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CleanFiber wants to turn millions of tonnes of cardboard boxes into insulation

For decades, building materials companies have shredded old newspapers to make cellulose insulation. But as newspapers declined, the cellulose insulation industry found itself in trouble, chasing dwindling supplies of raw materials.

As old newsprint becomes harder to find, another paper product is on the rise: corrugated cardboard. People are increasingly turning to e-commerce, and the number of cartons is steadily rising. Up to 50 million tons of materials are thrown into trash and recycling bins every year.

Cardboard seemed like the perfect paper solution to the insulation industry’s supply shortage, but there was a problem: Corrugated boxes were filled with contaminants like plastic tape, shipping labels, and even metal staples. Converting it into insulation is more challenging than newsprint. However, one startup, CleanFiber, anticipated this shift and has been working on solving this problem for years.

To date, CleanFiber has been able to produce enough insulation for approximately 20,000 single-family homes. But CEO Jonathan Strimling knew that if the company wanted to become an afterthought, it would have to expand beyond its original factory in Buffalo, New York. According to data from Grand View Research, the U.S. insulation market is dominated by a few large companies and is worth $12.5 billion.

Sterling also knew he and his team needed more capital to expand. They last raised $10 million in Series A funding in 2022 through a creative mix of equity and debt to get the Buffalo facility running at full speed. But nationwide expansion will require greater funding.

Fortunately, the company has been attracting Spring Lane Capital, a sustainability-focused private equity firm, for more than a decade. TechCrunch has exclusively learned that the company has been following CleanFiber’s progress and was satisfied with the data released by the startup and decided to lead a $28 million Series B round of financing, which also includes $31.5 million in project financing. Ahlström Invest, AXA Investment Managers, Climate Innovation Capital and Tokyu Construction/Global Brain also joined Spring Lane.

“This puts us in a very, very good position to roll it out across the country,” Stripling told TechCrunch.

Converting a different raw material into a drop-in replacement for existing cellulose insulation using a completely new process was one of the challenges the company faced when developing its product. It can’t cost any more, and it must perform just as well, if not better, for the installers who handle it every day.

CleanFiber has been selling its fiber packages at market prices while improving its production process. Strimling wouldn’t say whether the company is making the product profitable, but he did say CleanFiber has been able to “bring the marginal cost of production down significantly,” Strimling said.

With the first-of-its-kind plant up and running, CleanFiber has been able to navigate one of the most dangerous parts of the Valley of Death, which often kills startups trying to commercialize new technologies. Building a new factory is no easy task, but things should get easier as subsequent factories are built. In addition, Stringling noted, stricter building codes mean new homes require more insulation than ever before. In other words, CleanFiber doesn’t need the established players to lose in order to win.

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