are also looking into this, how easy can these things scale? I would say, there is the smaller assets heavy things like Neustark where you need to have such carbonation installations on your recycling center, for example. And this will be then paid or bought by recycling centers, so it's a Neustark sales machines, machines or the equipment. This, this is still relatively easy to, to scale up for, for then such customers. If it's the more heavy ones then, then probably we, we are looking into offtake agreements. That's something that we with some of our startups where we said, hey, look, if you need to invest now a hundred million or so into a plant, we at least we give you the certainty that we take off the material. Which helps then as you say to look also into alternative project financing. I think this is something that we made so far a good experience with and I think where, where the industry also still needs to develop more to take this, this scale up really into industrial scales.
Patrick Hypscher: Yep. Yep. Alright, and you referred to the traditional VCs already. Let's look into them again. When observing independent VCs do you see that they have some kind of preferences when it comes to business models or technologies in the circularity field?
Bengt Steinbrecher: In general, I would say, and I mean that's a bit broader across construction tech, I think construction tech circularity is maybe still a bit more nichey, right? There are in other areas, there are many generalist funds investing into B2C platforms all over the place. I think that's not the case for, for our sector, and I would say circularity is potentially even more nichey than, than construction tech is. Why is that? It's probably because the market is, is very fragmented and, and decentralized, so, there is probably still uncertainty of financial investors to see if these things really can scale and, and do these really become unicorns? And I think that's why the, there are still the amounts, the funds in that space are less. It is this, lead standards that financial VC would be in the circularity space, more biased to technology topics where there is also IP behind, where they could say, okay, I mean, I can see how this is somewhat protected and as a technology can, can potentially scale. And I think for us, we are also always obviously looking at the scaling factor. But, but it could also be limited to, to regions, right? If we think about something could scale for us in Germany, Austria, Switzerland, that's already can be a scaling factor for us. This this will not make it a unicorn, but uh, you create enough impact for us.
Patrick Hypscher: Yep. And one follow up question on that one, when it comes to circularity, so I've talked to a couple of VCs that have a dedicated circular focus and they also have a circularity framework and assessment scheme. Is this rather common also in, let's say in a construction field or in the software field where you probably also have contact with VCs? That people have, let's say a industry specific framework which they use to assess the the attractiveness and potential of a startup, or is it, let's say circularity or environmental impact VCs a bit special because they add this extra layer of impact or circular ambition?
Bengt Steinbrecher: Yeah, I probably have not a sufficient kind of benchmark data for it, but my gut feeling would be to, to say yes as, as you already mentioned, that there are impact investors kind of almost claiming that there, this is a special clause of investing, right. So I mean they obviously, they have this additional dimensions of criteria that they look at to see if something fits their criteria and what would need to be fulfilled. So probably you have that from this impact investor category, very especially. And then I think if you look at strategics, the strategic goal always also has this impact view of just a, more looking at, at your your own impact and how does it fit into your uh, um, into your sustainability and circularity targets. Which are similar across probably our peers, but which can be still with different focus elements.
Patrick Hypscher: Yeah, I had the same thought when, when listening to you, right. It, it also feels like you have kind of strategic KPI you mentioned the three dimensions that are relevant for Holcim. Yeah, and an impact VC or a circular VC also applies a set of KPIs and frameworks. Yeah, so in that way it might be closer to a corporate VC at least when it comes to selection. I mean, there are other major differences of course, but when assessing the circularity fit or strategic fit it's maybe a similar process.
Bengt Steinbrecher: Yeah. And then I think it probably depends on how close a CVC is to to the, to the group in, in general, and you have those which are more independent. They, they would maybe more use more, more generic additional set of, of impact KPIs. Whereas if you're rather closer to the group which we would be definitely that. Then you let yourself guide very much by kind of the strategic targets that the group has because I mean, I'll be asked every half year, every year kind of, okay, how is now your, your portfolio and your investment activities or your current proposal, contributing to my my clients for next year? For 2030, hopefully.
Patrick Hypscher: Alright. Bengt, let's, let's wrap it up. I have three final questions for you. The first one is coming back to the founder perspective. So what's your advice to circular founders applying for funding?
Bengt Steinbrecher: I think my, my first advice would, would be linking to what we discussed before, a little bit about how decentralized and fragmented the market is. I would recommend bringing in kind of the ecosystem and the stakeholders early on in the discussion. Typically, this is not another market where just by the technology a product or so a solution it'll be a success on its own. You will need to have your partners on board. And these can be commercial partners or financial strategic partners, but I think um, make sure that you think about who are the partners you need to have on board.
Patrick Hypscher: Okay. The next one is about the future, what kind of trends do you see in circular business in the next three years?
Bengt Steinbrecher: I don't expect here a landslide, right? I mean uh, what we have seen is, is that uh, typically it's slow moving, but I think what we also see is that there is some acceleration. Acceleration, primarily driven on, on a regulation driven. I mean these waste streams are being monitored more closely. Land filling is becoming more challenging, the tipping fees are going up, that there is an increased regulatory requirement on transparency. What is coming on a job site? What is leaving the job site? Where is it going? And so on. And we see quite a lot of exciting startups coming up to address these novel needs. And I think that's, that's super super promising. This is where you potentially can see quite quick uptake, so this is more on this regulation side. And then I think from, from the market side, the whole, dynamics about energy efficiency in construction or in in the build environment with renovation and so on. We see a lot activity happening there, obviously, and this can be an opportunity for novel products and potentially also for more modular construction. We mentioned before, quickly that you already think about assembling and disassembling buildings, right? I think these can be a trend with which will help these, these startups. Maybe moving a little bit slower than the regulatory framework, but uh, still fundamentals.
Patrick Hypscher: My last question, Bengt, is about people, so many people have been listening to our conversation. Who should reach out to you?
Bengt Steinbrecher: Well I think, I mean, first of all, everybody who would like to kind of continue such a conversation and, and deep dive more. In general then obviously startups and founders who are having a, a solution or an idea which they would like to brainstorm, deep dive or where we can help them to to organize an exchange with an expert on the technical side, an expert on the market side or where they're also just in the funding process. And they would like to hear our thoughts if that could fit to Holcim. So, always open and happy there to have such exchange. We talked before about ecosystem play, I think it's important that we are working together, collaborating to bring this forward and this is where I see our role as well.
Patrick Hypscher: Fantastic. Thanks a lot for sharing your experience. Bengt Steinbrecher: Thanks a lot for having me.
Patrick Hypscher: This was Bengt Steinbrecher, head of Digital Partnerships and Startup Partner at Holcim MAQER Ventures. This episode is part of our series VC for circularity. If you want to get the actionable one pager about this conversation, sign up for the Circularity.fm newsletter. You can find it at www.circularity.fm Let's drive a profitable circular economy. And please don't forget, the most abundant renewable resource is your imagination. My name is Patrick Hypscher and this is Circularity.Fm the podcast about understanding, building and managing circular business models.