Why We Invested in Mycocycle: Nature-Inspired Circular Solutions for the Built World

Construction and demolition is now one of the biggest sources of waste in the world. By 2025, the annual volume of construction waste generated globally is expected to reach 2.2 billion tons.[1] In the U.S. alone, 600 million tons of construction and demolition debris were generated in 2018, more than twice the amount of municipal solid waste.[2]

The challenge lies not only in sheer volume, but in the complexity of construction materials. Non-concrete waste material––such as wood, drywall, asphalt shingles and tile––often have plasticizers (chemicals that make materials more flexible and easier to mold), trace or heavy metals and polychlorinated compounds in them, making it hard to recover those materials for their next lives. Furthermore, when those materials end up in landfills, they can leach those toxic chemicals into arable land and waterways––where they leave lasting environmental consequences.

Mycocycle, a biotechnology startup, found a solution to help address this complex challenge, inspired by fungi. Their patent-pending process improves the natural functions of fungi to transform construction waste into low-carbon raw materials for the built environment. Within a matter of weeks, their technology can turn organic waste from the built environment––such as carpet fiber and tires––into MycoFIBER©, MycoFILL© and MycoFOAM©, all raw materials that can replace virgin-derived materials.

Closed Loop Partners’ Ventures Group saw a key opportunity in Mycocycle’s technology, a solution that reimagined how materials can be recovered and kept in circulation. This aligned with Closed Loop Ventures Group’s focus on deploying early-stage funding to breakthrough circular solutions for foundational materials that underpin and influence vital sectors of the economy––from water and minerals to polymers and organics. Mycocycle’s solution to recover organic waste in the built environment unlocks new possibilities for circularity across a major industry.

Last year, Closed Loop Ventures Group led Mycocycle’s Series Seed extension to help address the growing challenge of construction waste––with participation from US Venture, the Illinois Department of Commerce and Economic Opportunity INVENT fund, and existing investor TELUS Pollinator Fund for Good.

Since then, over the past 10 months, the Mycocycle team has continued to impress––making significant progress on processing cost reductions and signing exclusivity agreements with major multinational companies for certain product categories. They are demonstrating that not only are their products not harboring the toxic chemicals of their inputs, but they are exhibiting significant performance improvements––in strength, elasticity and more––from the virgin-derived construction products they’re replacing.

Today, the team continues to operate in the south of Chicago––in a space nearly five times the size of the one they were working in over a year ago. And they are filling orders, using mycelium to transform organic waste from the built world into reusable, bio-based ingredients. Those ingredients are going into non-recoverable plastics, replacing food-grade fillers like corn stover, for which higher and better uses exist in biomanufacturing. They are also going into turf applications, replacing materials that have been outlawed in some geographies because of excessive microplastic shedding that pollutes airways and waterways. With products that are both cost competitive against the incumbents and gross margin accretive for the business, Mycocycle is on a path to scale that has already unlocked significant reductions in their processing costs––and there is still room for growth.

A big part of how Closed Loop Ventures Group invests is by identifying founders and leadership teams who balance a “no quitting” attitude with the detail orientation and the project management expertise to move the needle on tough challenges. Joanne Rodriguez, Founder & CEO of Mycocycle, and Colin Litow, COO of Mycocycle, exemplify these characteristics, creating a strong foundation for their team through its next phase of growth.

Today’s reality is that the built environment is still in the early stages of bringing circular principles to bear in the lion’s share of applications. Asynchronous design and demolition processes make it challenging to identify reuse and next life opportunities for materials, and the lifecycle of a building is long enough that it’s rare for an organization to think about disassembly and deconstruction at the time of design. Even if they were, less than 2% of the building stock is new each year.[3] Much more focus is needed on managing renovation and retrofit processes––not just tracking, but on finding new homes for the materials once they’re removed.

Mycocycle is a core part of the solution, as are the companies exploring opportunities to maintain or reduce costs while using recovered materials as inputs into their products. Closed Loop Partners’ Ventures Group is excited to continue to work with the Mycocycle team and those across the manufactured world as they lay the groundwork for a more circular future for the built environment.

About Closed Loop Ventures Group at Closed Loop Partners

Closed Loop Partners is at the forefront of building the circular economy. The firm is comprised of three key businesses that create a platform for systems change: an investment group managing venture capital, buyout private equity and catalytic private credit investment strategies, Closed Loop Capital Management; an innovation center, the Center for the Circular Economy; and an operating group, Closed Loop Builders.

The firm’s venture capital strategy, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough circular solutions for foundational materials that underpin and significantly influence a wide array of vital sectors of the economy. These materials include organics, minerals, polymers and water. Closed Loop Ventures Group partners with founders and companies who rethink how products are designed, manufactured, consumed and recovered, with the shared vision of reimagining supply chains and eliminating waste. Closed Loop Partners is based in New York City and is a registered B Corp.

To learn about the Closed Loop Ventures Group and apply for funding, visit www.closedlooppartners.com.

 About Mycocycle

Mycocycle, Inc. is a nature-inspired and woman-owned biotechnology startup that leverages fungi to transform industrial waste into reusable materials. Founded in 2018, the company drives circularity in the construction supply chain and diverts waste from landfills. Mycocycle blends lab-cultivated fungi with debris at the point of waste generation to transform waste into new raw materials. To learn more, visit http://www.mycocycle.com.

[1] Source: Construction Dive.

[2] Source: Environmental Protection Agency.

[3] Source: https://www.usgbc.org/articles/existing-buildings-99

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