Chitin-based Cruz Foam packaging brings in $18 million as industry moves to go green • TechCrunch

The best way to remove plastic from the ecosystem is to make sure it never gets there Pena Cruz is well on its way to replacing some of the worst with a natural, compostable alternative—and the company just received an $18 million Series A round to make it happen faster.

Cruz Foam creates materials from chitin, which is the shell of most crustaceans such as crabs, shrimp, lobsters and many terrestrial insects. It’s strong, stable, completely biodegradable, and there’s a lot of it: there are mountains of this stuff to take out of every seafood processing plant.

A company whose founder, John Felts, I met in Alaska during an accelerator at seahummed sharply, prototyping various ways to turn chitin and some other natural ingredients into a material that could replace expanded polystyrene (EPS; like Styrofoam) and other common plastic packaging.

They got their first big break last year when Whirlpool asked them to make a few for their appliance boxes, and now that they’ve proven their idea, Cruz Foam is preparing to break into half a dozen other industries.

“A lot of what we’re focusing on are those two initial areas — packaging that replaces polyethylene and Styrofoam. But demand is growing in other areas: cold chain, CPG [consumer packaged goods], e-commerce, etc. People ask about construction or how we can do injection molding. It’s exciting to see so much potential,” Felts said.

The need to prototype and test these capabilities is one of the reasons the company is raising such a large round. They just bought a new extruder (foam like this is basically printed using special equipment) and have been experimenting with all kinds of new form factors, managing partners and potential partners in many industries.

It helps that a number of laws and trends are steadily pushing companies toward environmentally friendly alternatives to plastic or even cardboard.

“By returning the ownership of the waste and its collection to the people who make the bags, you see a broad shift in ESG goals,” he said. “It used to be, ‘OK, we’ll be carbon neutral by 2030.’ Like, what does that mean? So we’re seeing a real breakdown of what that means now — is it packaging, is it energy consumption, what are the milestones, the two-year, three-year benchmarks? That’s how you know they’re serious.”

Suddenly, it seems like everyone from commodity manufacturers to people who make foam are looking for complete alternatives, even if there is no cost parity. They see the writing on the wall, and the idea of ​​being caught unprepared if, say, an EPS ban throws them out of West Coast markets is terrifying.

Felts said the company is in talks with several of the largest packaging foam manufacturers, working with them on a deal where they will actually produce chitin-based materials and share the glory with Cruz Foam.

However, the truth is that neither side has much of a choice. Manufacturers need to prepare for a greener future, and Cruz Foam doesn’t even have a fraction of the machines needed to meet the demand. Felts said they never intended to go into manufacturing.

“You literally can’t. It took 6 months to buy this extruder,” he said, and even that was a miracle. “Can you imagine scaling a business if it took you two years to get one machine? You to have use the existing infrastructure.’

The foam tape is squeezed out. Image Credits: Pena Cruz

Whoever made it, you’ll probably be seeing more of their products soon. The company showed me some of the prototypes and new verticals it’s been working on, though it can’t announce any of its new partners or customers until contracts or agreements are finalized and, in some cases, until the necessary patents are filed. Suffice it to say, the company goes far beyond simply replacing a foam insert here and a mold there.

The products that Cruz Foam makes are generally compostable in the broadest sense—you can just toss them in your yard and they’ll be gone in a month or two (and may even give your plants a boost). But because it combines with cardboard and other materials, the company continues to face the challenge of how to make these things fit with existing municipal waste systems. Can it be redone according to Sacramento’s definition of the word? And what about yard waste – technically it’s not breaking the rules there and who cares?

“The government needs to set the standards for the new generation of compostable products — you need to make it easy for customers,” Felts said. At least even if it ends up in the wrong landfill, it still gracefully degrades.

The $18 million funding round was led by Helen’s “global problem-solving organization” with participation from One Small Planet, Regeneration.VC, At One Ventures and SoundWaves.

The money will be used to expand operations, as well as research and development.

“The biggest focus is on commercial production and revenue generation by next year,” he said. “We file tons of patents. Significant growth in the operational footprint of this company; we are moving to a new headquarters, now up to 30 people.’

With Cruz Foam focusing on creative work and sales, as well as partnering with existing manufacturers to actually make things, 2023 could be the year the company moves from niche to mainstream. Watch out for the trademark CF threshold (or as I prefer to see it, jointed crustacean claws) on your delivery.