An increasing consumer appetite for sustainable packaging is powering a new wave of startups

With the packaging market being valued at as much as €1 trillion globally it’s become a ripe field for startups to engage this market with digital products that can bring efficiency to a highly traditional industry.

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This is perhaps why Packmatic, a Berlin-based digital packaging marketplace, has raised a €15 million Series A round led by EQT Ventures. Also participating were HV Capital, xDeck, and several high-profile angel investors. Packmatic plans to use the capital to push further into European markets.

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The company is one of a number of startups attacking this field.

Among those most recently raising has been Packhelp out of Poland, founded back in 2015, which raised $58.2 million in 2021.

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To date, it’s raised $58.2 million in total from the likes of PROfounders Capital, InfraVia Capital Partners, the European Investment Bank, Inovo VC, and Speedinvest, among others.

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Packhelp has a SaaS product for enterprise clients, and is among those focusing on sustainability by offering customizable and environment-friendly packaging.

Many of these firms have experienced an uplift in recent years because of the pandemic-induced boom in food deliveries, which required a vast increase in the amount of packaging required, and the similar shift of customers to having almost everything delivered to their home.

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In this vein, Manchester, England-based Sourceful — which describes its focus as “the faster, easier way for brands to create more sustainable packaging” raised a $19 million Series A funding round in 2022 led by Index Ventures, with Coatue, Venrex, and Eka Ventures also participating.

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Sourceful’s platform allows businesses to find products within a marketplace of vetted suppliers across the UK and Asia. It also has an ISO-verified carbon footprint estimation approach which analyses the product choices its clients make for sustainability.

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These packaging startups tend to be attacking the same kinds of problems for both businesses and consumers. There is not a lot of price transparency in packaging and the buying processes can be clunky. This highly traditional industry is rarely geared for the on-demand, made-to-order world. Meanwhile, suppliers find it hard to get visibility.

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Packmatic says its marketplace network of over 300 packaging suppliers across Europe is able to match large companies and FMCG brands with specialized packaging suppliers. It claims this can lead to as much as a 15% cost savings for its customers. Key to this is accessing sustainable packaging.

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Matthias Geiss, Co-Founder and Managing Director at Packmatic, told me over a call: “The three main reasons why customers are using us is the cost savings, sustainability, and a packaging management system. We have a software platform that allows them to manage all their packaging online.”

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“We basically aggregate paper-based packaging and plastic waste packaging on the supply side, and then act as one-stop shop to enterprise customers that spend roughly 200,000 euros on the platform to basically find better suppliers across Europe,” he added.

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He told me EQT was chosen as the lead investor because “they have a very good understanding of business models that try to disrupt very traditional industries. Plus, their approach is very entrepreneurial. So all the all the investment team are either former entrepreneurs themselves or operators in startups.”

Rania Belkahia, Partner at EQT Ventures added in a statement: “The European packaging market boasts an impressive valuation, but remains opaque, fragmented, and crucially, largely non-digital. Packmatic’s platform provides a unique solution– a cost-effective, fully digital marketplace championing the shift to low-carbon packaging.”

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It would appear these packaging startups may be onto something.

In a 19,000 person survey across the US, Japan, Germany, France, Italy, China, India, and Brazil, a BCG report found that 36% of consumers said they were concerned about sustainability in their packaging but only 1% to 7% had paid a premium for sustainable purchases.

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This gap suggests there will be continuing pressure on supplies to respond to this consumer demand, and thus the rise of these new marketplaces.

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Reference: https://techcrunch.com/2024/01/24/an-increasing-consumer-appetite-for-sustainable-packaging-is-powering-a-new-wave-of-startups/