Avoiding bottles and other goods made of single-use plastic led José Ignacio Parada, a lawyer who graduated from the Universidad Católica de Chile, to create BioElements in 2014. The Chilean startup builds eco-friendly alternatives to plastic, cardboard, and paper packaging.
“It all started with a basic bio-resin that we knew was compostable,” Parada, founder and CEO of the startup, tells LABS. The company’s first products were rigid ones like compostable cutlery (such as forks, knives) and cups for food delivery.
The COVID-19 pandemic certainly put a light on packaging issues as the delivery boom leveraged the amount of waste. The average lifetime use of plastic packaging is about six months, according to Our World in Data’s data in 2015, so plastic turns out to be wasted faster in packaging than in other industries.
BioElements invested in research to develop a proprietary formulation to make a bio-resin that could produce rigid products and flexible packaging as well. In late 2016, the company presented the so-called Resin Bio E-8. “After developing the bio-resin, we also managed to change the first one into a flexible product to make it biodegradable so that it could degrade not only in compost facilities but also in other conditions.”
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The startup‘s biodegradable bags, when left in a natural environment, will degrade within 15 to 20 months. When disposed of in a landfill, they break down within 16 to 20 months, without leaving any toxic residue in the environment. Conventional plastics take about 400 years to do the same.
“The raw materials have been degradable in aerobic conditions, such as compost facilities, and anaerobic conditions, in a dustbin or garbage. Mainly due to the action of a fungus that is everywhere, it doesn’t matter the conditions. We’ve been able to prove it all,” says Parada.
BioElements recently was granted a B-Corp certification for environmentally and socially sustainable companies. The startup has also won the Babson Rocket Pitch Chile (a contest that promotes disruptive startups) in 2017 as a problem-solving venture with a global reach. Since that year, Parada has been the executive director of the Asociación Gremial Pro Biopolímeros, a Chilean trade association that represents companies that produce biodegradable goods with BioElements technology to the Chilean and foreign markets.
“As we received non-toxic medals, we managed to establish alliances for certifying contracts with different universities from Latin America such as Pontificia Universidad Católica de Valparaíso, in Chile, Universidad Nacional Autónoma de México, and the Universidad Nacional Agraria de la Molina in Peru. That’s why today we are working in three different countries, and we just launched in two more.”
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BioElements wants to go beyond retail biodegradable packaging
BioElements works in Chile, Peru, Mexico and recently opened offices in Colombia and the United States. Well supported by investments in research and development (about 7% of its annual turnover last year), the company targets to triple its size and reach $100 million in sales, with recurrent sales of around $30 million by next year.
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The startup has an R&D-focused budget of around $1.2 million for 2021. It plans to apply it in concluding the development of bio-resin for bottles and flexible packaging for products directly in touch with food, such as cheese and ham.
For 2021, the goal is to double revenues to $50 million. To do that, Parada is betting on incorporating these new products and consolidating BioElements’ position in markets where it is present, such as Mexico. In 2020, the country accounted for nearly 30% of the startup‘s income, and the CEO thinks that, by the end of this year, it is going to represent 60%.
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Last year the startup developed a biodegradable six-pack beer packaging for the Latin America’s beverage company CCU through a contest made by Endeavor. Now, Parada is part of Endeavor’s network of entrepreneurs.
The exec says BioElements doesn’t need fundraising now since the company has positive EBITDA. “We have always been cash-flow positive. We’ve always made money; that’s why we are investing not only in R&D but also in the company.” Yet, Series A should come by the 2022 first quarter.
The startup has been hiring commercial, operational, and research teams to develop new products. It recently started a new business line called NBO (New Business Opportunities), dedicated to developing new products that clients have been asking for.
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The startup provides biodegradable packaging for 34 clients, including Mercado Libre, Adidas, Casa Ideas, Salcobrand, Sodimac, and Linio. “The idea is to grow also in the B2C world by next year. We have some products that we are going to launch in grocery stores. We are big in retail business today, but we think we also have a word to say in the industrial side of the market,” said Parada without detailing exactly what products the startup is developing for the end consumer.
It’s all about ESG
In 2020, more than half (54%) of the investors interviewed by a BlackRock‘s survey said they consider sustainable investing to be fundamental to investment processes and outcomes, and 47% of respondents in the Americas have stated that sustainable investing is already (or will become) central to their investment strategies.
Respondents plan to double their sustainable assets in the next five years, rising from 18% of assets under management today to 37% on average by 2025. ESG investing is related to policies but also comes down to customers’ eagerness to find eco-friendly solutions, as stated by Parada.
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“Our customers have been telling us more frequently they want to find biodegradable solutions […] With the pandemic, this is going to be a bigger topic not only for governments and companies but also because customers are waiting and demanding more sustainable products,” says the CEO.
One example is the alternative food boom, such as investments in plant-based startups like NotCo and The Live Green. “There are people who are going to start thinking if their food package is also sustainable. So more and more companies from different industries want our products, that’s why we are investing this money in developing these new products for them.”