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Intro

They were quite fascinated by the way that you can actually see that this is a bio-based material. You can see the fibers in it, and it just screams and shouts sustainability. It's not easy to find plastic companies that are willing to do something radical and different.

Announcer

Welcome to the Decoding Innovation podcast series, brought to you by the EY-Nottingham Spirk Innovation Hub, where we explore the innovative technologies, business models and ideas that are shaping the future of industries. During each episode, Mitali Sharma, a principal in the EY-Parthenon Strategy practice, meets with stakeholders at the cutting edge to discuss innovations in their space, challenges they need to overcome and their outlook on the future.

Mitali Sharma

Hello and welcome. I'm your host, Mitali Sharma, and today's topic is renewable materials. Our guest is Malthe Larsen, the CTO, Innovator and Cofounder of Coastgrass, a company that is specializing in making bio-composite materials from seagrass.

Malthe, welcome to the show.

Malthe Larsen

Thank you very much.

Sharma

Malthe, before we begin, would you mind sharing your background and your journey so far?

Larsen

Yes, I'm an engineering graduate from Danish Technological Institute. I'm an engineer within product development and material development. I founded the company Coastgrass with my fellow student, Kristoffer. He's the CEO and I'm the CTO. And we are, right now, a small company of only three people, but we are expanding.

I have a passion, and I have had all my life a passion, for development of materials, exploring material, and also, circular economy and sustainable development.

Sharma

Malthe, you said you started your company just out of school. Was that at the beginning of the COVID-19 pandemic?

Larsen

Yeah. We graduated in December, and we founded the company in February 2020, so just before COVID-19 pandemic. So, this definitely had some influence on what we were able to do. It came as quite a shock. And we had to be innovative in the way that we tried to break into both – to get contacts with customers, suppliers and end users.

One of the things that we actually did, because we were just sitting at home and we couldn't go to any streets or stores or to talk to people, was build kind of a fake landing page. So, we did some renderings of products that looked like they were made with our material. And then we set it up on different fora on the internet to get some contact with people who were just sitting at home like everybody else.

So, that was one of the things that we did to use our time and the possibilities that we had during the lockdown as best as we could.

Sharma

Malthe, thank you for your background. It sounds very interesting that you started this company just out of school. Could you tell us a little bit about what got you so excited that you took this bold step? Did you always want to be an entrepreneur, or it just came your way?

Larsen

Well, I think it came our way, because I think we could not do it. So that was why we got so passionate about working with the materials, working in the lab. And also, the first time that we started engaging with the market and with customers and users, it got us even more hard on the topic, because there was a pull, and it was a genuine interest with the people that we talked about.

Kristoffer and I have, throughout our engineering education, worked with more toxic and old-school polymers, like epoxy, which is one of the worst ones for the environment and climate. So, as soon as we started working with eelgrass, we knew that we could combine our passion with something that's sustainable and future proof.

Sharma

How did you come up with the idea of using seagrass?

Larsen

It was a course that we took at our university, where we got in contact with a local supplier of eelgrass. Eelgrass is an underwater type of grass that sheds its leaves once every eight weeks. So, this supplier upcycled eelgrass and used it as roofing — an old Danish tradition — but it's not common anymore. So, he needed to find another use case for eelgrass.

So, we started looking at what potential uses are in bio fibers and we started looking at compounding it to a plastic composite. And from there on, things took shape. And now we're at a stage where we are able to industrialize our product and sell it in big quantities.

Sharma

You're probably the right person to ask the question what is bio-composite material and how does that differ from other renewable materials?

Larsen

A bio-composite material is a material that is bio-based, meaning that there will be a binding agent and a fiber, both bio-based, in our case, it's a bio-based polymer, and then it's the natural fiber, eelgrass.

So, it differs from the conventional fossil-based plastics in the way that it's 100% renewable and not fossil-based as conventional plastics.

Sharma

If you can educate our audience on the recent technological advances in bio-composite materials, how far have we come?

Larsen

It's a matter of looking at both the advances within the biopolymers, which are the binding agents, but also the technologies for upcycling and compounding bio-fillers.

Natural fibers and using them in injection molding, I think we are quite far. There's still some infrastructure and legislation that needs to be corrected and adjusted through the new materials and technologies within this field. But I'm quite hopeful about the future and I know that there's a big pool in the market for bio-composites and bio-based materials.

Sharma

Malthe, you called it eelgrass. Why is it called that?

Larsen

Well, it's because it's a habitat for eels. It's an underwater type of grass found in big meadows on the shoreline. So, it's a habitat for a lot of sea animals, especially eels.

Sharma

What is the advantage of using this grass?

Larsen

There're multiple advantages. First of all, it's a really abundant resource, meaning that more than 50,000 tons in dry weight washes up onto the Danish shore each year.

It's a nuisance to locals, and municipalities use a lot of money in removing it and just disposing it — putting into landfills and getting rid of it. Instead of doing that, we use the inherent qualities that the fiber has. It's quite heat resistant, making it good for injection molding and mixing with the wood plastics.

Sharma

Interesting. Could you explain a little bit about the process of converting this material into pellets?

Larsen

The process is that the eelgrass is collected from the beach, preferably within 24 hours of it landing on the beach. It's then spread out on some fields, where it gets washed from rains, and then dried from the wind and sun. Then it's pressed into bales, and we mill it down and then we compact the fibers.

And after that, we ship it to our producer, who mixes it in a compounding machine into pellets. And these pellets are the product that we sell. So, the pellets are designed and manufactured for injection molders and about 70% of all plastic products are injection molded. So, it's quite a huge market.

Sharma

Interesting. It seems like a very labor-intensive process. Am I correct?

Larsen

You are correct in that. It's also a process that's quite climate friendly, using just the anti-fuels to dry it and clean is quite climate effective. But obviously, we are also looking into industrializing this process and scaling the capacity. At the moment, we have about three suppliers in Denmark, but we're working on onboarding more municipalities, who have this problem all around Denmark.

Sharma

What are the kinds of binders that are used to create the pellets that you need for actual extrusion?

Larsen

The fiber pellets that we make from eelgrass and shipped to our producer are actually just compressed fibers. So, there's no binding agent other than the lignin that's in the fiber. And once it's compounded at our producer, we can use a variety of polymers as a binding agent. So, that could be a bio-based polylactic acid (PLA), which comes from starch or sugar canes, and there're different kinds of polymers that we can use.

We are also able to use normal conventional fossil-based plastics. But these are only used for products that are designed for longevity. So, something like a yard or playground which needs to be there for 40 years, maybe it's difficult to have a mix of biodegradable materials.

Sharma

Interesting. Are there specific manufacturing needs that go with this material?

Larsen

There're a lot of processing needs. We need to have a fiber that's cleaned from sand and salt and other debris from the beach. And that's quite a challenge when working with naturally occurring fibers. Definitely, one of the most challenging things is that you need to have an end product, which is the same all the way through. You can’t have differences in what we send to our supplier, because then, we would have differences in our finished product. So, that's one of the main differences. We try to prepare our fiber so that the machinery already available in the industry and on the market can use it, because then we can sub into obtain a greater market share.

Sharma

That's very interesting. So, just to deep dive into that specific element, when you came up with the material or the modification of the material, how did you start thinking about the first few products that this material could be used in?

Larsen

The first product that we thought of was a sea cork for a gin bottle. And that was because there was a company close by our producer and they were locally based, so they wanted a sea cork out of seagrass. But we quickly realized that the market for sea corks is quite small. So, we took a step back and looked at the packaging market.

We've been working with a renowned Danish skincare brand, making their packaging for their lotions and creams. And there are some difficulties within that, because this EU legislation that's tricky to get around when using bio-composites that are not grass. So, it's tricky, but at the moment, we are also looking at functional products, as I mentioned, playgrounds and industries, like logistics or transport boxes for logistics. There's a huge turnover for plastics within those industries, even though the consumer might not know. But there's a huge waste of plastics within the logistics industry. And so, we are looking at industries, where there's a lot of material, several tons of material, being wasted every year. So, we can make a significant difference within those industries.

Sharma

How does the bio-composite material degrade over time?

Larsen

We have different material types. We have a material that is bio-based, meaning there's a bio-based binding agent and then our fiber. That material grade isn't biodegradable but is 100% bio-based. And then we have a biodegradable bio-composite, so to speak, which is a PLA, which is industrial compostable and mixed with our eelgrass fibers.

And then we have for the long-living product that needs to be resistance to UV, for example, needs to be able to be outside for many years. We have a fossil-based binding agent for that and a UV accelerator.

Sharma

Interesting. When you were thinking about this material and its applications, did you use or prioritize the capabilities of the material, the tensile strength, absorption permeability and things like that? Or did you start from the end market and, say, where is plastic being used most?

Larsen

I think we started from looking at the market and just seeing there is a place where people are willing to pay a green premium, because materials like this are quite expensive to manufacture, at least in the beginning, once before it’s scaled. But then also, we've now realized that we also need to look at the mechanical and chemical performance of the material, because that can be quite a long way to market, if you want to go with products that have high demands within those properties. So, it's in-between.

Sharma

You said you're working with one of the key manufacturers in Denmark in skin care. How did you approach them? How do you get them interested?

Larsen

It was through a concept that we had. We just utilized our network and showed them some early prototypes, and they were quite fascinated by the way that you can see that this is a bio-based material. You can see the fibers in it and it just screams and shouts sustainability. So, that's a huge advantage for them, because once their products are on the shelf, they stand out from other white plastic jobs, for example. Because you can see the fibers and it looks natural. So, that was the key selling point when we approached them.

Sharma

This is fascinating. A lot of people have good ideas, but to bring them to fruition is another task altogether. Please walk us through the journey of you coming up with the idea and then, approaching a company and having a saleable product.

Larsen

It's definitely a journey of ups and downs. I think one of the significant things about our company is that we need to build our supply chain as we move along. It's been a journey of both contacting customers, talking to customers and getting a lot of good feedback. And then, going to our producer and telling them this is what we want. Can you process our fiber in this way?

A lot of product development and iterations. It's not easy to find plastic companies that are willing to do something radical and different. It's quite an old industry or at least an industry that's been doing things the same way for a lot of years. We found our producer in Belgium, who is, I would say, probably the best in Europe, maybe the best in the world. So, using fibers in the plastic products and compounding in a way, so it can be used in the injection molding industry that we have today.

Also, in regard to our supply chain and our upcycling of eelgrass, we've been doing a lot of iterations ourselves with our supplier.

I've been doing a lot of development with the compacting of the fibers with them, with the processing, with the collection, adjusting and fine-tuning the process, so it fits our needs. At the moment, we are on the verge of launching a platform for municipalities, so they can monitor their beaches and we can get a lot of data about where and when the eelgrass will wash up. So, we can be quick to respond when the eelgrass is there. And also to have clean beaches immediately, because that's a big selling point for municipalities.

Sharma

You said that you would need to respond when the eelgrass is there. Is this a seasonal material?

Larsen

It is quite seasonal. It's from about the middle of June, and then into February and March, which is the most intensive period. It's also another way for municipalities to think, a lot of municipalities think, oh, we need to keep the beaches clean just in the summertime when there're beach guests. But it's also a matter of avoiding the emissions that will come from the eelgrass as it lies on the beaches during the winter and rots. That's because there's some quite potent climate gases, like methane, that will emit from the eelgrass when it rots. So, it's also a matter of convincing the municipalities that this is a good idea and onboarding them onto a quick-response platform, so we can get out there and retract eelgrass before it rots.

Sharma

Does eelgrass grow anywhere else in the world?

Larsen

Yeah, in most parts of the world there’re different sorts of eelgrass. We have a local one called Zostera marina that we have in the northern part of Europe. In the Mediterranean, there's also a type of Zostera. So, all over the world.

Sharma

And do they all have the same kind of capabilities in terms of material composition?

Larsen

More or less. It's actually not such a big problem. The specific material composition and the fibers — the variations aren't so significant that we need to make any changes in our processing.

Sharma

Very interesting. Let's pivot to Coastgrass as a company. You said you're three people right now. You're doing work with a lot of suppliers, manufacturers and product makers. That means sort of convening an ecosystem. Tell us about this journey.

Larsen

Kristoffer and I, from quite early on, realized that in order to cover such a broad perspective, we need to be the spider and the web. We don't have much production in-house and we don't have much product development anymore, but we administrate and rely on our partners. So, this was quite an important realization and probably also why we are still alive as a company, because we realized early on that we need to outsource it and we need to find partners, suppliers and producers that we can rely on and that share the same values as us. So, it's been a journey of trying development partners and suppliers and producers. And saying this won’t do and then go out and find someone new, because it's also a matter of trust. We need to be able to trust our producing partners quite well and need to know that once we say, we are going to achieve these goals, then we also tell it to our customers and investors. And then we need to rely on our partners to achieve the goals with us.

Sharma

Malthe, you referenced investors. Let's talk about that. How did you get this company off the ground in terms of funding?

Larsen

We started the company, Kristoffer and I, directly from university. So, as soon as we graduated, we got ourselves part-time jobs. I was working as a teaching assistant part time at the university and Kristoffer had a part-time consultancy job. And all the other waking hours, we were working on Coastgrass. So, that was the first half year of founding the company.

Then we got quite a lot of public funding. We got into a Danish program called Innofounder, which is 12 months with a paid salary, quite a low salary, but still we were able to go full time on that. And during the last month of Innofounder, we got two angel investors on board, who were able to take us to the next step.

From there on, we closed around with the syndicate of investors, private investors, and then our third cofounder, our commercial lead, Dani, invested in us also. And then now, we are in dialogue with some of our partners for further investment. And that most likely will be the last investment that we make in the company.

Sharma

Interesting. What's been your biggest learning through this journey?

Larsen

It's kind of difficult. We've been talking to a lot of venture capitalists (VCs). I think it's also a matter of how VCs are always interested in waiting a little bit. So, they're going to say, we're going to wait three months and follow you just to see if you crash and burn or if you actually make it. So yeah, making sure to start fundraising early on. That's definitely one of the key learnings that we have. Try to secure a stable runway, because it's difficult to focus when you're on a burning platform and you're running out of money in two months. Then, it's difficult to focus and keep calm. So yeah, fundraising in advance definitely.

Sharma

Interesting. When you were thinking about this material, which is going against cheap plastics, how were you thinking about pricing?

Larsen

We obviously want to keep the cost price as low as possible, even though eelgrass is abundant and waste material at the moment, there’s cost to processing it. So, we are still trying to develop our process and trying to increase in efficiency also in regard to cost and our own processing.

And obviously, there's going to be legislation that makes it impossible for people to sell plastics in the future that are nonrecyclable, nonbiodegradable or bio-based. So, that's definitely an advantage for us. There's going to be taxes on fossil-based plastics in that regard. And I think at the moment, we're about two to two and a half times pricier than the cheapest fossil-based plastics. So, I think we are on the way to being competitive on price.

Sharma

What are the major factors that are hindering your ability to be more competitive?

Larsen

We are relying on our suppliers of binding agents. So, bio-based binding agents, at the moment, are pricey and they were even before we have had global supply problems and so on. So, it's something that we are just waiting for the market to cool down and also the market to expand. Because there's definitely room for expansion in the supply of bio-based polymers. We are also trying to be more efficient in the way that we process our own fibers.

Sharma

So, it's about processing and actual production, cost line, the labor, the material. And you're trying to create efficiencies around it.

Larsen

Yeah, exactly.

Sharma

Do you think volumes would make a difference?

Larsen

It's definitely a volume game, there's no doubt about that. The reason why we are at a price range, like two or two and a half times at the moment, compared with some fossil-based plastic, is also because we're in relatively low capacity. We are right now at about 100 tons a year. So, it's not a lot, compared with a big plastic producer. It's definitely a volume game.

Sharma

How long does it take for this kind of material to biodegrade?

Larsen

That's an interesting question because biodegradable does have no clear definition. So, we like to use the term industrial composting, where the material will end up in an industrial composting facility.

There're polymers, like PLA, that can biodegrade in some climates of the world, but won't do in other climates of the world. So, it's easier to say, well, it's compostable in facilities that use these conditions.

And I think it's also the right way to look at it, because industrial compostability, in that process, you also use the biogas that would otherwise be emitted if it was just on a landfill and degrading. That’s the right way to look at it. Our material would need about 90 days in a facility like that in order to be 95% biodegradable.

Sharma

When you were thinking about your product being market-ready and working with the skin care company, how has the process of making it market-ready been?

Larsen

It's been quite challenging, and I think also because we were market-ready in regard to the chemical and mechanical performances of our material. But there are legislations within the EU that, right now, are quite challenging for us, because there's a law that says that you can’t use anything else than tree flower. And I think it's coffee shelf for bio-composites, which is kind of weird if you ask me.

But that's the legislation that there is at the moment, and you need to go all the way to the parliament in order to get it changed. So, we are looking at ways to get around it. And that's also one of the reasons why that's not the main market that we're focusing on right now. We are focusing on producing products that are more functional and don’t have the same requirements.

Sharma

So, the trend toward sustainability is definitely helping advance your material.

Larsen

Yeah, that's probably the main driver for our material.

Sharma

What developments in this field are exciting you the most?

Larsen

We've been working with the Danish Technological Institute on coating. There're some really exciting things about using coatings for biodegradable materials, because it's a technical issue, for example, to have a lotion chart in a human bathroom for three years. It needs to be biodegradable in a humid environment within 90 days, but it needs to be able to sustain a bathroom for three years.

So, the coating that they use is like a glass coating that's actually biodegradable, once it’s shredded as you do in composting facilities. So, I think probably looking at surface treatment for biodegradable and compostable materials is one of the key drivers in commercializing and expanding it. And for it to be able to compete directly with fossil-based plastics.

Sharma

Malthe, as you think about the next steps, the growth trajectory that you're on, what keeps you up at night?

Larsen

Well, it's both concerns and hopes that keeps me up at night. I think some of the concerns are: Will the infrastructure of waste handling and recycling actually be able to adapt to bio-based materials?

We can't be relying on fossil resources forever. So, every waste management system in the world needs to be able to go from fossil-based to bio-based in some way. And I can be a bit concerned about whether that's possible in a lot of other poorer parts of the world than we are. That's one of the things that can keep me up at night.

Another thing is the hopes and dreams of what we are doing and trying to achieve – one big close, a big deal with the customers. It's definitely something that excites me a lot.

Sharma

For sure. I'm sure it's going to be even more exciting in the years to come. We wish you all the luck and we'll be watching. Thank you so much for your time.

Larsen

Thank you so much for having me.

Outro

Announcer: The Decoding Innovation podcast series is a limited production of the EY-Nottingham Spirk Innovation Hub, based in Cleveland, Ohio. For more information, visit our website at ey.com/decodinginnovation. If you enjoyed this podcast, please subscribe. Leave a review wherever you get your podcasts and be sure to spread the word.

 

The views of third parties set out in this podcast are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.

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