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Living in a bio-based material world
HOW ONTARIO IS ATTRACTING OUTSTANDING COMPANIES
By Daniela Fisher
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EcoSynthetix:
LIVING IN A BIO-BASED MATERIAL WORLD
Finding ways to cut down our use of petroleum has become a pressing need in the global community. With a growing world population burning through oil and gas, in the past 150 years alone, we’ve consumed half the world’s known oil supply. Finding an alternative to this raw material is not an option, it’s a must.
You may or may not be surprised to learn that Ontario is home to one of the companies leading the world in the move away from petroleum-based products. With a goal of using renewable resources to create products traditionally made from petroleum, Burlington’s EcoSynthetix is establishing itself as an innovator in the field of green chemistry.
EcoSynthetix specializes in developing and producing environmentally friendly, carbon neutral products. More specifically, the start-up company has developed an eco-friendly coating for paper products such as magazines or business cards. It uses a bio-based polymer to coat paper and paperboard products, making them infinitely more biodegradable and recyclable than their petroleum-containing counterparts.
The company’s work is part of the growing trend of using bio-based materials – materials created from biological matter or renewable resources like crops or plants – to make products currently produced from petroleum.
Based out of Burlington, the cleantech company is an Ontario success story. Not only did the company voluntarily choose to move its R&D and head offices from Michigan to Ontario in 2010, it also built a state-of-the-art Centre of Innovation in Burlington for high tech R&D, attracting top level talent to the province.
Since then, EcoSynthetix has set down successful roots in Ontario and is making a case for why the province can be an attractive place to do business in the cleantech sector.
In 2011, the company completed an IPO to the tune of $100 million, the largest cleantech IPO on the Toronto Stock Exchange to date. Additionally, EcoSynthetix was ranked the second fastest growing cleantech company (Tesla Motors took first) in Deloitte’s 2012 Technology Fast 500, a ranking of the fastest growing technology, media, telecommunications, life sciences and clean tech companies in North America. In February of this year, the company received Life Sciences Ontario’s Emerging Company of the Year Award. As these accolades suggest, the emerging clean tech company is making a name for itself in Canada, as well as across the globe.
“I’m certainly personally very, very bullish about the future. I think the focus on sustainability is not optional, it’s a must,” says EcoSynthetix co-founder and CEO John van Leeuwen. “If we want our society to continue to thrive, we have to do this. I think we’re showing that a
John van Leeuwen, EcoSynthetix co-founder and CEO. Photo credit for photo and cover image: Jonathan Bielaski, Light Imaging.
— John van Leeuwen
Canadian company can be a world leader in this space. Over the last five years to be ranked number two only behind Tesla Motors in terms of growth speaks to that.”
Leading the company as CEO and president, van Leeuwen co-founded the company with his longtime friend Dr. Steven Bloembergen. Both originally from The Netherlands, the two came to Canada to attend the University of Waterloo. After graduating, they joined North America’s petrochemicals industry, with van Leeuwen on the business side and Bloembergen on the science side.
“I was heavily involved in the whole petro-chemical plastics world and I saw a lot of its benefits but also started to become aware of the issues you face – the products you’ve made now out of plastic reach their end of life and how do you recycle them?” says van Leeuwen.
The idea to create the company was initially Bloembergen’s. His concept of creating renewable polymers that could be better recycled or actually biodegradable caught van Leeuwen’s attention – and his business acumen.
“I thought this potentially is a very important issue for our society at large. If we can come up with at least part of the solution for making biodegradable plastics and polymers, I thought that would be a really novel thing to work on and that would have a huge impact potential on our world,” says van Leeuwen.
Combining their business and research experience, the pair co-founded the company in 1996. As Bloembergen was working at the Michigan Biotechnology Institute (MBI) at the time, they were able to use a business incubator in Lansing, Michigan to help the company get off the ground.
“Our vision was to become a world leader in this whole bio-based materials space,” says van Leeuwen. “To not only make these materials but also to create and develop the markets for them.”
With this goal set, from 1996 to 2000 the company worked on developing the products in its pipeline. These included the sugar-based monomer called EcoMer®, the first new monomer the chemical industry had seen in 20 years, and EcoStix®, a pressure sensitive adhesive that could be designed to wash-off at a certain temperature, thereby enabling labels to be removed at 50°C so that their adhesive would not interfere with the paper or plastic recycling process.
It was in 2001 with the invention of its breakthrough EcoSphere® biolatex® binder that the company really took off. This innovation helped EcoSynthetix form collaborations with large industry partners across the world, including the Minneapolis-based Cargill, Suzano in Brazil and the Japan-based Nippon Paper.
EcoSynthetix’s biolatex polymers were the industry’s first eco-friendly alternative to petroleum-based Styrene Butadiene (SB) latex binders. These binders, whether SB latex or EcoSphere biolatex, are what allow colourful graphics to stick to the glossy paper used in magazines, books and business cards, or on packaging items like cereal boxes, cartons and paper bags.
As an eco-friendly alternative, the biolatex binder uses starches derived from annually renewable crop resources such as corn, potatoes and tapioca and their proprietary reactive extrusion process transforms them into a new class
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of materials having exceptional binder properties.
“If you use raw materials that are cropbased, then that crop will have captured the CO2 in the season it grew in,” explains van Leeuwen. “So, for example, if you grow a field of corn, it captures CO2. The sunlight and the CO2 form the starch, and if you now use the starch you basically have used a raw material that has sequestered CO2. It has captured CO2 which you then use in your product. That in itself is a more sustainable approach to making these industrial materials.”
Up to 2010, as EcoSynthetix worked on developing and patenting its sustainable technology, the company was still based out of Michigan. “While the company had met with some success in attracting state and federal funding for research, it was minimal.” says van Leeuwen. EcoSynthetix needed more to complement the investments it received from traditional VC financing. It was time for the company to turn their attention north.
“Eventually we said you know what, we’re from Canada originally why don’t we see if we can get some funding in Canada.” says van Leeuwen. “We applied at two levels - one was with Sustainable Development Technology Canada (SDTC) in Ottawa and the other one was with the Innovation Development Fund (IDF) in Ontario. Both applications were accepted; in both cases we actually got through the whole process which was a tough slog but we got the grants.”
The federal and provincial funding, as well as Ontario’s lower corporate tax rates, were strong factors behind the company’s northern trek.
“We found that the corporate tax rates were lower in Ontario than they were in Michigan. The other advantage was quite frankly what we’re trying to do is really very capital intensive. You have to spend a lot of money on R&D to bring these products to market, so the two funds – both SDTC and IDF – were very focused not so much on fundamental R&D but rather to bridge that transition from the developmental stage to bring it successfully to market. They’re willing to fund that piece and that was very helpful for us. That was a big attractor to relocate.”
Also very important was having access to bright minds, says van Leeuwen. Access to university talent was top on the relocation must-have list. By setting up shop in the Golden Horseshoe, EcoSynthetix was able to form partnerships with a variety of local academic institutions, including the University of Toronto, McMaster University, University of Guelph and University of Waterloo.
For a company to be successful in the long term and for it to become a world leader, you need to keep the pipeline of new technologies open, says van Leeuwen. What better place to look for new technologies than at a university.
“We felt if we could start collaborating with some of these universities and hook up like we did with the University of Waterloo and start a five-year collaborative research program to develop new technologies that would be a great benefit,” says van Leeuwen. “The rules around intellectual property at the University of Waterloo are different from what they are in the States. It’s much easier to do that kind of collaborative research called open innovation almost with a university like Waterloo here in Ontario than it is with almost any university in the U.S.”
In addition to being able to team up with universities to develop new technologies, the company benefited from its move to Ontario financially as well. In 2011, it announced a $100 million IPO, one of the largest initial public offerings ever seen for a Canadian clean tech company.
“That was a really important step for us, because we had venture investments for the entire history of the company. Most VCs can only stay with you for about eight years, then usually the fund is closing down and they need to start liquidating. So to take it public you basically create liquidity for your shareholders; we raised more capital to build the company out further and, overall, we were able to signal to our customers that we’re here to stay.”
The company has a solid business model: they offer a product that delivers equal or better performance to the products that it displaces while having lower cost and being more sustainable Also, as it’s made from renewable resources instead of petroleum, the price of EcoSynthetix’ products are not constantly fluctuating. This means they can offer a more stable, lower price which defies the notion that being more eco-friendly means more expensive.
“If you can make these materials less expensive than what you’re replacing, you truly have a disruptive technology,” says van Leeuwen.
On the environmental front, EcoSynthetix has established itself as a leader in the global trend towards sustainable or green chemistry.
“If you can use things that at the end of their lives either are biodegradable or recyclable, for example paper, then the environmental benefit to that is huge,” says van Leeuwen. “We coat paper board and paper which are recycled in a very well-established recycle stream through blue box programs in North America. All of that stuff is recycled and turned back into recycled paper board. The role that our biolatex binder plays in that is that it doesn’t interfere; instead, it enhances the recyclability.”
The environmental benefit is that you can recycle it and then eventually when it is no longer recyclable, it is still biodegradable, says van Leeuwen. The carbon dioxide that gets released from that product is exactly same amount of carbon dioxide captured in the first place, so at the end of the day it is carbon neutral.
It is clear that EcoSynthetix has made its mark on the cleantech sector. With more innovations like these, perhaps in the future we will all be living in a bio-based material world.
To see this story online visit http://biotechnologyfocus.ca/ ecosynthetix-living-in-a-biobased-material-world/
