Styrofoam is a convenient material that can help insulate a steaming cup of coffee and keep breakable goods safe through transit. But like many everyday conveniences, it’s bad for the environment. Styrofoam is littered more than any other material, makes up 30% of landfills throughout the world, and releases harmful chemicals as it slowly decomposes over half a millennia.

StarchTek is taking action with a patented, starch-based Styrofoam alternative called StarchFoam. StarchFoam is eco-friendly, biodegradable, and cleanly dissolves in water, so it doesn’t have to take up any space in consumers’ trash cans. We reached out to founder, President, CEO, CFO, and Innovation Officer John Danny Dubuk to learn more about the company’s challenges and strategies.

Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.

Funding Round Details

StarchTek logo
Company: StarchTek
Security Type: Equity - Common
Valuation: $10,622,670
Min Investment: $500
Platform: StartEngine
Deadline: Aug 30, 2022
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What inspired you to take the leap and start StarchTek?

I was inspired by the massive demand for green packaging, the infancy stage of the green packaging sector, the excellent mechanical properties of starch-based plastic, the early stage of starch-based technology, and my experience/knowledge/skill set to take advantage of this great opportunity.

What were the technical challenges of transforming raw starch into a usable packaging material?

Starch is a very tricky polymer to work with, so the challenge is to discover the optimal combination of:  i) formulation, ii) process, iii) equipment, and iv) dye. This is the StarchTek formula for success: formulation + process + equipment + dye = market-viable, starch-based product (MVSBP). Note, there are literally thousands of MVSBP combinations.

Where are you at in the development of your product, and what are the next steps that you need to take to go to market?

We have multiple MVSBP combinations that we have successfully tested. Now we need to scale up with our own equipment and add the back-end, off-the-shelf equipment to build the full starch-based production line. Therefore, the next step is to attain funding to place the order for the necessary equipment.

Who are the partners that will help you succeed with this company?

Our key partners are the future license holders of our technology. For example, those might include Styrofoam manufacturers, paper/corrugated cardboard companies, and plastic packaging manufacturers.

What are the challenges of the protective packaging market? How do you overcome them?

The challenge is scalability. In packaging, you can’t transport “air,” so you have to be very close to the customer to minimize transportation cost. Therefore, most legacy companies have multiple locations that create a barrier of entry for newer, smaller companies that operate from one or a few locations. I learned this early on with my prior employer.

StarchTek overcomes this challenge by joining the legacy packaging companies via licensing agreements. It is a win-win situation because we don’t deploy capital for expensive build-outs and hard assets. We focus on developing state-of-the-art, starch-based technology that enable legacy packaging companies to offer green packaging solutions to their customers that demand it. We do this by merging technology from our partners (academia and others) with our own technology, testing it, optimizing it, and delivering it to our licensees. It is a very lean model that will be very profitable.

Note: When Microsoft was a small company, it teamed up with IBM and purchased the first operating system, the disk-operating system (DOS), from the Seattle Computer Company for less than $100,000. Microsoft took DOS, added its technology/code, called it MS-DOS, and delivered it to IBM for low engineering fees but with the exclusive rights to license MS-DOS. Hence, Microsoft grew. StarchTek is similar. We acquire technology, and we add our own technology and license to partners like the “IBMs” of the packaging industry.

How and when are you going to start making money?

We will make money through engineering fees, licensing fees/royalties, and/or raw material mark-up that is directly drop shipped to our license holders. Based on the talks that we are in right now with one of the largest paper companies in the world and a large US styrofoam producer, we should generate revenue in the fourth quarter of 2022.

What does the competitive landscape look like, and how do you differentiate?

There are not that many green sustainable solutions in the market. That is why the polystyrene (plastic) market keeps growing. I strongly believe (and can prove) that starch-based plastic is the best solution out there. Our MVSBP has the best chance to succeed because at the end of the day, most love green packaging alternatives, but most don’t want to pay more for it. I learned this a long time ago because I have engineering skills and financial skills.

Our biggest differentiator is that we know how to provide starch-based plastic solutions to the market at Styrofoam prices. That is our killer differentiator.

How do you intend to use the money you raise this round to scale the business?

We will use the money for equipment, building our team, research and development, and sales and marketing.

We look forward to seeing where John and his team take the company. StarchTek is currently raising on StartEngine.