Cruz Foam, a green alternative to Styrofoam, lands $18 million in Series A funding

If anyone appreciates a bit of cushioning, it’s a company that makes protective packaging materials, which is why Cruz Foam, an environmentally friendly alternative to Styrofoam, is celebrating landing $18 million in Series A Funding.

• The round was led by Helena, the venture capital firm with a non-profit arm that supports environmental and social issues, and joined by Small Planet, Regeneration VC, At One Ventures, and SoundWaves.
• Investors already on board from earlier funding rounds include Leonardo DiCaprio and Ashton Kutcher.

Sea foam: Cruz Foam, which draws its name from its headquarters in Santa Cruz, California, was founded in 2017 by John Felts, its CEO, and Marco Rolandi, its chief science officer.

Felts, a surfer, is disgusted not just by floating plastic waste, but also by drilling rigs near Santa Barbara.

“When I used to come home from surfing, I used to literally have to scrape black tar off of my feet with a knife because it was so prevalent in the ocean,” he told us.

Expanded polystyrene—often generically referred to as the Dow brand, Styrofoam—is petroleum-based and famously slow at biodegrading.

And it’s increasingly falling out of favor with lawmakers.

• Maryland, Maine, Vermont, New York, and New Jersey have banned polystyrene, with a ban in Colorado to come in 2024.
• A California law requires a 25% reduction across all plastic packaging, and mandates packaging be recyclable, reusable, refillable, or compostable by 2032.

Retail companies are particularly interested in reducing their carbon footprints.

• 71% of retail executives are making ESG a priority, compared to 64% of executives across all industries, according to a Harris Poll.

Alternative scenarios: In this (warming) climate, “we’ve literally reached out to nobody at this stage,” Felts said. “Everybody’s coming to us looking for solutions in their supply chains for this issue that they’re having around using these materials that are getting banned and they need to move away from for different reasons, be it regulation or be it ESG goals.”

Felts said Cruz Foam has been approached by brands as varied as Ford, which wanted a prototype of styrofoam-alternative packaging for a 300-pound engine part, to Estée Lauder, which wanted the same for a bottle of lotion.

While the company hasn’t inked deals with either brand, it has with Whirlpool, and consumers will begin seeing Cruz Foam on some of their products later this year or early next year, Felts said.

Shell yeah: Cruz Foam is made primarily from chitin, a component in the shells of shrimp and other crustaceans, a fishery waste product in abundance throughout the country since the shellfish are harvested off of many US coasts, Felts said. The material’s ubiquity means that it can be made regionally near where it’s being used, rather than incurring the environmental impact of long-distance shipping.

The foam can be composted in backyards or through municipal curbside programs.

Of course, many people neither compost in their backyards nor live somewhere where there’s a curbside program. But Henry Elkus, founder and CEO of Helena, said what drew the VC firm to Cruz Foam, is not just what happens to the product in the best-case disposal scenario, but also the worst.

“If we’re doing a side-by-side” comparison with styrofoam, he said, “if you do throw this in the trash and it ends up in a landfill, it won’t take thousands and thousands of years to biodegrade.”