The DS Group is continuing to develop steadily. To this end, we are seeking strong partners in the chemicals and energy segments - but increasingly also for innovative start-ups and equity investments in green tech and sustainability. This strategy is beginning to bear fruit: The young companies Lynatox GmbH and SCS Holding GmbH with its subsidiary ELAPRO GmbH & Co. KG are part of the DS family. We asked their respective founders Gerrit Christiansen and Daniel Martschoke how this came about and in what ways they benefit from working with the DS Group.
Mr. Christiansen, Mr. Martschoke, can you explain in less than 10 sentences what your company does and what its business idea is?
Gerrit Christiansen (SCS Holding)
Since 2015, we have been producing liquid plastics with which customers can seal flat roofs in particular. Our liquid plastic is an alternative to welding or classic roofing covers. Using this liquid plastic, it is possible to work much more conveniently and flexibly. We also develop liquid sealants and adhesives for the automotive industry. In the past, our focus was on corrosion protection, paints, lacquers and coatings. However, when my colleague Bernd Merle and I joined the company in 2015, we completely revamped the business model and structures. So if you look at it closely, Elapro in its current form has been around for many years, but our current business model and the company’s structures are all very young. That's why the term “start-up” is very apt.
Daniel Martschoke (Lynatox GmbH)
In short, we have developed a chemical method for purifying water cost-efficiently and on a sustainable basis. We have come up with a catalyst with which we can clean water of organic pollutants. Pollutants in this case are odorous substances, dyes, toxins, drug residues, herbicides, pesticides or multi-resistant germs. At Lynatox, we develop the basic technology and applications in various areas. The process is known as “photocatalysis”, i.e. a chemical reaction using light. This produces harmless end products, namely carbon dioxide and water
How did the collaboration with Diersch & Schröder come about?
We had conducted an experiment with a spherical granulate and discovered that we can also break down petroleum in water with this granulate by adding sunlight. We can insert these floating granulate balls in the water, where they absorb the oil and break it down completely. In experiments, we were able to prove and document this effect. The contact with Diersch & Schröder arose via a company we know.
We were in talks with another company in Bremen. But then they suggested approaching Diersch & Schröder. They knew that Diersch & Schröder wanted to position itself more broadly in this technology sector. We had been looking for a partner for some time but had not found a suitable candidate with whom we could talk on an equal footing. Then Diersch & Schröder came along and was convinced of our idea, our documentation and the technology.
And how did the process of getting to know each other go? Did everyone involved already know what they wanted?
I met Jan Christiansen, the CEO of Diersch & Schröder Holding, in Wolfsburg. There was an initial exchange, which was followed by further very constructive meetings. Dates, deadlines and agreements were meticulously adhered to, something that cannot be taken for granted in talks between such partners of different sizes.
With us, things also moved very swiftly after the initial contact had been established. A team from Diersch & Schröder visited us and we presented our technology to them once again. At first we were more interested in a sales partnership. However, Diersch & Schröder made it clear very early on that they were seeking a full-scale equity investment. We were in the first financing round at that time – but Diersch & Schröder offered to acquire all the shares held by our previous investors.
Was that a reason to opt for Diersch & Schröder?
The decisive factor for us was that Diersch & Schröder firmly believes in our technologies. In the second conversation between us and Diersch & Schröder it was already clear to everyone how much potential this technology holds. Ultimately, one statement coming from Diersch & Schröder family was of crucial importance:
“Water could well be the new oil of the future.” This made it very evident to us that they were seriously interested in working with us in the long term.
It’s the whole mentality. We are a comparatively small company, with a completely different organisational form and structures that have not yet grown to such an extent. Nevertheless, Diersch & Schröder spoke to us eye to eye. That was impressive. It is not easy to dock onto such a large established company. Diersch & Schröder has devoted a lot of time to make it as easy for us as possible. The personal commitment of the CEOs Henning Thiele and Jan Christiansen was a new experience for me. I was constantly looking for the catch, but there wasn’t one. (laughs)
What else was important to you about Diersch & Schröder as a partner?
Above all else, we were looking for an experienced strategic partner from whose network, structures and know-how we can benefit. We needed a partner in the automotive sector in particular. Diersch & Schröder as an investor wants to provide real help, support our business strategically and grow it. That’s something else that cannot be taken for granted.
We greatly appreciate the Hanseatic corporate culture. Diersch & Schröder radiates confidence and we quickly had the feeling that we were dealing with “honourable merchants”. We like this sincere and honest approach. As Mr. Christiansen just said, Diersch & Schröder sees the whole company and the manifold possibilities, not only their own business interests. It’s about the technology and how it works in the field of petroleum, but also beyond that.
Do you have the sense that as a small, agile company you also have something to offer a large company in terms of culture?
For Diersch & Schröder we are a catalyst when it comes to new start-ups. We can make direct contact with them and help them to integrate.
We are a kind of link between the holding company and new investments in the Young Business sector because we share this experience.
Diersch & Schröder would like to continue investing in start-ups. Via us, the holding company is learning to respond to more agile structures and to find even better interfaces.
In this way, we are shaping a new internal culture inside the DS Group. A culture that is more agile and relaxed and works more efficiently with start-ups.
You have retained a large part of your autonomy. Was that a condition for you to work with Diersch & Schröder?
This was clear on both sides from the outset. Diersch & Schröder knew from the get-go that the expertise held by our team constitutes our company’s enterprise value. And this expertise can only unleash its full potential in an environment of great independence.
We experienced the same thing. I would even go as far as to say that it was Diersch & Schröder who imposed this condition on us. This is because it is primarily interested in ideas, visions and the people associated with them. And the ideas and visions are closely tied to the people and their scope for action. Innovation is precisely the reason for the investment – and without this autonomy it would be severely constrained. However, Diersch & Schröder is an enormous help especially in accounting. We have outsourced these functions almost completely to DS Holding. This transparency is an advantage and requires trust on both sides. However, this trust arose very quickly.
What would you recommend to start-ups looking for investors and partners?
In my eyes it’s never wrong to start exploring possibilities early on. And by doing so, you can adopt a very open-ended approach. Tell potential investors that you are still at a very early stage and that you do not know exactly if and when you will be needing an investor. The other question is this: What do I need the investor for? To survive? Does that mean I have to close shop if I can’t find anybody? Or is it about expansion? For us it was the latter. And in that case, all I can say is: don’t settle for the first caller And if a big investor cancels, ask him why. Ask for feedback.
Companies active in new technologies in particular often receive funding from the federal and state governments. However, these very helpful subsidies are linked to “SME” status. So you have to be careful not to lose this status through the admission of an investor. Start-ups should definitely think this through when they are looking for investors.