Blog Post

The latest venture play: composting

It all started with a breakfast buffet and some leftover French toast. That was when Dan Blake, the CEO of composting soil startup EcoScraps, says he realized he wanted to make a business off of collecting food waste and turning it into something useful. Two years later, this week, the company announced that it’s raised a series A round of $1.5 million from Utah venture firm Kickstart, Silicon Valley’s DBL Investors (the fund behind Tesla and BrightSource), and Peterson Partners, also in Utah.

Blake tells me that the funds, and the company’s efforts, are all focused on 2013 — that’s when EcoScraps hopes to move beyond the West Coast and set up distribution and business across the U.S. The company wants to open facilities for making its compost mix in Texas, New Mexico, up the East Coast, and across the South and Southwest.

The company doesn’t disclose the volume of compost mix and soil that it currently produces, but Blake said that its current revenues are three times bigger than they were a year ago, and the company’s products are being sold in at least 200 Home Depots. EcoScraps’ current three facilities — in Arizona, California and Utah — are composting over 100 tons of food waste per day.

The company’s business model is pretty simple. Third-party haulers, like Waste Management, collect food waste from grocery stores and farmers — mainly fruits and vegetables, but anything that’s not dairy or meat — and take it to EcoScrap’s facilities. EcoScraps charges them less than other sites that accept waste.

Within their plants, EcoScraps has developed a composting method that takes under a month, compared to other process that can take three to six months. At the end of the composting time, EcoScraps then packages up the mixture with its unique brand and sells it at big box retailers.

The company’s tag line is “no chemicals, no poop,” and it works just like other mixes that gardeners buy to add nutrients and promote plant growth. The compost mix and soil is a premium product that is being sold for an average middle-market price point, says Blake. Just because it’s green doesn’t mean it has to be more expensive.

But venture-backed EcoScraps is competing head-on with some of the gardening industry’s largest companies. Scott’s Miracle-Gro has around $3 billion in worldwide sales and a quasi-monopoly on garden nutrients. That means EcoScraps will have to be a solid marketing company, too, in order to convince customers to buy its mixture over its gorilla competitors.