Want some love from the VC crowd? Don’t start a toy com­pany

Bloomberg Businessweek (Europe) - - CONTENTS - Dorothy Gambrell and Lau­rie Meisler

To see what kind of com­pa­nies at­tract the most ven­ture cap­i­tal, we looked at 895 U.S. star­tups that have got­ten at least $20 mil­lion in eq­uity fund­ing since 2008. This year, fund­ing is pro­jected to fall 25 per­cent from 2015’s record $63.3 bil­lion, in part be­cause of con­cerns about over­val­u­a­tion.

de­pend­ing on the size of the unit; the pur­chase price ranges from $23,000 to $42,000. A small di­gester—46 inches wide, 35 inches deep, and 50 inches high—pro­cesses up to 800 pounds of waste in 24 hours, ac­cord­ing to Celli.

BioHiTech es­ti­mates the mar­ket for its type of di­gesters could ex­pand to more than 250,000 units used by busi­nesses do­mes­ti­cally, as cities and states grap­ple with bet­ter waste man­age­ment and en­vi­ron­men­tal reg­u­la­tions. Roughly one-third of food pro­duc­tion glob­ally is lost or wasted, ac­cord­ing to the Food and Agri­cul­ture Or­ga­ni­za­tion of the United Na­tions. Ninety-five per­cent of that winds up in land­fills, where de­com­pos­ing scraps emit methane, a green­house gas that con­trib­utes to cli­mate change. Last Septem­ber the U.S. En­vi­ron­men­tal Pro­tec­tion Agency and the U.S. De­part­ment of Agri­cul­ture set a first-ever na­tional goal of cut­ting food waste in half by 2030.

Many states are push­ing for re­duc­tions, too. A Cal­i­for­nia law that re­quires busi­nesses to ar­range for re­cy­cling their or­ganic waste started to take ef­fect this year. Since 2014, Mas­sachusetts has pro­hib­ited large waste pro­duc­ers, such as food pro­ces­sors and col­lege cam­puses, from dump­ing food with the rest of their garbage. The ef­forts are sim­i­lar to the move to adopt re­cy­cling in gen­eral, ac­cord­ing to David Bo­damer, an ex­ec­u­tive di­rec­tor at the trade pub­li­ca­tion Waste360. Some states lead the way, oth­ers fol­low. “The same thing is go­ing to hap­pen with food waste,” he says.

BioHiTech’s Celli sees even greater op­por­tu­ni­ties to ex­pand into larger ma­chines and in­ter­na­tion­ally. On May 16, the com­pany, which is not yet prof­itable, an­nounced that a sub­sidiary will fo­cus on the mu­nic­i­pal waste mar­ket. Last year it es­tab­lished a unit in the U.K. to ex­ploit op­por­tu­ni­ties in Europe. The com­pany hopes to sell 100 dis­posers in the U.K. in the next 24 months, and it’s also ex­pand­ing in Sin­ga­pore, Latin Amer­ica, and Mex­ico. To­tally Green, which turned a profit in the last year, could even­tu­ally ex­pand beyond the U.S. and Canada. “We’re get­ting calls from all over the world,” says CEO Louis Anag­nos­takos. “Peo­ple are start­ing to un­der­stand there are op­tions to the truck, to the tra­di­tional waste-dis­posal meth­ods,” he says.

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