For decades, building materials companies have shredded old newspapers to create cellulose insulation. But as newspapers have declined, the cellulose insulation industry has found itself in a bind, chasing dwindling supplies of raw material.
As old newsprint has become harder to find, another paper-based product has emerged: corrugated cardboard. People have increasingly turned to e-commerce and the number of cardboard boxes has steadily increased. Every year, as much as 50 million tons of the material ends up in waste and recycling containers.
Cardboard would seem like a perfect paper-based solution to the insulation industry’s supply shortages, except there’s one problem: Corrugated boxes are riddled with contaminants like plastic tape, shipping labels, and even metal staples. Transforming it into insulation is much more challenging than newspaper. However, a startup, clean fiberanticipated the change and has been working on the problem for years.
To date, CleanFiber has been able to produce enough insulation for about 20,000 single-family homes. But CEO Jonathan Strimling knew the company would have to expand beyond its initial factory in Buffalo, New York, if it wanted to become more than an afterthought. The insulation market in the United States is dominated by a handful of large players and is worth $12.5 billion, according to Grand View Research.
Strimling also knew that he and his team would need more capital to expand. They last raised a $10 million Series A in 2022 using a creative combination of equity and debt to get the Buffalo plant running at full steam. But a nationwide expansion would require a much larger war chest.
Fortunately, the company had been courting Spring Lane Capital, a sustainability-focused private equity firm, for more than a decade. The company had been watching CleanFiber’s progress and, happy with the numbers the startup was posting, decided to lead a $28 million Series B that also included a $31.5 million project financing facility, it learned exclusively TechCrunch. Spring Lane was joined by Ahlström Invest, AXA Investment Managers, Climate Innovation Capital and Tokyu Construction/Global Brain.
“It puts us in a very, very strong position to roll it out nationally,” Stripling told TechCrunch.
Using a completely new process to transform a different raw material into a direct replacement for existing cellulose insulation was one of the challenges the company faced when developing its product. It couldn’t cost more and it had to work just as well or better for the installers who handle it daily.
CleanFiber has been selling its bales at market prices while refining its production process. Strimling did not disclose whether the company is manufacturing the product profitably yet, but did say that CleanFiber has been able to “reduce the marginal cost of production to a very, very significant curve,” Strimling said.
With a plant, the first of its kind, built and operational, CleanFiber has been able to traverse one of the most treacherous parts of the valley of death that often claims new companies trying to commercialize a new technology. Building additional new factories won’t be a walk in the park, but it should get easier with each one. Additionally, Strimling notes that stricter building codes mean new homes require more insulation than ever. In other words, CleanFiber doesn’t need established players to lose to win.
