Investing in the Growth of our Collective Future
Dear Federal Taxpayer:
Since 2008, you have made strategic and important investments in our company when others were risk averse. It was part of an overall federal government effort to revitalize manufacturing in the U.S. We wanted to tell you our story and let you know how your investment has paid off.
Ecovative is now a leading biomaterials company that grows high performance, cost-competitive, durable products — including MycoBoard™ panels for furniture and construction, MycoFoam™ packaging materials, and other consumer goods — that are healthy, environmentally friendly, and certified sustainable.
Investing in a pioneering biomaterials company like Ecovative — with two manufacturing facilities, 80+ employees, award winning products, and Fortune 500 customers including Dell and Steelcase — does not seem farfetched today.
But let’s flash back to 2007. We were two recent college grads — engineers, without a business class between us — essentially squatting in an abandoned print shop in the basement of the building that housed Rensselaer Polytechnic Institute’s business incubator, in upstate New York.
Our big idea was to use mushroom materials — yes, mushrooms — to literally grow a replacement for petroleum-based polystyrene products like Styrofoam™, which we regularly referred to as “that toxic white stuff.”
The challenge was how to grow our idea. We knew that, as a biotech and manufacturing company, traditional private venture capital would be scarce at our early stage. Unlike early software investments, making money in manufacturing requires not only early research support, but also investments in the facilities, machines, and people — scientists and engineers, but also operations and production staff — required to produce a tangible product.
There was a buzz about our “green” start-up — generated by winning several business competitions — and we had outside experts agreeing we had a game-changing idea with the potential to create sustainable products that would meet the needs of large markets. Yet, we were too early stage and potentially too capital intensive to garner the interest of traditional private VC’s in good economic times, and 2007–2008 were not good economic times.
We were proposing to create an entire new industry, based on an entire class of new materials science. Let’s face it, we were a high risk bet.
What we needed was an angel investor, and we found our angel in Washington, D.C., at the federal Small Business Innovation Research (SBIR) program.
Within our first year of operation we were awarded an SBIR grant to support the development and commercialization of our technology from the US Environmental Protection Agency.
The SBIR peer review process alone provided further validation of our technology. And, that early award made it possible for us to qualify and characterize our initial material — MycoFoam™ — with the added benefit of garnering the attention of industry and other angel investors. In just six months we selected our initial target market — protective packaging — produced hand samples of products, and with that we identified and signed our first customers.
Scaling up the operation to create a full-fledged manufacturing and research facility also required creative approaches in the absence of sufficient traditional private VC investment. Again, SBIR supported us with so-called “phase 2” funding for scale-up.
Those federal investments helped make it possible for us to re-employ people and equipment. We leveraged old, dormant manufacturing technology, including machines that once blanched asparagus, chilled chocolate, or filled seed starter trays. We hired workers from traditional manufacturing industries (autoworkers, farmers, engineers) along with next-generation innovators. Together we modified the equipment and processes to cost-effectively create a prototype production operation.
By 2010 we were producing sustainable, protective packaging for Fortune 500 customers including Steelcase, Puma, and Dell Computers. These companies were replacing petroleum-based non-compostable plastic packaging with our new compostable materials that were sourced and produced in the U.S. Our idea, our vision was realized!
Those initial federal investments — when private investment was not forthcoming — made it possible for us to develop and scale our technology. By the time we did raise capital from private strategic partners including 3M, and licensed our technology to partners including Sealed Air, we had demonstrated the viability of our technology and potential for commercial sales, thereby increasing the value of the company such that we were able to maintain control of our business, which we still do today.
Additional essential Federal SBIR investments in our underlying research — including from the National Science Foundation — also helped us develop and bring MycoBoard™ to market. Designed to address the growing concern of formaldehyde in particle board and other engineered wood, this environmentally friendly option is now being used by manufacturers to create healthy furniture and other interior products, free of toxic resins. And, we are working with mill owners to upgrade and make their products and process more healthy and sustainable, free of formaldehyde and toxic resins traditionally used to manufacture engineered wood.
We continue to grow our products, people, and facilities. We employ people across the spectrum from scientists, architects, and engineers, to equipment operators, technicians, and administrative staff. We purchase raw materials from domestic farmers, and we sell sustainable, compostable products to other manufacturers across the U.S.
For these achievements, we were honored to receive the SBA’s prestigious Tibbetts Award in 2013, celebrating high-tech small businesses “for the critical role they play in research and development for the government and for their success in driving innovation and creating new jobs.” And we appreciated SBA Administrator Maria Contreras-Sweet’s reference to the Ecovative “success story” in her 2016 State of Entrepreneurship remarks at the NASDAQ in February.
We started as two guys and an idea to change the world a little bit. When we were just a seed of an idea, you invested in us, and your continued investments nurtured us along the way. Look what, together, we have grown.
Thank you for investing in our company and in our collective future.
Gavin McIntyre is co-founder and Chief Scientist at Ecovative Design, a leading biomaterials company based in Green Island, New York.