When analyzing private companies at Zirra we have the luck to come across some pretty exciting and life-changing ideas. Of course, what is a thrilling concept to one person can be dull as a doorknob to the next (ahem, Big Data BI), while some innovations are downright sexy (who wouldn’t drive a Tesla Roadster?!). Now, I am about to risk giving the impression that I don’t shave my pits when I say that we came across a startup recently that I can't stop fawning over, and that that startup deals with compostable packaging. That’s right, compostables. It’s the sexiest thing I’ve heard in a long time. Now, just like how I feel about Big Data BI, you may not agree with me on that point. But I hope to at least make the case for the other descriptor I used above, “life-changing.”
The company that has me so excited about sandwich bags is called Tipa, an Israeli startup with the vision to create plastic packaging that breaks down just like an orange peel, even fertilizing the earth as it does.
If this doesn’t excite you, I challenge you to spend just one weekend setting aside ALL the food and household product packaging you peel off and review the sheer volume of it after two days. And, no, most of that is NOT recyclable. And even that which is, let’s be perfectly honest with ourselves about our recycling habits. It’s time consuming, it’s difficult, and it costs a lot of tax dollars to deal with it. Now imagine a world where you could simply toss that sandwich bag and give it the classic send-off “to dust shall you return.” A world that DOESN’T have 269,000 tons of plastic pollution floating in the oceans. Life-changing.
To date Tipa has raised $12 million, which is nothing to sneeze at, but in the midst of Snapchat’s $26 billion IPO announcement it does appear as if investors and the world are less interested in this technology than I am. Clearly they don’t see how sexy this all is. But what’s at least as sexy as an electric sports car? The same thing that got Trump three wives (and his other unmentionable conquests), money. So, when we mention that the global packaging market is worth more than $95 BILLION doesn’t it sort of up the sex appeal?
So what’s stopping us from doing the right thing already? While Tipa and similar companies have contracts and are seeing interest, there are two obstacles. One is simply the price. This technology just isn’t as cheap as the plastics we currently use, averaging roughly three times the cost. The other obstacle is literally the antithesis to sexy, the plastics lobby. The American Progressive Bag Alliance is quite possibly the unsexiest thing ever and they spend millions fighting things like plastic bag bans and anything they feel threatens their piece of that $95 billion pie. Can you imagine being at a party and asking someone what they do only to have them answer “I’m with the American Progressive Bag Alliance, we work hard to protect your right to use plastic bags?" You’d down your drink in a hurry, mutter something about your fake spouse, and make a beeline for the bathroom.
We know there is a massive market and we know it fears change. Therefore, the only way to fight that is with pushing for more innovation in this area that will create true and affordable solutions. Only then can and will the industry adapt in a large scale way. So we have large market potential on one hand and low investor interest on the other. Frankly, it’s time VCs woke up to the plain fact that compostable packaging is just as sexy as Snapchat. While a Snap and a Tipa bag both disappear quickly, I’d bet on the longevity of the packaging market first, in spite of the universal appeal of duck-face selfies.