Strategies for Partnership-Driven Success in Transportation & Industrial Protective Coatings Market

Protective coatings serve a critical function fighting corrosion, wear, friction and fouling in a diverse range of industries. The lure of this large market entices multinationals and start-ups alike, but there are a dizzying array of coating options and a host of technology, business, and regulatory challenges. To assist end users and coating developers, we sized four key markets for protective coatings – namely automotive, marine, aerospace and industrial domains – and, not surprisingly, a robust $14 billion market size in 2025 will develop from the $10 billion market today. While our clients are certainly able to see the underlying technology details and segmentation within this broad market projection, even more interesting is to look at the next generation of protective coatings that will emerge during this period at a significant CAGR. For this, we focused on protective coatings start-ups with functionality that provides more than just standard protection.

In this subset of developers, the Lux Innovation Grid evenly distributes start-ups between Long-shot and High-potential quadrants, with few players in the Dominant or Undistinguished spaces. This “protective plus” space is far more open to new entrants than traditional protective coatings, but also has start-up companies than can provide a running start. For example, TripleO has built a successful business in the aerospace sector combing anti-scratch and debris resistance with hydrophobic functionality – although expensive at a total cost of more than $20/m2, its coating offers a one-year payback period in fuel savings. Multiple start-ups have introduced coatings with hydrophobic functionality for condensing coils, including Dropwise Technologies, Lotus Leaf, and NBD Nano. This application combines the need for high-temperature corrosion resistance with hydrophobicity for improved condenser efficiency. Finally, companies like Agienic Antimicrobials use copper salt additives to provide anti-corrosion and anti-microbial for down hole oil and gas fouling and corrosion prevention.

The questions then become what are the attributes to distinguish the start-up winners, what to do about it and how to engage with the best companies to maximize their chance of success. Counter-intuitively, for start-ups developing new products, cost is not the main determinant of success and only becomes meaningful once a coating product has reached the market, and once it has competition. For many start-ups, finding the right market or niche for their product is a challenge that is never met. What’s more, novel functional protective coatings may offer a combination of properties that have no direct analogue within the offerings of multinationals. In these instances, a start-up may be able to name their price within a given niche – like tripleO has done with hydrophobic protective coatings in aerospace. The best predictor of success is age. For many start-ups simply surviving the length of time needed to qualify products in conservative protective markets will be the largest hurdle they face. The minimum age for success appears to be around five years to seven years – far longer than many investors are willing to wait. Those who can survive long enough to clear regulatory hurdles, such as I-Tech in marine antifouling coatings, can achieve rapid growth.



This means coatings start-ups should focus as many resources as they can to scout available applications for their technology and develop paths to market in applications that show strong fit, as opposed to scaling prematurely to drive cost down. However, focus remains critical as our analysis also shows that start-ups actively pursuing too many applications have lower overall revenue per headcount than those focused on fewer applications. In this sense, the best way for large companies to help and create the magical win-win is to leverage their resources towards application scouting and building customer relationships as this is likely to be most effective in moving start-ups towards success. Between the two main ways large company partners claim to help, market channels are more important than expertise scale-up and engineering.

Anthony Schiavo is a Research Associate for the Advanced Materials and the Coatings Intelligence services at Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. For more information, visit the Lux Research site.