“We believe the movement against plastic is now firmly entrenched worldwide, with many governments acting to reduce or ban the consumption of single-use plastics and businesses committing to reduce their plastic footprint,” says Zhaotan Xiao, President (Asia Pacific) at RWDC.

An increasing awareness about the dangers of single-use plastic and a ban/ restriction on its use in many countries has opened enormous opportunities for startups as well as venture capitalists to develop and promote environmentally-friendly alternatives.

Singapore- and US-based RWDC Industries is one such startup that has long been working on developing a biodegradable alternative. The company, which has secured nearly US$168 million over its six years of existence from renowned VCs such as Vickers Venture Partners as well as the ‘Iron Man’ star Robert Downey Jr., produces medium-chain-length polyhydroxyalkanoate (mcl-PHA) biopolymers that are designed for use across a broad range of applications.

In this interview, Xiao, discusses RWDC’s association with Downey, the company’s products and future plans.

Edited excerpts:

Since inception, RWDC has raised US$168 million from about seven investors. Why does the company need this much capital? How much of this capital is going into R&D?

There is no lack of investor interest and financial support for our mission to replace single-use plastics.

Almost all funding raised by us is going towards capacity construction, as there is no lack of demand for PHA. We need to build physical factories that are first of its kind in the world; we are not building apps.

Also Read: Biodegradable plastic startup RWDC Industries raises US$22M in fresh funding

We cannot disclose the exact amount going into R&D. RWDC firmly believes in the importance of investing to maintain our technological advantage, and we are constantly innovating both in our production processes and in the utilisation of PHA in novel end-product applications.

How much did you raise from Robert Downey’s fund FootPrint Coalition? How did this deal come in? How will this partnership mutually benefit?

We cannot disclose the amount raised from FootPrint Coalition (a US-based coalition of investors which invest in high-growth, sustainability-focused companies including in Asia).

We were introduced to FootPrint Coalition (FC) through one of our institutional investors. FC really intrigued and excited about our technology, and completely aligned with our vision of transitioning the world towards bio-based and natural materials that are in harmony with Nature’s regenerative cycles.

Aside from capital investment, FC will be an extremely helpful resource for educating the world about the benefits of PHA. They recently did an excellent short video on this topic, and the recent press coverage about their investment into RWDC has greatly elevated our profile.

You’ve been working on the biodegradable alternative since 2015. However, as per your site, your products haven’t hit the market yet. Why is it taking a long time for the commercialisation of the product?

PHA has been known to mankind for more than 100 years, but nobody had found a way to produce the material on an industrial scale. We have gotten to where we are due to the decades of work put in by our Founders. Again, we are not building an app.

The road to commercialising new materials is typically very long (think Goretex, Teflon etc.). The reason is because everything fails at the weakest link, and we need to have solved every single problem from our clients’ perspective for them to adopt the material.

We are very confident that we are now at the cusp of transitioning the world away from plastics towards this much more logical choice of material, as our clients are now able to successfully run our PHA material on their existing equipment as a “drop-in” replacement of the plastics they currently use.

The fruits of successfully commercialising new materials are also typically very big (think Goretex, Teflon etc).

As per your website, you will target the Singapore market in the first phase by introducing a drinking straw. How are you going to price the product? Will it be cheaper than traditional plastic straws?

RWDC is a B2B business. We do not make the end products (bottles, cutlery, straws, coated paper, etc.) ourselves. We provide PHA in the form of a resin or dispersion, and this would be used to produce the end-products on our clients’ existing machines. Our go-to-market strategy is therefore largely determined together with our clients.

Our straws will be more expensive than traditional plastic only if the negative externalities to the environment posed by plastic straws are not taken into account. We know that our pricing is acceptable to clients because we have already signed deals with large MNC clients.

Additionally, a ban on single-use plastic items including straws has been or will be imposed in many countries.

Even in places where plastic straws are not (yet) banned, businesses would like to show their environmental consciousness by replacing plastic straws with other environmentally friendly alternatives. Straws make up a tiny part of overall costs for businesses, so higher pricing is generally acceptable.

Our PHA straws are competitive to other alternatives, including paper and polylactic acid (PLA) straws. In addition, they have several advantages compared to other alternatives.

Also Read: This Indian startup makes cutlery using sugarcane waste

For example, our straws are more functional than paper straws (they don’t turn soggy after a while). They are also biodegradable in the truest sense (i.e., in nature), whereas PLA is only compostable (i.e., only degrades under certain conditions), and will take the same time as regular plastic to degrade if leaked into nature.

When will your other products (cutlery, cups, bags, etc.) will be available in the market? Which are your other key target markets?

We target to launch bottles, cutlery and straws in 2021. In addition, we have made great progress with clients on areas such as coated paper, PHA fibres, injection-moulded articles and so on. We have also demonstrated our ability to make PHA films and foam products.

Is there awareness among businesses, especially F&B ones, about the dangers of plastic in Singapore?

There is definitely increasing awareness about the dangers of plastic in Singapore. We believe the movement against plastic is now firmly entrenched worldwide, with many governments acting to reduce or ban consumption of single-use plastics and businesses committing to reduce their plastic footprint.

Do you also work with the Singapore government in its drive against single-use plastics?

We have had discussions with the Singapore government about the benefits of PHA and the limitations of the three ‘R’s to change the growth trajectory of plastic pollution.

Having said that, concerns about plastic pollution in the Singapore government appear to be less pressing due to the fact that the country incinerates our waste and leverages on the waste-to-energy conversion for power.

RWDC is actively engaged with the European Commission on their Single-Use Plastics Directive. As a natural polymer that is not chemically-modified, we believe PHA should not even be considered a plastic.

Singapore is much smaller than many other markets in the world. Why does RWDC want to introduce its first products in this country?

We are going to commercialise our first products globally, in collaboration with global brand owners.

How big is your total addressable market (TAM) in Southeast Asia?

PHA is a viable alternative to plastic (in terms of functionality, versatility and price), so our TAM is at least the market for single-use plastics.

In reality, adoption (especially in certain applications) will be slowed down by several factors, including the need for extensive product trials to ensure feasibility, our ability to increase production capacity to catch up with demand, and pricing.

We have very aggressive and ambitious plans for scaling up. This is a very long journey, and our partners are all fully aligned with us in terms of values and vision.

Do you have plans to secure additional investments soon?

We expect to raise a new round in the second half of 2021 or early 2022, to unlock funding for our next phase of growth — building the first wave of full-scale production modules in the US and Asia.

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Image Credit: RWDC Industries

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