How can startups work effectively with corporations? Specifically, how can larger companies effectively integrate entrepreneurial climate solutions into their supply chains, operations and logistics?
Climate tech strategist Chante Harris moderated a keynote panel at GreenBiz 23, “A Brave New World for Sustainability Startups,” to answer those questions. Joining Harris in this discussion were two startup founders: Nuha Siddiqui, co-founder and CEO of plant-based plastic alternatives company erthos; and Santiago Espinosa de los Monteros Harispuru, co-founder and CEO of climate consulting company Toroto.
Some of the language has been modified or shortened for clarity purposes.
Chante Harris: Welcome to both of our panelists. I think I’ll kick us off by asking, what are you building? What is your company? Tell us a little bit about the actual innovation you created.
Nuha Siddiqui: Sure. I’m the co-founder and CEO of erthos, and we’re creating plant-powered alternatives for traditional plastics. We focus on designing materials that are both environmentally sustainable but also fully compatible to existing supply chains. Erthos started off as a research project that I was kicking off with my co-founders at the University of Toronto. We didn’t have decades of experience in this space, but we found that there was an opportunity to really redefine how we think about biomaterials and how we could really, truly add value to some of the major complex challenges we have with plastics.
Santiago Espinosa de los Monteros Harispuru: Toroto is a family-started company. We do large-scale ecosystem restoration and conservation, and we’re mainly focused on working with corporates that want to increase ecosystem services inside their supply chain. Why? Because they need [the services]. We need water to make food, we need soil to make food. We need carbon removals to have a healthy ecosystem. We need biodiversity corridors. These are fundamental. And it’s really important that we learn how to manage ecosystems in a way that all of these services can be enhanced, and more so if the services are being offered by nature, to corporate supply chains and to corporate value chains.
Harris: Thank you both for walking us through your innovations. You both decided to launch startups, which is no small feat. I’m curious if you can share a little bit more about why you decided to go down this route and what inspired you to do so?
Siddiqui: I think back to the moment I realized I wanted to address [plastics] head on and actually take that role, I was just frustrated and impatient. And I think that’s a common trait that you’ll see with a lot of entrepreneurs and founders — that we feel a sense of responsibility to change what our futures look like. I think that everyone feels that sense of frustration, in some way, when we see what our futures are looking like. And either you can take it on yourself and take control and actually try to change it, or you can stand by. And I wanted to take control.
Harris: Amazing. Santiago, how do you actually bring together stakeholders and have an impact?
Harispuru: By acknowledging and addressing major issues. There is a transparency issue. [Corporations] don’t have enough information to derisk investments as much as possible and to make sure best standards are being applied. Second is operational scalability at the field level. There are billions, perhaps trillions, [of dollars] that are going to be invested into nature-based solutions over the next few decades. And if you want to reforest 1,000 hectares, you need to be able to produce 1 million trees locally using local seeds, which necessitates full-time seed gathering squads operating the whole of the year. And, of course one of the best ways to do it is to build it inside the supply chain of [corporations] who need their value chain to be enhanced through better ecosystem services being provided in the land of Indigenous and agrarian communities.
Harris: So what I’ve heard from both of you is that innovation is the outcome of folks asking the right questions. And there’s a lot of risk involved but not always as much focus on how startups are actually effectively helping corporations reach their goals … and integrate into their supply chain. So we’d really love to hear from you both: What does value add, on both sides, look like?
Siddiqui: When we started working with [corporations], we were still very early in our journey. So we knew that we wanted to create a bio-alternative for plastics, but we didn’t really know how to fit it into existing systems. And so I feel like when we worked with [corporations] at those very early stages, we were able to learn so much about what we actually needed to build. And as a startup, one of our greatest assets is being able to pivot and change the business to service our partners and our industry. And so we took a lot of those learnings early on to help us define our go-to-market, define what we thought of our business model and in our actual materials themselves.
Harispuru: When working with [corporations], it’s very important to realize that the business cycles are probably going to be straining the capital of any startup. And there’s a lot [corporations] can do to make this easier. But still, it’s going to be hard because we’re talking about two players with very different sizes. So definitely, I would say really high-quality financial management is super important for any climate startup that wants to work with actual value chains. Now from the perspective of [corporations]. One of the key successes of the programs we’ve been through, I think, is [that corporations] are actually working together to solve similar challenges that they might have, because not one [corporation] can do it [alone].
Harris: How do startups think about their ecosystems? And then think of, really, all of the budgeting and the finances so that you make sustainability executives’ jobs easier? Do either of you have an example of how you’ve done that effectively or what that looks like?
Harispuru: I mean, for us, the main thing has been being able to work with amazing partners. [Partnerships are] super important. Startups will definitely not bring the capital to the table — that’s what the [corporations] can bring. And sometimes, when you’re talking about 120-day payment terms or 90-day payment terms, it might be up to 60 percent of the total cash available to that startup.
Siddiqui: I think that the one thing I would add there is that the success stories that we had with partners is when they are truly ready to commit to the process. I think, on the corporate side, when they’re starting to engage with startups like us, you have to really commit and you have to be 100 percent in because the last thing you want is for startups to spend all this time and resources on a pilot project, or a certain solution, that doesn’t actually scale. So I think it’s just so important to make sure those expectations are really, really clear from the very beginning.
Harris: What’s so interesting about both [panelists’] solutions is that there’s really an opportunity to fund the projects that make sense internally for a corporation … to move past R&D and initial VC investment to, ‘Hey, we have this specific challenge in our supply chain. How can we actually fund that project and make it useful for the corporation as a whole, as well as the startup?’ So I will end there, but I want to give you two an opportunity to say one tip that would give to a lot of the corporate execs sitting here.
Siddiqui: I [would] say one line: Work with startups. I think in the startup world, where we’re used to being on tight runways, we’re constrained by a lot of different situations, and that puts us into this sort of wartime mindset. And the climate crisis requires all of us to be in that wartime mindset, where we’re taking some really big, bold moves and we’re facing life or death. And so that gives me a lot of hope — to see how everyone’s changing their mindsets and working with startups, working with early-stage companies, and I’m excited for the future.
Harispuru: Absolutely. I would also say form relationships with the startups that you’re working with. For us, it’s been a blessing to meet so many great people inside these [corporations], and having actual relationships with these people helps tackle the problems in a creative, open manner, without necessarily faking it at all. And being conscious of our limitations and aspirations and dreams and problems is super, super useful to move this kind of world forward.