May 21, 2024
Søborg-based Cellugy, a Danish industrial biotech startup developing innovative, natural, biofabricated cellulose-based solutions to replace fossil-based materials in various industrial applications, has raised €4.9 million in seed funding to scale up production of its EcoFLEXY dry cellulose product to industrial volumes. The round was led by Germany’s ICIG Ventures and Denmark’s Unconventional Ventures, with new, U.S.-based investor Joyance Partners joining the round, along with existing investors PSV DeepTech, The Footprint Firm, and EIFO.
The funding will accelerate the deployment and commercialization of EcoFLEXY, currently in the pilot phase. This involves a substantial production increase, from kilos to several tons yearly. The funds raised will enable Cellugy to expand its manufacturing capacity to commercial production to satisfy extensive and increasing customer demand. The funding will also support further product co-development partnerships to take EcoFLEXY into new application areas and expand the company’s IP portfolio and headcount.
In the personal care industry, many leading cosmetics brands pledge commitment to more sustainable, environmentally conscious formulations, placing natural, biodegradable ingredients like cellulose in high demand. Cellugy’s team of scientists has developed a unique platform technology that harnesses the power of bacteria, leveraging cellulose-producing microorganisms to produce high-purity, crystalline cellulose derived from the bioconversion of sugar. The platform creates fully bio-based and biodegradable alternatives to carbon-intensive petrochemicals.
Petrochemical ingredients sourced from fossil feedstocks are heavily used in cosmetic formulations for their desirable functional properties. However, these ingredients can pose environmental threats such as pollution, increased carbon emissions, and even human consumption of microplastics. These petrochemical ingredients also pose potential health risks. Therefore, bridging the gap between sustainability, safety, and applicability is crucial for ingredient manufacturers.
“Reliance on fossil-based petrochemical ingredients is today’s most critical sustainability issue in producing personal care products. With our technology, we genuinely see a future completely free from these polluting ingredients,” said Dr. Isabel Alvarez-Martos, CEO and co-founder at Cellugy. “Our mission is to develop sustainable solutions for everyday products, so we’re naturally pleased to partner with impact-driven investors. Together, we can achieve those goals.”
The global cosmetics market is booming and is expected to reach USD 415.29 billion by 2028. With a growing focus on health and sustainability, consumers are increasingly seeking bio-based alternatives. The natural and organic cosmetics market is projected to surge at a CAGR of 9.76%, reaching USD 50.46 billion by 2027.
Despite the obvious need for high-quality, sustainable alternatives, the personal care industry lacks ready solutions that meet petrochemicals’ performance requirements and cost criteria. Cellugy is providing a ‘drop-in’ alternative, which is particularly attractive as it is easily scalable, fits within standard equipment, and can be used in existing infrastructures.
The latest funding round adds further depth to Cellugy’s already strong backing. Follow-on participation from existing investors makes up close to half of the investment round, as PSV Deep Tech, EIFO, and The Footprint Firm continue to provide both financial and expertise-based support. Lead investor ICIG Ventures represents the CVC arm of International Chemical Investors Group, a privately owned German industrial group with market-oriented chemicals platforms and enterprises, bringing additional valuable industry-specific connections, expertise, and guidance.
“Investing in Cellugy represents a strategic step for ICIG Ventures, underlining our commitment to fostering innovations that drive sustainability in the industrial sector. Cellugy’s breakthrough in biofabricated cellulose technology not only aligns with our mission to support green technology but also promises to revolutionize the personal care industry and beyond,” added Dr. Pelin Yilmaz, Investment Director at ICIG Ventures. “This sustainable alternative to petrochemicals, coupled with Cellugy’s efficient business model and potential for cross-industry application, presents a compelling combination. We are particularly excited about the synergies in accompanying Cellugy in its scale-up journey. Our investment underscores our belief in Cellugy’s team, technology, and their vision for a more sustainable industry.”
New investor Unconventional Ventures also joins the round. Their focus on sustainability and social impact aligns strongly with Cellugy’s long-term mission. In addition, Unconventional Ventures’ dedication to unlocking the potential of diverse founding teams and underrepresented groups behind impact tech companies reflects Cellugy’s core values of diversity and people empowerment.
“When meeting Isabel, Paruntungan, and Deby we were particularly impressed with their unified mission of creating a sustainable alternative to petrochemical ingredients. Their groundbreaking platform technology has the potential to revolutionize not only the personal care industry, which is sorely in need of more sustainable alternatives, but could also disrupt industries like textiles and food,” commented Thea Messel, founder and General Partner at Unconventional Ventures. “As an impact investor, seeing the founders’ determination to translate outcomes of scientific research into innovative commercial products with significant sustainability gains really stood out to us, and we are proud to be backing them on their growth journey ahead.”
New investor Joyance Partners has a strong portfolio in the biotech and personal care sectors and brings deep insights into scaling up and commercialization strategies. It also has valuable CPG connections to facilitate access to global branded customers.
“This investment round will be instrumental in scaling up EcoFLEXY’s production and distribution, allowing us to meet the surging demand for sustainable, high-performance beauty ingredients,” Alvarez-Martos explained. “It will also fuel further product co-development partnerships for EcoFLEXY, allowing us to unlock its full potential and develop new application areas within this target market. By promoting sustainable materials choices and innovative production processes, we see ourselves as also enabling the innovation of others, leading the way to healthier, more ecological solutions that are both skin and planet-friendly.”
GERMANY