Wang Shu Chen, Founder of Adespec, a Brazilian-based producer of environmentally-friendly adhesives and sealants, spoke with LAVCA about how a health problem led her to develop new types of solvents that she hopes will revolutionize the Brazilian adhesives market.
LAVCA: Please give us some background on Adespec and its products.
Wang Shu: Adespec was established in 2001 with the aim of developing special adhesives, sealants and protective coatings that are not harmful to the health of humans, animals or the environment. Our mission is to create innovative solutions to the adhesion, sealing and protection needs of individual and professional users that want high performance, cost-effective solutions that are environmentally-friendly. We concentrate on two technologies – water-based adhesives and adhesives and sealants based on polyether siloxanes, which are chemically neutral and fully elastic.
Adespec graduated from the Centro Incubador de EmpresasTecnologicas (CIETEC) in Sao Paulo and now has a manufacturing site in Taboão da Serra and a research and development lab in CIETEC-USP (University City). We have established ourselves as a major supplier of adhesives and sealants, especially with partners who seek an advantage through high performance and sustainability.
Adespec is currently the only Brazilian company in the adhesives and sealants sector to receive the “SeloSustentaX de Sustentabilidade e Qualidade”, an international certification recognizing sustainable products for the use in the construction of “green buildings.”
LAVCA: What is your background?
Wang Shu: I’m a Chemical engineer by training and have 35 years of experience in national and international companies such as Petrobras, Souza Cruz, Loctite, Henkel, Brascola and have worked in areas such as development, research, production, customer support and sales. I also have 25 years experience in the adhesives market.
LAVCA: How did you come up with the business idea for Adespec?
Wang Shu: After spending over two decades in research centers for multinational companies in the adhesive industry, I went to work for a company that primarily produced solvent-based adhesives. I discovered that my white blood cells responsible for defending the body had dropped 30% in just three months of working in close proximity to solvents such as toluene, ethyl acetate, etc. And I had not even had direct contact with those products!
Because of this health problem, I began studying the relationship between the solvents and their effects on the human body and environment. As a result I found that there is a large part of the adhesive market that is still unexplored in Brazil and that there was an opportunity for companies with the appropriate knowledge and technology to produce products for niche markets.
LAVCA: What sort of financing have you received thus far?
Wang Shu: The early years of the company were dedicated exclusively to research and development and support came from my own resources and from the Foundation for Research Support of the State of São Paulo (FAPESP), through its PIPE program, which targets scientific research and technology in small businesses.
In 2007, we went to market to raise funds with the aim to expand the business and production capacity. We raised capital from Rio Bravo, through its Rio Bravo Investech Fund II. With this investment we were able to develop products for three commercial sectors that were in different phases of development: (1) Window and mirrors, (2) Industrial, and (3) Retail.
LAVCA: What role have equity investors taken in the management/operation of your company?
Wang Shu: Rio Bravo has a very competent and personable team. The entry of the fund had a positive impact on Adespec by providing guidance in areas such as financials, strategy, staff expansion and company marketing and image-building. They also agree that we need more capital for faster growth and have actively helped us search for additional potential investors.
LAVCA: What feedback have you received from investors about where to make improvements in your business model?
Wang Shu: The business plan has been reviewed together in regular meetings of the board. The adaptations had to be made according to company growth and available resources. And, in order to fulfill the needs of Rio Bravo and its shareholders, we have developed a consistent Corporate Governance structure.
They’ve also provided guidance in ways to make our processes more efficient. For examples, Adespec is now fully controlled through an electronic system that allows better coordination of our database, inventory, billing, etc between the factory and head office which are located at different addresses.
LAVCA: What is your most pressing strategic challenge right now?
Wang Shu: Adespec has enormous potential for growth and the valorization of its actions. However, one difficulty that is typical for a company in its first years of life, and that we face, is the lack of investment capacity and the need for working capital.
The last years have been important for us since we proved that there is place in the market of special adhesives, sealants and protective coatings for a company like Adespec.The stage of greatest risk – product development, start of operation, design and implementation of a commercial strategy – has been overcome.
We are now in a moment of growth which we want to reach through expansion of sales and commercial activity, but this requires further investment.
LAVCA: Who is your competition? What do you see as your competitive advantage?
Wang Shu: Companies in the Brazilian market today that we consider the main competitors would include multinationals Henkel (Germany), Three Bond (Japan), Pidilite (India,) ITW (US), as well as Brazilian companies Brascola and Artecola. These companies share characteristics with Adespec such as, access to advanced technologies (developing or buying), financial capacity, profit mentality, market presence and professional management.
We aim to differentiate by continuously introducing innovative products that exhibit characteristics superior to products currently on the market, ensuring quality of manufactured products, added consulting services, training and technical assistance to guide customers on what the best adhesive and how best to use the indicated application.
LAVCA: Are you looking for additional financing? If yes, from who? If yes, how do you plan to put your next round of financing to use?
Wang Shu: Yes, we are open to an additional injection of capital and are looking to other investment funds as well as private companies.
We’re looking to finance growth and the development of new products in the field of biodegradable polymers from renewable sources. The investment would be used to form a core technology from the transfer of R&D results conducted in the academic realm to the large scale production of biodegradable plastics and compostable plastics.
LAVCA: Where do you see your company five years from now?
Wang Shu: In five years, Adespec aims to represent the industry standard in developing and commercializing products that combine high performance, security and sustainability. We also aim to be a leading supplier of green polymers for market segments that value these characteristics.