Changing the world of chemical manufacturing using microwaves, a technology that everyone is familiar with: that is the mission of Microwave Chemical. Since the late 19th Century, the main energy sources used for chemical production have been “heat” and “pressure”. The chemical industry comprises 30% of all energy and 17% of all carbon dioxide emissions in the manufacturing industry. Microwave Chemical’s aim is to replace all energy sources in the chemical industy with microwaves. This effect will reduce energy consumption by two-thirds, and reduce the area required by chemical plants to one fifth of the current size.The leader of this chemical industry revolution is the CSO of Microwave Chemical, Mr. Yasunori Tsukahara. Microwave Chemical has achieved co-development agreements with several corporates and is becoming the ‘big wave” in the chemical industry. We will go through the journey of Microwave Chemical with UTEC Partner Naonori Kurokawa.
03
STORY
MICRO
WAVE
UTEC
Making big waves in the chemical industry with microwaves
Microwave Chemical Co.,Ltd. CSO
Yasunori Tsukahara
UTEC Partner
Naonori Kurokawa
PROLOGUE
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SECTION01 : Microwaves will bring about a revolution in the chemical industry.
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SECTION01
Microwaves will bring about a revolution in the chemical industry.
At the heart of the chemical plant, is a portion called the “reactor” which is responsible for processing chemical reactions. The reactor allows the conversion of raw materials into pharmaceuticals, nanomaterials, electric components and other various functional chemical products. The reactor requires a source of energy in order to carry out chemical reactions. Microwave Chemical aims to replace the energy transfer method from the conventional heat conduction to that of a microwave. The method of energy transfer can be exemplified with what happens in the kitchen. From the inception of the chemical industry in the late 19th century, the conventional energy transfer method used was that of heat conduction. Just like when one puts a pan over a gas stove flame. Even though this way of heating has a long history, it takes a long time to heat up the contents because the heat is applied from outside the container (in this case, a pan), and the heat is not applied uniformly in the contents. On the other hand, the microwave method allows the heating of material through the vibration of the molecules of the contents, and hence mircrowave heating is capable of heating the contents from the inside uniformly and also allows for the heating time to be shortened.
- Tsukahara:
- The characteristic of microwave technology is that it can induce heat in specific molecules. For example, when you heat up your “bento” with the microwave in the kitchen, you can selectively heat up the water molecules. Hence the food type that contains a lot of water gets heated and the surrounding plate or plastic does not heat up. We do the same thing in a chemical plant. For example we induce heat into particular catalysts, solvents or substrates and accelerate the chemical reaction. This is Microwave Chemical’s biggest strength.
There have been previous efforts to industrialize microwave technology for applications in chemical plants. However, the scale up of manufacturing devices is very challenging and the technology’s application at the industrial scale was thought to be impossible. Microwave Chemical’s breakthrough was that it was able to develop a technology that is able to render a heating performance that is just as effective at the industrial scale.
- Kurokawa:
- The lifestyle revolution which microwaves brought to our everyday lives could be brought to the chemical industry. This was the belief behind UTEC’s investment in Microwave Chemical. In the past there were only gas stoves in the kitchen. However, now microwaves and gas stoves co-exist in the kitchen and support our modern diet. Similarly, if microwave manufacturing equipment becomes a must-have in chemical factories, it would have the potential to revolutionize the chemical industry as a whole. I have this scale of expectation for Microwave Chemical.
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SECTION02
Over the “pilot wall”, together
Microwave Chemical was started by Mr. Tsukahara and Mr.Iwao Yoshino, the current CEO. Before co-founding the company, Mr. Tsukahara had a vision to “grow university spin outs in to the world” and that’s why he chose to become a researcher at the engineering research department of Osaka University Graduate School. On the other hand, Mr. Yoshino had joined Mitsui & Co’s chemicals division and then went to get his MBA at the University of California, Berkeley. There he found he was profoundly interested in starting a technology venture that would impact the world. In 2005, Mr. Yoshino and Mr. Tsukahara met through a mutual acquaintence. For a year after that, they contacted each other and gathered information; and in 2007 they started Microwave Chemical. The company was started with the vision to become the “global standard for chemical plants” their office at the time was a room in an apartment block.
- Tsukahara:
- In the ten years since founding the company, we have been constantly searching for ways to popularize microwave processes in the chemical industry. In the first 3 years, we were sticking to the theory of a typical early stage venture: we made sure we did not have too large of an asset and focused only on selling the core technology. At the time, we focused on the development of a process for making biodiesel from waste oil using microwaves. Biodiesal was receiving a lot of attention from society at the time, and we focused on this process in order to sell our technology. However, microwave technology had no track record at large scale. Even though our technology was respected and highly rated, in order for an mass adoption, we needed a precedent: a pilot plant that was operating in an actual factory.
In order to break this “pilot wall”, Microwave Chemical decides to have its own factory to demonstrate the technology. Their idea was to say “if there is no precedent, we will make the precedent ourselves”. Mr. Tsukahara immediately started running around to raise capital to construct our very own factory. However, this idea faced negative reception from financial services and the venture capital industry. Having a factory implies the need for a construction cost and maintenance cost. Having large assets such as a factory goes against the theory of a venture company. The only venture capital that recognized their technology and future potential and invested was UTEC.
- Kurokawa:
- When I met Mr. Tsukahara and Mr. Yoshino at the 2009 NEDO exposition, I immediately felt that if we could appropriately scale microwave processes it would definitely change the landscape of the chemical manufacturing industry. I studied applied physics in graduate school and my research area was coincidentally close to that of Microwave Chemical's. Furthermore, Mr. Tsukahara and I are alumni’s of the same university and we were a part of the same academic society. Having said that, it took me a year and a half to finally decide to invest in Microwave Chemical. I thought that their business model of selling core technology and their target of biodiesel did not fit the investment profile of a venture capital firm. After having long and frequent discussions with Mr. Tsukahara and Mr. Yoshino we were able to come up with the grand design of making a manufacturing plant called M3K (currently operating in Osaka) to over come the “pilot wall” ourselves to sell the core technology. It was only then that I felt confident enough to invest in Microwave Chemical.
In 2011, UTEC invests around 120 million JPY to Microwave Chemical and the first ever microwave plant was born in Kobe. In this plant, Microwave Chemical built a facility capable of manufacturing 2 MT of chemicals.
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SECTION03
Installing Microwave Chemical technology to chemical plants around the globe.
We can now read newspaper articles written in ink manufactured with microwave technology. In 2014, Microwave Chemical raised another 1 billion Japanese yen with UTEC and completed the world’s first microwave plant “M3K”. In this facility, Microwave Chemical makes the raw material to ink called fatty acid ester using the microwave process. The ink is bought by one of the largest ink manufacturers in Japan: Toyo Ink. 150 companies have visited the M3K factory so far.
- Tsukahara:
- Since we were planning to build the world’s first large scale Microwave Chemical plant,we really struggled to fundraise. We visitied funds, investment vehicles, venture capitals and governmental organizations with UTEC to raise the JPY 1B that we needed. M3K’s achievement is that we were able to prove to our clients that the Microwave Chemical processes are really scalable and can confirm to regulations. In terms of our business plan we were able to clear our first milestone. Currently we are working on making a microwave process plant in existing manufacturing sites and also getting partnerships for co-developments and licensing out our technology. The first of these was Taiyo Chemical, a manufacturer of materials for food and industrial use. With the plant starting its operation in 2016 within the premisie of Taiyo Chemical, we designed not only the central microwaver reactor but the entire plant. To accelerate the adoption of microwave processes exponentially to the world, we would need it to be installed in plants run by corporations. To enable this we are working on a system which allows for the adequate transfer of microwave processes to existing chemical plants.
UTEC’s contribution was far from just funding Microwave Chemical. Mr. Tsukahara says that he deeply values the global network that UTEC has.
- Tsukahara:
- I am so grateful that UTEC provides us with connections to global corporations that we would never have had access to. If we had directly approached these corporations it would simply have been a sales pitch. We are grateful that UTEC, from an investor standpoint, facilitates the growth of connections to global companies.
- Kurokawa:
- Well that is because we believed that microwaves really would be a technology that will be used in chemical plants. Microwave Chemical already has proceeding talks for co-development with several of the corporations UTEC had introduced. For example, the chemical industry giant BASF. We would like to support Microwave chemcial in achieving co-development deals with global corporations and realise the chemical industry revolution that Microwave Chemical are really set out to achieve.
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FINAL SECTION Pure desire is the driving force of innovation
FINAL SECTION
Pure desire is the driving force of innovation
In going forwards, Microwave Chemical will prove the usefulness of microwave processes in a wide range of use cases with various global corporations. Not only in the ink manufacturing that was previously mentioned, but also in food additives, pharmaceuticals, functional materials, electrical materials and fuels; the technology is being adapted to many use cases. Microwave Chemical is planning its plants to manufacture electrical materials for example in touch panels of electrical devices and also in plants manufacturing peptide medicines of peptidream, another former UTEC portfolio company. Microwave Chemical is currenlty solidifying the ground for an IPO.
- Kurokawa:
- Through the IPO, we would like to see Microwave Chemical raise money of a further size and proceed to take on larger challenges as a global compnay. I believe it is UTEC’s job to support Microwave Chemical in using our resources. I ran around the whole country with Mr. Tsukahara and Mr. Yoshino in search of a new hire who could take care of the administration of the company which is crucial to an IPO. For example, that time we tried to recruit a seasoned executive at a global chemical manufacturer in order to increase the client base, accelerate technological development and build a stronger team.
- Tsukahara:
- In the case of peptidream, I remember UTEC had supported us as a team with Dr. Katadae at its lead.
The dream of Microwave Chemical to become the “global standard of chemical plants” is becoming a reality. Mr. Tsukahara, who wants to revolutionalize the world with his invention, says that the important factor to his drive is to properly understand what one really wants to do.
- Tsukahara:
- Microwaves have the potential to reduce CO2 emissions and solve various problems related to energy consumption and contribute to society. My drive is to revolutionize the 500 trillion JPY global chemical industry. I knew clearly what I wanted to do, so starting a venture which allows me to truly pursue my dream was a natural step for me. I often get consulted by researchers whether they should start a venture or not. I tell them that for me, when I understood what “I really wanted to do” I was able to naturally take my first step. I too want researchers to find their own first step naturally towards venture by understanding what they really want to do.