For decades, building materials companies have made cellulose insulation by shredding old newspapers. But with the decline of newspapers, the cellulose insulation industry is in a bind as it chases a dwindling supply of raw materials.
As old newspapers become harder to find, another paper-based product is gaining popularity: cardboard. As people increasingly turn to e-commerce, the amount of cardboard boxes is steadily increasing. Every year, 50 million tons of material ends up in trash cans and recycling bins.
Cardboard seems like the perfect paper-based solution to the insulation industry's supply shortage, but there's one problem. Cardboard boxes are full of contaminants like vinyl tape, shipping labels, and even metal staples. Converting it into insulation is much more difficult than traditional newspaper. But one of his startups, CleanFiber, anticipated this change and has been working on this problem for years.
To date, CleanFiber has been able to provide enough insulation for approximately 20,000 single-family homes. But CEO Jonathan Strimling knows that for it to become more than an afterthought, it needs to expand beyond its original factory in Buffalo, New York. Ta. The U.S. insulation market is dominated by a few large companies and is worth $12.5 billion, according to Grand View Research.
Strimling also recognized that he and his team needed more capital to expand the business. They last raised $10 million in Series A in 2022 with a creative combination of equity and debt to bring the Buffalo factory to full capacity. However, expanding to a nationwide scale would require even larger military funds.
Fortunately, the company had been working with Spring Lane Capital, a sustainability-focused private equity firm, for more than a decade. The company has been closely monitoring CleanFiber's progress and was pleased with the numbers the startup posted, deciding to lead a $28 million Series B that includes a $31.5 million project financing line, TechCrunch exclusively reports. obtained. Spring Lane was joined by Ahlstrom Invest, AXA Investment Managers, Climate Innovation Capital, and Tokyu Construction/Global Brain.
“This puts us in a very strong position to expand nationally,” Stripling told TechCrunch.
Converting a disparate raw material into a drop-in replacement for existing cellulose insulation using an entirely new process was one of the challenges the company faced during product development. We couldn't afford to spend more, and we needed it to perform as well or better for the installers we deal with on a daily basis.
CleanFiber has been selling bales at market prices while improving its production process. Strimling won't yet say whether the company is producing the product profitably, but said clean fibers can “bring the marginal cost of production down to a very, very important curve.” He said he was able to do it.
By building and operating the first plant of its kind, CleanFiber passes through one of the most dangerous parts of the Valley of Death often claimed by startups seeking to commercialize new technologies. I was able to. Building new additional factories is not easy, but it should get easier with each subsequent factory. Additionally, Strimling points out that stricter building codes will require more insulation in new homes than ever before. In other words, for CleanFiber to win, existing players don't have to lose.