Cellugy, a Danish, Søborg-based industrial biotech startup developing innovative cellulose-based solutions to help replace fossil-based materials in various industrial applications, has raised €4.9 million to help scale production of its EcoFLEXY dry cellulose product to industrial volumes. This round was led by Germany’s ICIG Ventures and Denmark’s Unconventional Ventures, with the new U.S.-based investor Joyance Partners joining the round alongside previous investors PSV DeepTech, the Footprint Firm, and EIFO.
The funds raised will help accelerate both the commercialization and the deployment of EcoFLEXY, which is currently in the pilot phase that involves substantially upping production from kilos to several tons yearly. The funding will enable Cellugy to expand its manufacturing capacities to commercial production to satisfy the extensive and increasing customer command and to support further partnerships that will take EcoFLEXY into new application areas and expand the company’s IP portfolio and headcount.
Many cosmetic brands in the personal care industry have pledged to commit to more sustainable, environmentally conscious formulations and will instead use natural, biodegradable ingredients like cellulose, which is in high demand. Cellugy’s team has developed a unique technology that harnesses the power of bacteria, which can leverage cellulose-producing microorganisms to produce high-purity cellulose derived from the bioconversion of sugar. The platform creates fully biodegradable alternatives to its carbon-intensive petrochemicals counterparts.
Petrochemical ingredients, sourced from fossil feedstocks, have been heavily used in cosmetic formulations because of their desirable functional properties. However, these ingredients can pose environmental risks, including pollution, increased carbon emissions, and even the human consumption of microplastics. Petrochemical ingredients can also pose potential health risks. As a result, Cellugy feels that bridging the gap between safety, sustainability, and applicability is crucial for manufacturers.
Dr. Isabel Alvarez-Martos, CEO and co-founder at Cellugy, said, “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.”
With a booming global cosmetic market expected to reach $415.29 billion by 2028, customers are increasingly seeking out bio-based alternatives. The natural and organic cosmetic markets are projected to surge to a CAGR of 9.76% and reach $50.46 billion by 2027.
However, despite the need for sustainable alternatives, the personal care industry lacks solutions to meet the petrochemicals’ performance requirements and cost criteria. Cellugy, as a result, is providing a ‘drop-in’ alternative, which is attractive because it is not only easily scalable but also fits within standard equipment and can be used in existing infrastructure.
The newest funding found adds an increased depth to Cellugy’s backing. Participation from existing investors makes up close to half of its production round, as PSV Deep Tech, EIFO, and The Footprint Firm provide both financial and expertise-based support. The lead investor, ICIG Ventures, represents the CBC arm of International Chemical Investors Group, a privately owned German industrial group with market-oriented chemical platforms and enterprises.
Dr. Pelin Yilmaz, Investment Director at ICIG Ventures, stated, “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. This sustainable alternative to petrochemicals, coupled with Cellugy’s efficient business model and potential for cross-industry application, presents a compelling combination.”
A new investor, Unconventional Ventures, has also joined the round. Their focus on sustainability and social impact strongly aligns with Cellugy’s long-term mission. Unconventional Ventures’ additional dedication to unlocking the potential of diverse founding teams and underrepresented groups behind impact tech companies also reflects Cellugy’s values of diversity and people empowerment.
Thea Messel, founder, and General Partner at Unconventional Ventures, said that, “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.”
New investor Joyance Partners has a strong portfolio in the biotech and personal care sectors, bringing deep insights into scaling up and commercialization strategies. It also possesses CPG connections that facilitate access to globally branded customers.
Dr. Isabel Alvarez-Martos of Cellugy has explained: “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. 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.”
