Opening Up The World’s Specialty Chemicals Market With Mstack

Shreyans Chopra, the founder and CEO of Mstack Chemicals, believes the global chemicals industry has embarked on a transformative phase that will change the sector for good. Mstack, a specialty chemicals business which is today announcing it has raised $40 million of Series A financing, is positioning itself accordingly.

Data from Grand View Research suggests the global specialty chemicals market is now worth around $650 billion, with the industry playing a crucial role in supplying other sectors with the individual chemicals and formulations their production and manufacturing relies on. However, while suppliers in Europe and China have traditionally dominated, Chopra points out that this is now changing.

“Western businesses, and particularly those in North America, are looking to diversify their supply chains to reduce their reliance on China,” he says. “At the same time, European specialty chemicals businesses are struggling to remain competitive because of soaring energy costs caused by problems such as the conflict in Ukraine.”

In theory, Chopra adds, the answer for many Western businesses in need of specialty chemicals should be to cast the net a little wider – to look to businesses in other emerging markets, particularly in Asia, that can provide both supply chain diversification benefits and competitive prices. In practice, he says, this isn’t happening because many businesses lack the confidence – as well as the infrastructure – to start dealing with what are often smaller suppliers based in markets they don’t fully understand.

That’s where Mstack comes in. “We’re building a trusted brand from which these companies can secure the specialty chemicals they need,” Chopra says. The company secures these chemicals through deals with manufacturers based across Asia, as well as in the Middle East, but customers only have to worry about dealing with Mstack. It guarantees the quality they need while securing the chemicals at more affordable prices.

Mstack has deliberately avoided the marketplace approach that some new entrants to the chemicals industry regard as a way to solve the diversification challenge. “We think you need to be in the supply chain managing the quality, rather than simply acting as an intermediary,” Chopra explains.

Instead, the company has built its value proposition on the foundations of a technology stack that enables it automate many of its interactions with its emerging market suppliers, keeping costs to a minimum. Buyers can source, test, ship, deliver, and track all the specialty chemicals they need through Mstack, rather than having to deal with multiple small suppliers.

It’s a pitch that appears to be resonating with customers. Chopra doesn’t want to share details of the business’s revenues at this stage but says the company has grown sales by a factor of 15 over the past 12 months. It now has more than 50 enterprise clients and sells in six different geographies.

The business, launched in 2022, believes it is possible to continue growing at this rate given the fast-rising demand for specialty chemicals and the desire of customers to find new suppliers. Chopra says the Indian specialty chemicals market, for example, is currently growing at 12% a year, four times’ the rate of growth of the global industry, as buyers look to diversify.

Mstack is also eyeing expansion through investment in research and development, building facilities through which to work with its own suppliers on new formulations and process innovation.

The company’s successful Series A round will help it pursue these ambitions with greater urgency. The round was co-led by Lightspeed and Alpha Wave Global, and also included a debt facility from HSBC Innovation Banking, as well as support from a number of angel investors.

“We believe that the company has tremendous potential to lead this transformation [of the specialty chemicals market], says Bejul Somaia, partner at Lightspeed. “The new round of funding will enable Mstack to unlock the full potential of its tech-driven platform and undertake cutting-edge research, offering high quality products to customers across the world.”

At Alpha Wave Global, co-founder and partner Navroz Udwadia adds: “We are very excited to partner with Mstack as it plays an important role in shaping the global chemical supply chain – this round enables Mstack to strengthen its R&D capabilities in co-creating new products with vendors.”