International Startups
EconomyUp | 9/12/2024 | Italy
English translation
By Luciana Maci
EconomyUp Editorial Coordinator
John Felts, surfer and chemical engineer, talks to EconomyUp about his company Cruz Foam, which makes an eco-friendly foam composed of 70% recycled food waste, capable of replacing polystyrene in packaging and has also convinced Leonardo DiCaprio and Ashton Kutcher.
What do a Californian chemical engineer surfer, a Washington University professor of Italian origin, Leonardo Di Caprio and Ashton Kutcher have in common? They are contributing, each in their own way, to making the planet a better place. How? By participating in various capacities in the start-up Cruz Foam, created by engineer John Felts with professor Marco Rolandi, and financed by various investors, including the two famous Hollywood actors.
Cruz Foam produces an innovative material in the world of packaging: an eco-friendly foam that can replace polystyrene and which as a result promises to make the packaging sector more ecological. Since being founded in 2017, the company has grown, obtained significant funding and now John Felts is in Italy to propose his innovative material. This is where EconomyUp met him to listen to his story: a story of innovation, but also of passion and sacrifice. In fact, at the start he was forced to find a second job as a home pizza delivery boy to make ends meet.
College, Surfing and Oil
The first seed of the idea for what, years later, would become Cruz Foam were sown when Felts attended UC Santa Barbara in California. “Santa Barbara is right on the coast, the university itself is literally facing the ocean,” the entrepreneur explained to EconomyUp, “and in front of it are the Channel Islands, a group of 8 islands, extraordinarily natural habitats. But there are also many oil platforms and offshore drilling, which generate floating masses of tar. I was a surfer; I would dive into the ocean and end up covering myself with tar. When I got home, I had to scrape it off my feet with a knife. That image stuck with me and gave me the drive to do something for our seas.”
After graduating with a degree in chemical engineering, John worked for six years in the environmental remediation industry, collaborating with the US Army, the EPA (the Federal Government’s Environmental Protection Agency), and the Navy. But his efforts in this direction were less than satisfying, so he decided to change his life and went back to school to earn a Master’s in Materials Science at the University of Washington.
It was there that he met the man who would become the co-founder of Cruz Foam: Marco Rolandi, an expert in materials, biopolymers, electrical engineering and physics. Together they discovered the potential of a biopolymer derived from shrimp and crab shells that allowed them to create robust, effective and sustainable new materials. Initially, they tried to develop surfboards made from this material. “That was our interest at the time,” the entrepreneur continues, “but about a year later, we realized we had created something that could really make a difference. The big issue was ocean plastics and the damage we were all doing to the planet with single-use plastics, especially foams. Almost without realizing it, we had created a perfect substitute for Styrofoam.”
However at this crucial stage the start-up faced financial difficulties. “I worked all day in a basement lab at UC Santa Cruz, the International Research University of California, but it didn’t pay much, and then after a year I became a father too. I found myself working 10 hours a day for Cruz Foam and then going to deliver pizzas for 4-5 hours. It was definitely a hard time but I had to keep going.”
Then the innovative company obtained an initial funding of $15,000 from the “National Science Foundation” and participated in various pitches and competitions, obtaining amounts ranging from $2,000 to $20,000. It also started working with accelerators such as Plug and Play, Alchemist, Launch, The Sandbox. Things began to change when Cruz Foam joined an accelerator and incubator in Santa Cruz and the founders met Toby Corey, an entrepreneur who had worked at Tesla and SolarCity and who helped them grow.
A Boat Trip to Alaska to Raise Funds
Another turning point was joining the Sustainable Ocean Alliance accelerator, supported by Marc Benioff, founder, president and CEO of Salesforce. A boat trip to Alaska played a central role here. “Sustainable Ocean Alliance is an ecosystem of investors, stakeholders, filmmakers and other start-ups like us. At one point they launched this program: a boat trip with 20 members from 20 start-ups, representatives of about 20 companies and 20 other stakeholders. We sailed through the fjords of Alaska for a week, there was no Wi-Fi and you couldn’t use cell phones. It was a fantastic experience. I created lasting relationships that I still maintain today, including our biggest investor, Tom Chi. He gave us $500,000, another fund gave us $500,000, and we also received a $225,000 SBIR (N.B. federal government funding for research and development projects.) at the end of 2019. By the beginning of 2020 we had reached a significant sum, $1.2 million.
Cruz Foam and the Support of Hollywood Stars
But where do Hollywood stars come into it? Michael Smith, one of the start-up’s first business angels, initially invested $20,000 and later founded Regeneration VC, doubling his investment in Cruz Foam. Regeneration VC has a diverse network that includes entertainment and fashion and one of their strategic advisors is Leonardo DiCaprio, and that’s how the star of “Titanic” decided to invest in Cruz Foam. “I was able to meet him personally,” recalls John Felts. “Leo’s team made a lot of useful connections, demonstrating real and unexpected commitment.” It was much the same with Kutcher.
“Start-ups? It’s like surfing”
As an experienced surfer, John compares running a start-up to surfing. “Standing up on a board for the first time is a huge challenge, just like starting an innovative company. Then, once you’re up, you realize there’s no going back. As you go, you find yourself having to brave bigger and bigger waves and different scenarios each time. There are moments when you’re in tune with the wave and you ride it, and other times when it hits you over and over again. Just like in the start-up world, where the hard times can be extremely tough, but the successes can be extraordinary.” Cruz Foam has grown and now has multiple locations across North America, with its headquarters in Santa Cruz and operations in Chicago and North Carolina. The company has about 25 employees and is partnering with big players like Amazon Robotics and LVMH. Is it a scale-up or a big start-up? “Right now, as far as funding rounds go, we’re between our Series A and our Series B. We’ll probably do another round in the first half of next year. It’s always going to be a start-up in my mind, but I feel like we’re past that early stage.”
Cruz Foam: The Technology
Cruz Foam is committed to replacing conventional single-use foams by offering similar performance at a competitive price. The innovative eco-friendly foam is made of 70% recycled food waste, helping to reduce waste going to landfills. The approach is based on a scalable and frictionless model, which allows material manufacturers to easily integrate this sustainable technology into their existing operations. In fact, it allows a seamless transition from traditional plastic pellets to those of Cruz Foam. Specifically, the technology allows to convert raw materials into pellets, which are then heated, extracted and expanded to be sold in various profiles and thicknesses, ready for various applications. Every Cruz Foam product is compostable, meaning that nothing should end up in a landfill. In compost, Cruz Foam completely degrades in about 100 days without ecotoxicity. Cruz Foam partners include companies such as AMC Industrie based in Paris, Bay Cities in California, Atlantic Packaging in North Carolina and UN1F1ED2 Packaging in Massachusetts.
Plastic: An (Unfortunately) Growing Market in the EU
Plastic production in Europe reached 57.2 million tonnes in 2021. This equates to 36.1 kilograms of plastic per person, a 29% increase since 2010. The most common form of plastic disposal in the European Union is incineration with energy recovery, which accounts for 39% of disposal. Recycling makes up 32.5% of disposal, landfill 25%, and the remaining 3.5% is “mismanaged”, meaning it leaks into our terrestrial and marine ecosystems. Each of these disposal scenarios has negative impacts on the environment, including air pollution, chemical leaching, methane emissions and more. Alternative packaging materials that fit harmoniously into our current ecosystems and can be seamlessly integrated into circular systems are therefore needed. And Cruz Foam aims to offer just that.
