Investment in sustainable packaging accelerates

Most consumers enjoy the convenience of packaged goods that we stack in real and virtual shopping carts. But for anyone with a conscience, there is also a guilt factor.

The statistics are sobering. Today, containers and packaging make up more than a fifth of all waste in US landfills. Globally, more than 14 million tons of plastic they end up in the ocean each year, endangering and killing dozens of marine organisms. In the meantime, petrochemical production used to make plastics continues to increase.

The founders and investors seem to think there is an opportunity to do better and potentially make some money in the process.

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Startups in the sustainable packaging space have raised hundreds of millions in venture funding in the past year, according to data from Crunchbase. And with much of the other investment being diverted early or mid-stage, industry insiders see plenty of room for future growth.

“There are very few sustainable material alternatives available at scale,” he said. Bob BecklerDirector of temperament pack, one of the most mature and heavily funded players in the space. Last week, the Richmond, Va.-based company closed at $140 million in a risk round led by Goldman Sachsbringing the total funding to date to some $210 million.

TemperPack, as its name suggests, specializes in thermal packaging for temperature-sensitive products, including perishable foods and pharmaceuticals. The company operates two production plants, in Virginia and Las Vegas, that produce insulating packaging materials that are curbside recyclable and derived primarily from paper and cornstarch.

A series of great rounds

Seven-year-old TemperPack is one of several startups that have pulled off good-sized venture rounds in recent months. Here’s a sample list of a dozen companies:

based in Singapore RWDC Industries, a developer of polyhydroxyalkanoates (PHAs), a type of organic material that has plastic qualities, has been a particularly prodigious fundraiser. Over the past four years, the company has raised $263 million, according to Crunchbase, including a $95 million Series B that closed in October.

RWDC doesn’t focus solely on packaging, but says its materials can be used to make a biodegradable and compostable alternative to Styrofoam, the petroleum-derived plastic used to make Styrofoam. End products include coated paper goods, single-use foodservice items, and packaging materials.

Writes, an Israeli startup developing flexible and compostable packaging, including clear film and resealable bags, raised $70 million in a venture fund in January, bringing known funding to date to $130 million. The company says it focused on thin-film packaging in part because it has previously been one of the least recyclable materials.

Notably, the list of funded startups also includes two companies that use seaweed to develop sustainable packaging materials. based in London notpla develops a material derived from algae and plants that is currently used in ketchup packages, food packaging coatings and other products. Based in San Francisco Influence manufactures compostable containers based on algae.

Packaging for public markets

Several companies in the sustainable packaging space have also turned to public offerings, with the most recent choosing the SPAC route to market.

scientific danimer, a manufacturer of bioplastics used in disposable container liners, packaging and other products, was an early participant in the 2020-21 SPAC boom. The Georgia company completed a merger with a blank check acquirer in December 2020. After an initial surge, stock performance has been disappointing, with the shares recently trading below $6 apiece.

source materials, a developer of technology that converts carbon found in biomass into useful materials, including a biodegradable plastic alternative, completed its merger process with SPAC in June. The shares are currently well below the initial offering price.

SPAC’s uninspiring aftermarket performance hasn’t deterred another company in the sustainable packaging space. based in Arizona Paw printa maker of plant-based plastic alternatives that have applications in packaging, announced plans in December to go public through a merger with a blank check firm run by billionaire Alex Gores.

Lots of pent up demand

One bullish factor for the sustainable packaging space is that both consumers and businesses are rooting for its success.

While sustainable materials can be price-competitive with polystyrene, according to Beckler, it also helps that consumers and distributors are often willing to pay a little more for eco-friendly packaging.

Sustainable packaging products can also have some features that polystyrene does not offer. For TemperPack, Beckler said, one advantage is that it ships flat before being folded to shape, which allows for more efficient distribution and also provides a smooth, printable surface.

Other packaging companies are also launching exciting features. Notpla, for example, attests that its bags of drinks and sauces are edible. (Not that you want to eat them, but I guess it’s nice to know you could.)

The rise of corporate commitments to sustainability also bodes well for producers of compostable and recyclable packaging. Most of the big consumer brands have made some gestures in this direction. Amazon, P&G, walmart and Targetalong with hundreds of others, for example, are members of the Sustainable Packaging Coalitiona trade group that advocates for making packaging more environmentally friendly.

I must admit that personally there is a bit of irony in the above, as the four companies mentioned above represent a significant portion of my least sustainable packaged goods. But on the plus side, that means there’s plenty of room for progress.

Illustration: Li-Anne Dias

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