Green alternatives: How investing in cannabis fuelled my hydrogen startup
Green startups find it hard to get funding – but thinking outside the box can be rewarding, says Aleksandra Binkowska
Funding a cutting edge company producing technology to convert the world’s waste plastic to environmentally-friendly hydrogen fuel through the production of medicinal cannabis may sound unconventional. But necessity is the mother of invention in today’s money markets – which, as we know, are all too often reluctant to invest in startups.
Hydrogen Utopia International (HUI) is one of many green startups developing new technology. The specific problem the London-listed firm addresses is non-recyclable plastics. These clog landfills and litter the earth’s soil and ocean; they even get stuck inside human bodies. HUI, which I work for, transforms these otherwise-harmful plastics into hydrogen fuel – which can then be used to power vehicles, factories and eventually homes and offices.
Companies pioneering solutions to the big issues of the green revolution have to be nimble and take on all the risk until they attract the kind of investment needed to make a genuine impact. For instance, HUI requires £40m of investment to develop our technology. Current circumstances mean it is currently a struggle for companies to raise even this relatively small amount of investment on the smaller London markets.
As the fraught and protracted negotiations at Cop28 demonstrated, urgent action is needed to reduce carbon emissions and fund alternative sources of fuel. Low-carbon hydrogen was in fact specifically identified as being required to meet climate goals. Yet investors remain nervous about providing this level of startup capital, and policymakers are not offering support.
On top of that, the markets are particularly jittery right now. High interest rates, inflation, wars in Ukraine and the Middle East, plus the collapse of American banks Silicon Valley and Signature, all mean that investors have become more risk averse.
Last week, the Financial Conduct Authority said the number of companies applying to list their shares on the London Stock Exchange is the lowest it has been in at least six years: only 56 companies applied between January and November 2021.
But adversity breeds innovation, so HUI decided to look further afield – to North Macedonia. to be precise. In the summer, it bought a 49 per cent stake in Ohrid Organics, which is poised to become a major player in the European medical cannabis market – a market expected to grow to $13.4bn by 2027 from a current value of $4.96bn.
Though headquartered in London, Ohrid Organics operates a cannabis facility through a subsidiary in North Macedonia, which it turns out has excellent conditions to grow the plant. It is expected to produce up to 37 tonnes of cannabis a year.
Medicinal cannabis already helps millions of people cope with the symptoms of serious illnesses such as some forms of epilepsy, MS, depression, anxiety and PTSD, and is being embraced by the medical profession all over the world. The UK is currently wholly dependent on foreign imports to meet the huge increase in demand. There has been a 110 per cent increase in NHS prescriptions in the past year and a 300 per cent increase in demand in the private health sector.
The logic behind the deal is simple enough. It is a low investment foray into a market with steady growth; taking maximal profit out of minimum investment. In this way HUI is looking after its shareholders by not driving down the share price and ensuring HUI does not run out of money.
This guaranteed return enables us to grow a commodity product, the sale of which will help us fund the cost of the technology that HUI needs to build in order to create hydrogen from plastic waste.
A 49 per cent stake will give HUI financial security and a guaranteed revenue stream to realise our green hydrogen dream for generations to come. I want other London businesses to know that, however tough the markets may seem, there is always a way – you might just need to tap into the creativity and dynamism this city is so famous for.
Aleksandra Binkowska is founder and CEO of Hydrogen Utopia International