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TOP

Wouter de Heij, CEO

Entrepreneurship in the valley of death

October 2021

“At TOP, we always ask ourselves what latent need exists in the market and how we can respond to this with new technology and equipment. There are plenty of ideas on the shelves of universities. Based on this, we develop new technologies that have a chance of being commercially applied after five to ten years.”

We speak with Wouter de Heij, director of TOP, a company that focuses on the development of new technologies for commercial application in new markets. He and his team do not shy away from bridging the gap between laboratory and industrial scale, also known as the ‘valley of death’. Once the technology is ready for the market, TOP sells or licences it and then picks up a new challenge. The company, which employs some 25 people, focuses mainly on innovation in the food industry.

De Heij explains that TOP starts each innovation project without immediately involving potential customers. “You have to have a creative environment to be able to make inventions. Based on scientific knowledge, we design new equipment for a process, for which we anticipate a latent need exists in the market. Over time, we seek to collaborate with customers and equipment manufacturers to tailor the new technology to specific commercial applications.”

For example, TOP has developed a technology that allows producer Ojah to make a meat replacement product based on soy and water, called Beeter®, whose structure, taste and bite are comparable to those of chicken. The technology involves texturising the vegetable protein in soy using what is known as high moisture extrusion. Ojah was initially one of TOP’s internal innovation projects.

“You have to have a creative environment to be able to make inventions.”

Preserving fruit juices

Another achievement concerns the preservation of fruit juices by exposing them to extremely high pressure. This so-called HPP technology, whereby HPP stands for high pressure pascalisation, retains the aroma and taste. The development started in 2009. TOP and juice producer Juicy-Line together knocked at Mibiton’s door and obtained a financial lease to finance the hire purchase of a high-pressure machine from the American manufacturer NC Hyperbaric, the Wave 6000/55. Shortly thereafter, they received a second financing from Mibiton to purchase an HPP device with eight times the capacity, the Wave 6000/420. Through their joint venture Pascal Processing in Helmond, they were also able to preserve products for other companies.

“Juicy-Line began as a small company, but has grown to become the largest juice manufacturer in Europe with annual sales of hundreds of millions and employing hundreds of people. HPP is now a mature technology that is used on a large scale”, says De Heij.

“That’s often how it goes”, he continues. “We know we can do something with it, but not exactly what, and there is no market for it yet. But in collaboration with a partner and customers, it is possible to find and develop commercial applications. Most of the juices and smoothies you see on supermarket and petrol station shelves today have been preserved using HPP. This technique is also used to prolong the shelf life of ready-made meals.”

With HPP, the fruit juice bottles are placed in tubes that are pushed into the high-pressure device, after which the pressure is increased to 6000 bar. In this process, the cell walls of bacteria that would otherwise cause premature spoilage collapse. “That pressure is equivalent to the pressure of a 60-kilometre layer of water. That is five times as high as the pressure at the bottom of the Mariana Trench in the Pacific Ocean”, says De Heij.

In 2011, TOP received asecond financial lease of almost half a million euros for the construction of a drying and extraction plant for algae and other botanicals in collaboration with Phycom, a major producer of algae in the Netherlands. This was a new extraction technology, which was subsequently transferred to extraction company PhytoNext.

TOP also pioneered pulsed electric field (PEF) technology, which enables the extraction of high-quality substances from plants and the pasteurisation of liquid food. The advantage here is that aroma, taste and vitamins are preserved at a temperature of up to 40 oC. In order to develop this PEF technology, TOP and extraction company Phytonext, which also emerged from TOP, entered into a four-year agreement with Mibiton in 2015 to purchase a PEF generator worth almost two hundred thousand euros.

PhytoNext now applies this new mild extraction method on a large scale to get high-quality food supplements into your hands unscathed. Subsidiary company Becanex in Berlin has been using the PhytoNext extraction platform to extract cannabis oil from hemp since 2019.

Short pulses

In PEF, short electrical pulses pass through a continuous stream of food or juice like a heartbeat. Those pulses have a voltage of 60,000 volts and a current of 6,000 amps. They deliver a short-lived power of 600 megawatts, which destroys the membranes of bacteria and also kills fungi and yeasts. As a result, drinks and liquid food products will keep for at least three weeks. “Several large producers now use PEF in addition to HPP to pasteurise juices”, says De Heij.

TOP is running a new programme to pasteurise protein-rich flows with PEF. “With raw milk, for example, we face the problem that with laminar flow, the liquid flows slower at the edge than in the middle, causing proteins to coagulate near the wall. If we succeed in solving this, we can apply PEF, for example, to make oat milk preservable, so that it tastes much better compared to high-temperature sterilisation.”

Tender meat

TOP is basically the research branch of Blue Ocean XLerator (www.boxnv.nl), a private incubator for entrepreneurs who want to develop sustainable innovations. Together with Bflike, TOP has also developed a platform technology to produce meat and fish replacement products based on vegetable raw materials. “Vegetarian meat is often dry, because fats are missing. Bflike products, however, are just as tender as regular meat”, explains De Heij.

In April of 2021, BFlike was partly acquired by the American group Cargill, but TOP will remain involved as a partner of both companies in the development of the technology and recipes that Bflike licenses throughout the world.

TOP also generates its revenues mainly by licencing new technology. Companies that apply the new technology or manufacturers that build devices for it pay royalties to the company. “That allows us to keep the business running. There are no major investments. We find ourselves constantly in the valley of death. Some developments succeed, others do not. Our shareholders know this and accept that they will not receive dividends every year”, explains De Heij.

“If you want to buy a half-million-euro device to do applied research, you don’t get a subsidy just like that, and certainly not from a university.”

Financing in the early stages of development

It was precisely because of the innovation risk that TOP turned to Mibiton for equipment financing. De Heij: “If you want to buy a half-million-euro device to do applied research, you don’t get a subsidy just like that, and certainly not from a university. A bank or a leasing company will only conclude a lease contract with you if the equipment retains a considerable residual value and sufficient cash flow on the investment is guaranteed. But our prototypes don’t meet these requirements. And venture investors want to be assured of a decent return, but that’s not possible at an early stage of technological development.”

Mibiton does not provide capital but loans (financial lease) with a repayment period of 4 to 5 years, which sometimes involves only paying interest in the first year and starting actual repayments in the second year. The interest rate of 8% is high, but on the other hand, if things go well, a start-up can repay the loan early and will not be stuck with a debt if things go wrong. Furthermore, Mibiton allows some deferral of payment if there are problems. Last year, for example, TOP was able to postpone the final loan repayment for six months during the Corona pandemic.

“If you fall behind with your payment at a bank, you immediately end up in the non-performing accounts department. Mibiton, on the other hand, thinks with us and remains flexible”, says De Heij.

Moreover, Mibiton does not require collateral for a loan. The foundation estimates the chances of success of a start-up in advance on the basis of a due diligence study and then decides whether to grant a loan in the form of a financial lease. If a project fails, there is no problem, even if the company goes bankrupt, because Mibiton remains the legal owner of the equipment and can remove it if necessary and sell it at the residual value.

Taking risks is part of Mibiton’s mission. After all, the foundation was set up to help young companies in the life sciences get off the ground, not all of which succeed. But the companies that do succeed make the investments worthwhile.

De Heij’s assessment of the significance of the Mibiton loans for TOP is clear. “Without these loans, PEF technology would never have matured and there would not have been a company like Becanex. Mibiton provides the first stepping stones, which would not be provided by a bank or venture capitalist. And that is essential to bridging the valley of death.”