MicroGREEN Polymers Raises $10M From Increasingly Active Tribal Investors

8/29/13Follow @bromano

The cup that holds your morning coffee is a seemingly simple item to be used and discarded. It probably hasn’t changed much over the years. No big deal, except that Americans go through 137 billion disposable beverage cups each year, generating a tremendous amount of waste.

That looks like a huge opportunity to MicroGREEN Polymers, a company with a distinctly Pacific Northwest mix of technology, innovators, customers, and investors, now including two American Indian groups, which represent a new source of venture capital and private equity nationally.

The Arlington, WA-based manufacturer is raising $10 million from investors including the Confederated Tribes of the Grand Ronde. The financing is part of a $20 million round, which began early this year with a $5 million investment from the Stillaguamish Tribe, and is expected to close with another $5 million investment, also from American Indian tribes, says MicroGREEN president and CEO Tom Malone. The company plans to use the cash to expand its line of recycled and recyclable hot and cold beverage cups, and to increase production capacity.

The Stillaguamish and Grand Ronde are part of a growing number of American Indian tribes putting their newfound casino wealth to work in more sophisticated ways, including through direct investment in local companies focused on long-term sustainability, among other values that match their own.

MicroGREEN aims to make up to 500 million InCycle cups a year—still just a drop in the bucket of the disposable cup market, which is expected to grow to 159 billion units by 2016, according to the company, which cites research from The Freedonia Group. That would generate around $25 million in sales, and the company forecasts it will turn profitable by mid-2014, “largely because this round of financing enables us to put in place the final production equipment to hit that full capacity,” Malone says.

It plans to nearly double its staff to 100 people by the end of the first quarter of 2014, with a third shift to be added “almost immediately,” he says.

UW Technology

MicroGREEN’s manufacturing process—developed by Greg Branch and Krishna Nadella as graduate students in the University of Washington mechanical engineering department more than a decade ago—injects food-grade carbon dioxide into recycled polyethylene terephthalate (PET) plastic inside a pressure vessel. The polymer is then heated, allowing billions of tiny bubbles to form in the core of the plastic, expanding it into a material that can be made into insulated beverage cups marketed as InCycle.

Malone

Malone

The cups have 30 percent the density of solid plastic cups, Malone says, reducing the cost and global-warming impact of the end product. Moreover, the cup is easily recyclable at the end of its life—adhering to “cradle to cradle” design principles—unlike plastic-lined paper cups found in many coffee shops, which are difficult to recycle in most conventional municipal systems.

“All we’re doing is allowing recycled plastic to take another trip through the economy,” Malone says.

And since the MicroGREEN process gives the cups great insulation properties, there’s no need to grab a second cup or sleeve to protect hands from the hot drink inside.

“We can compete against all the legacy producers in a way that enables us to give the consumer what they’re looking for and for us to make a profit,” Malone says.

The company names customers including Redhook Brewery and Alaska Airlines, which will begin using InCycle cups for beverage service on flights beginning Oct. 1. Other airline orders are also in the works, Malone says.

The Alaska deal has helped expose the company to one of the world’s biggest users of disposable cups: Starbucks, whose coffee is served by Alaska and, according to Malone, has approved the InCycle cup to hold its brew. (Starbucks, which uses 4 billion cups a year globally, has a goal of making 100 percent of them reusable or recyclable by 2015. It’s actually a quite complex problem, as explained in this post updating the coffee giant’s progress.)

With this latest investment, MicroGREEN has raised $42 million. Earlier investors include WRF Capital, Northwest Energy Angels, and Waste Management, the garbage giant.

Tribal Investment

The story of MicroGREEN’s investment from American Indian tribes starts with … Next Page »

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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