The time is long past when a group of chemists at Dutch science-based company DSM holed up in the lab for a year to finally emerge—Eureka!—with an innovative material or product. These days, DSM sends investment managers, among them Erik Rutten, around the globe to scout emerging companies, which they subsequently invest in or partner with to generate innovation. Rutten calls it “innovating from the outside in.”
Innovation through investing and partnering with start-ups is also called “venturing.” The venturing department at DSM is comprised of eight people located across the globe. Rutten is one of them, and for the last five years he has been based in the Bay Area. Rutten, whose background is in chemistry, has worked at DSM since 1985 and knows the company like the back of his hand. He previously worked for DSM in America, as Vice President of R&D at Pharma Chemicals in North Carolina.
In the 28 years he’s worked there, Rutten has seen DSM evolve from a traditional chemical company into a products and materials specialist for the health and nutrition sectors. DSM is also extremely active in the production of bio-ethanol from corn cobs, leaves and stems. In January 2012, DSM announced a joint venture with American company POET to invest in a bio-ethanol refinery in Emmetsburg, Iowa. Rutten can frequently be found in the US Midwest region, on the lookout for innovation that supports the transition to biofuels and bio-based chemical products.
Of the companies Rutten works with, only one is located in the Bay Area: a company that makes coatings for smartphones and tablets. But Rutten is happy with his home base in California. “The great advantage of this region is that every start-up eventually comes this way looking for financing,” he says. He lives and works at his home office in Granite Bay, a neighborhood in Sacramento. San Francisco is lovely, he says, but expensive, and it’s hard to get there quickly. The Sacramento airport is ideally located for him. In his search for companies, Rutten travels extensively, attends conferences, and takes part in panels. As a result, many start-ups know where to find him, even though DSM is not a household name in America. “I always tell people we’re like DuPont,” Rutten says, referring to the well-known US brand.
Rutten spends his time looking for start-ups developing products that fit well with DSM’s profile and complement the company’s existing activities. A perfect example is a company called Verdezyne, based in Carlsbad, California. They found a special method that uses fermentation to produce bio-based chemicals like nylons and plastics, which are used in everyday products. Rutten is extremely selective in his work. “Of a hundred companies I visit, I’ll pick one.” DSM partners with start-ups in several ways, such as by investing in companies and taking a minority share of 10 to 25 percent. Combined with the investment, Rutten also joins a company’s Board of Directors. Other partnerships take the form of joint research or market for a product.
Rutten’s work day has changed dramatically since he moved to California. “Given the time difference, I start at 5 AM, so I can still communicate with the Netherlands,” he says. He is very enthusiastic about doing business in the US. “The culture is very open and positive. Americans are easy to approach. And they can be very happy about another person’s success.” Rutten hopes to close many more deals for DSM with innovative start-ups in the US. The motto “proudly invented here,” which companies used many years ago to promote new inventions, is gradually shifting to the alternative: “proudly found elsewhere.”