Which 20 New Materials Trends are Top of Mind for VCs?

The material production sector is responsible for 25% of global emissions, with key contributors like aluminium, concrete, steel, and plastics driving 78% of these emissions.

With material use predicted to double from 2015 to 2060, the challenge of decarbonizing these industries is urgent.

As net-zero pathways emerge, innovative technologies are transforming material production to align with climate goals. Venture capitalists play a critical role in accelerating these solutions.

Which material technologies are they betting on to reshape this high-emissions sector? From low-carbon concrete to advanced recycling, we ask 7 leading VCs where they see the greatest potential for impactful change.

Solutions include:

🎯 Enhanced Properties
🔬 Encapsulation Technology
🏭 New Production Methods
🔍 AI-Driven Material Discovery
📈 Increased Reshoring and Onshoring
⛏️ Sustainable Material Extraction
🪨 Critical Minerals for the Energy Transition
🧪 Green Chemicals as Drop-in Chemicals

Tip: If you’re fundraising and your startup is working on one or more of these solutions, then reach out to the investors to start discussions today or join us at the HackSummit to meet many of them IRL.

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The material technologies investors are looking to fund next:

Beata Enwall at Norrsken VC

• AI Fuels the Sustainable Materials Revolution: The shift to sustainable materials is accelerating. With AI driving breakthroughs, industries like construction and manufacturing are moving towards greener, cheaper, and faster alternatives. 

• The Next Economy: In 2025, the momentum will ramp up as we see smarter R&D processes, circular supply chains, and significant emission reductions. This isn’t just innovation—it’s the foundation for the next economy.

Karina Rubinstein at InNegev

• Industry Transition into Sustainable Materials: The shift to sustainable materials is reshaping industries, reducing dependence on traditional mining and emphasising circular economies. This transformation aligns with clean energy goals, focusing on minimising emissions, waste, and environmental impact while meeting the growing demand for critical components in technologies like EVs and renewable energy systems.

• New Production Methods: Advanced technologies like bio-mining, green solvents, and closed-loop recycling are revolutionising material extraction and manufacturing. These methods prioritise efficiency and sustainability, reducing resource intensity and emissions while enabling the production of essential materials needed for a low-carbon economy.

• Blended Materials and Processes: Innovative material combinations, such as hybrid composites and bio-based alternatives, enhance performance and sustainability and enable a smoother industry transition to a more greener end-product. Integrating these with eco-friendly processes supports cleaner production cycles, driving sustainable growth in sectors reliant on critical materials like construction, electronics, and renewable energy.

Andres Baehr at Savia Ventures

• Biomaterials Revolution: The materials industry is undergoing a seismic shift with the rise of biomaterials as sustainable, high-performance alternatives to traditional plastics and chemicals. As regulatory frameworks tighten and consumer demand for environmentally friendly solutions grows, the biomaterials industry will continue to thrive. Whether it's Living Ink's algae-based alternative to carbon black ink, BioPlaster's alternatives to plastic film and packaging foam or Phycolab's seaweed solutions designed to transform the textile industry, startups driving these changes are not just addressing the environmental crisis but also unlocking massive market opportunities and proving that there's a sustainable solution out there for just about everything.

• Critical Minerals for the Energy Transition: The transition to renewable energy and electrification is driving a surge in demand for critical minerals like lithium, cobalt, and rare earth elements. Urban mining - recovering valuable materials from electronic waste and other post-consumer products - presents a scalable and sustainable solution. Companies like Niu Niu are leading the way by developing innovative processes for extracting minerals from unconventional sources, creating a circular supply chain that reduces environmental impact and dependence on traditional mining. 

• Encapsulation Technology: Encapsulation is emerging as a transformative technology across industries like food, agriculture, healthcare, and advanced materials. Companies like Vexxel, which specializes in encapsulation technology for agriculture to improve crop yields and reduce chemical usage, and Medu Protection, which utilizes encapsulation to create reusable hospital gowns which are both anti-bacterial and anti-microbial are addressing critical challenges. These innovations are enabling precise delivery systems, extended stability, and sustainable solutions, meeting the growing demand for efficiency and environmental responsibility in their respective sectors.

Jia Lin Yong at Giant Ventures

• Progress in AI-Driven Material Discovery: In the last few years, there has been a significant growth in the number of startups founded to leverage AI for the design and discovery of novel materials required to unlock critical climate solutions (e.g. carbon capture, energy storage, energy-efficient chips, etc). The aim is to enable scientists to rapidly generate, test, and iterate materials to the desired properties before synthesis, representing a step change from solely relying on trial-and-error and experimentation. In 2025, we may start to see breakthrough discoveries from these teams.

• Increased Focus on Adaptation and Resilience: The increasing frequency of extreme weather events means that solutions focused on managing physical climate risks will start to receive more attention. However, this attention is likely concentrated on software-driven solutions such as climate and weather foundation models and parametric insurance. Hardware solutions including infrastructure retrofits with more climate-resilient materials and structures may still face challenges due to the capex requirements.

• Increased Reshoring and Onshoring: There is a push for American/European-dynamism, and as part of this, we will likely see a push for more funding and innovation to reduce dependency on non-domestic supply of critical metals and minerals (including key materials for climate technologies). This trend will have a dual impact: security and sustainability.

Wouter Van de Putte at Capricorn Partners

• Resource Efficiency & Process Optimization in a Complex Value Chain: While recycling technologies and direct air capture are crucial for achieving net-zero goals, investing in resource efficiency and process optimization for core chemical processes has often been overlooked. Innovations such as new catalysts, membrane separation technologies, heat storage and heat optimisation schemes, which integrate seamlessly with existing infrastructure, offer faster decarbonisation by leading to more selective reactions, less waste, and reduced energy consumption. From a $/ton CO2 reduction perspective, they are tens of millions more cost-effective than DAC technologies. In the long term, these process innovations are also relevant, such as new catalyst technology for plastic waste conversion.

• Green Chemicals as Drop-in Chemicals and Supply Chain Resilience: Making supply chains more resilient by developing CO2 to chemicals or industrial biotech to create drop-in replacements of chemicals with localized manufacturing. These opportunities span the entire value chain, from base chemicals to niche chemicals with specific applications. Sustainable base chemicals may struggle with green premium pricing and high volume requirements, making scaling challenging but offering significant CO2 reduction potential. Downstream chemicals like surfactants could benefit from niche markets with more consumer ‘green’ interest , delivering faster customer adoption. Technologies to watch include electrochemistry and plasma for a broad range of molecules like formic acid or fertilizers, Fischer-Tropsch for e-fuels and industrial biotech for chemical intermediates, specialties and nutrient ingredients.

• Thermoplastics for Recycling: Lightweighting of the materials sector will continue to accelerate as sectors such as automotive and aerospace will increasingly require this due to the ongoing shift to battery-driven energy sources. This trend is driven by the need to enhance energy efficiency and extend the range of electric vehicles and aircraft. Additionally, a shift from thermoset to more thermoplastic-based materials will be required to cope with increased recycling requirements, improved manufacturing efficiency and the potential for cost savings in production.

José Tomás Joglar at Sunna Ventures

• Critical Minerals: The global shift towards sustainable energy hinges on critical minerals—essential components in technologies like batteries, electric vehicles (EVs), solar panels, and wind turbines. The market for critical minerals has experienced significant growth. In 2022, the combined market value of key energy transition minerals reached approximately USD 320 billion, doubling over the past five years. Projections indicate that this value could more than double again by 2040, reaching USD 770 billion, driven by the escalating adoption of clean energy technologies. 

• Sustainable Material Extraction: While extraction alone is important, it is also crucial to have efficient and sustainable methods, to be in line with the ultimate goal of the energy transition. Traditional mining methods often pose environmental challenges, such as habitat destruction and water contamination. The mining industry is a significant contributor to global greenhouse gas (GHG) emissions, accounting for approximately 4% to 7% of worldwide emissions LatAm Landscape. Latin America plays a pivotal role in this landscape, boasting substantial reserves of critical minerals. The region accounts for 40% of global copper production, with Chile leading at 27%, followed by Peru at 10%. Additionally, Latin America holds significant lithium reserves, primarily in Bolivia, Argentina, and Chile, collectively known as the “Lithium Triangle.” Brazil contributes notably with 17% of global nickel reserves and substantial deposits of rare earth elements. These abundant resources position Latin America as a strategic hub for the global energy transition.

Juan Nieto at Zacua Ventures

• Materials in the Built Environment: Innovative materials are redefining the built environment by integrating sustainability and performance. Key building materials production - like cement, concrete, steel, and insulation, among others - haven’t changed in decades, and are among the most carbon and resource intensive materials on earth. Biomaterials like bio-concrete and algae-based composites reduce environmental impact while offering enhanced durability and insulation. 

  Circularity in Materials Innovation: Construction and demolition waste accounts for almost 40% of all waste generated in Europe, and a portion of that still going to landfill. Minimising waste by prioritising reuse and recycling is the goal. Urban mining extracts valuable resources from waste streams, while biomaterials designed for closed-loop systems extend product life cycles. This approach reduces reliance on virgin resources, fosters economic resilience, and supports global sustainability efforts across industries, including construction but also others like packaging.

  Carbon Neutrality: Designing materials and systems that minimize emissions and offset residual carbon. Biomaterials naturally sequester carbon during production or carbon mineralization techniques, while recycled metals and urban mining reduce extraction emissions. These innovations align with global climate targets, enabling industries to transition to net-zero operations.

  Enhanced Properties: Some building material verticals haven’t changed much in a while from a pure property perspective, like insulating materials.  Modern materials combine sustainability with enhanced properties, including strength, thermal insulation, and antimicrobial protection. Encapsulation technologies enable precise functionality, such as phase-change materials for energy-efficient buildings. Biomaterials and advanced composites outperform traditional alternatives while addressing environmental concerns, ensuring performance and sustainability in applications across construction, healthcare, and agriculture.