Søborg, Denmark-based Cellugy, which is developing a biodegradable cellulose ingredient to replace the petrochemicals used in cosmetics like sunscreen and makeup, has raised a €4.9m seed round.
The round was led by Germany’s ICIG Ventures and Denmark’s Unconventional Ventures, with participation from US-based investor Joyance Partners and existing investors PSV DeepTech, The Footprint Firm and EIFO. The startup plans to use the capital to increase production and meet the demand it’s received from brands in the beauty and cosmetics market.
Fossil fuels on your face
Petrochemicals are a common ingredient in the cosmetics industry, but they’re a major contributor to climate change: around 87% of cosmetics products contain petrochemical ingredients, according to the charity Plastic Soup Foundation, and the European Council found that 92% of micropollutants found in water come from cosmetics, personal care and pharmacy products.
Many leading brands have been trying to distance themselves from petrochemicals because of health and sustainability concerns. Reports suggest that the beauty industry could also lose around €12bn because of the EU’s microplastics plan if they don’t find an alternative.
There’s just one problem, says Isabel Álvarez-Martos, CEO and cofounder of Cellugy: “[The industry is] struggling to find an alternative material that can provide the same performance as these petrochemical ingredients, but is natural, biodegradable and more sustainable.”
Cellugy is looking to meet that demand with its first product, EcoFLEXY. It focuses on cellulose, the ingredient used to get the smooth texture of lotions and cosmetic creams. Cellulose is extracted from plants and used in the production of beauty products, but Álvarez-Martos says that the current process strips away the natural benefits; the natural materials extracted are processed and modified until they’re no longer considered natural.
Cellugy’s substitute ingredient is made through fermentation using microorganisms that naturally make cellulose by converting sugar. “We thought, why don't we take inspiration from the way microorganisms produce cellulose in nature, rather than extracting it,” says Álvarez-Martos, who cofounded the startup alongside Deby Fapyane and Parun Sihombing in 2018. “We don't do any chemical modification to the fibres.
Meeting the demand
Cellugy’s EcoFLEXY product is in its pilot phase, and Álvarez-Martos says that some of the funding will be used to increase production and meet the demand that the company has had from the cosmetics industry.
“It's a luxury issue, but we already have the demand for several hundreds of kilos,” she says. The company can make several kilos per vat in its pilot facility — but with its planned industrial production upgrade, that’ll rise to hundreds of kilos per vat. It hopes to reach that scale by the end of the year.
Once that’s been sorted, the focus will turn to the second milestone: bringing in the cash.“We want to start selling at the start of 2025 to generate the first revenue for the company,” says Álvarez-Martos.
And while the cosmetics industry is the current focus, there are other use cases on the horizon.
The team is working on development projects with the European Commission to develop a water-resistant coating for textiles that isn’t plastic-based. While they are focused on providing the ingredients for other companies to use in products, Álvarez-Martos won’t rule out branching out into their own cosmetics range in the future.
“The applications are almost endless,” she says. “Which is good, but we are also very selective on where we open up for new market applications.”
