The story of Poliloop, founded by Liz Madaras and Krisztina Lévay, is a growing success, based on a biotechnological process that breaks down lightweight, typically single-use plastics into organic sludge, or compost, in 6-8 weeks. Most recently, Liz Madaras was honoured at the 2020 Manager of the Year Awards Gala as a recipient of the 2020 Future Manager of the Year Award. But who first saw the potential in their innovation, how did they get in touch with Vespucci Partners, and how much did the venture capital fund’s $2 million investment help them? Interview with Liz Madaras, co-founder of Poliloop.
Who first saw the potential in Poliloop?
It was Julia Sohajda, Founding and Managing Partner of Vespucci Partners. We met at quite an early stage with her, which was too early for Vespucci to even invest, as they are a seed stage fund. But Julia saw the potential in us and Poliloop immediately, so she helped us get get into a large international accelerator programme that sought to connect early-stage startups with potential investors from around the world. The Budapest-based venture capital fund organised an in-person demo day for one of the Managing Directors of Techstars, Vijay Tirathrai, and they provided us an opportunity to pitch at this event. It was thanks to this event that Vijay got to know us, saw the potential in us and that we got into the Techstars program and later also got an investment from TechStars into Poliloop.
Vijay Tirathrai, who has led the Techstars Hub71 Accelerator Program, has always favoured startups with innovative solutions in AI, blockchain, IoT, AR and VR technologies, but has also been a strong supporter of startups in key sectors such as healthcare and financial services, real estate and infrastructure, petroleum and petrochemicals, renewable energy and utilities. We’ve talked to him a lot since then, and it was clear that in addition to our innovation, he was interested in our deep knowledge of our industry and felt we had a clear understanding of our prospective customers’ needs.
I also remember one of my teachers telling us in the last class of my master’s degree that his generation, along with the one before, had destroyed the Earth, and how sorry he was that they hadn’t paid more attention. The then 93-year-old said goodbye to us by saying that our generation would have to correct this mistake. This idea was extremely inspiring for me.
Vespucci Partners first saw the potential in Poliloop. When they invited the Managing Director of the Abu Dhabi TechStars program to Hungary, you got the opportunity to introduce yourself to him. How do you remember that first competition and what path did this opportunity take you on?
Such an event plays an extremely important role in terms of business investment and job creation, as depending on the event, the audience can come from all over the world, which creates a great opportunity for networking. We prepare accordingly. We always set realistic goals for ourselves.
Getting to such an event starts with a presentation. We will introduce ourselves in three minutes, and then answer questions for five to ten minutes. We also try to assess the composition of the audience in advance. Typically, we write a text, put together a presentation, finalise it through a series of filters and then give it a look and feel. Of course, we aren’t masters of everything, but maybe we’ve got better at this kind of process over time.
The 3 month TechStars program provided us with a great network of corporates and investors, as well as a lot of help on how to structure the business side of our startup.
How did you get into contact with Vespucci Partners?
Virág Forrai, an active ecosystem builder in the Hungarian innovation community saw my presentation and Krisztina Lévay’s, who then introduced us to Vespucci Partners, which was founded not long before that. So we introduced ourselves to the professionals of venture capital firm, with whom we immediately found a common ground and they selected us to be invited to the TechStars event.
What did you know about the world of venture capital before you started working together?
Practically nothing. We had absolutely no insight into the field of venture capital fund management. Let’s not forget that we, the founders of Poliloop, are researchers. But we realised very early on that if there is no capital available, there is no innovation.
What are the benefits of working with Vespucci Partners?
Beyond the financial benefits – they’ve given us a two-million-dollar seed investment – they’re helping us in several important areas. For exapmle, we really appreciate the fact that we were introduced to a reliable law firm and accounting team that performs its work with the utmost professionalism, and we have been working with them ever since.
Vespucci Partners is known specifically for helping Hungarian-American hybrid startups to grow, so they are present in Hungary and the United States. One of their colleagues lives in the US, but they also have other partners, for example in Silicon Valley, whose job is to help Hungarian startups set foot in the US market and then grow there.
Vespucci Partners provides smart capital. What does that mean? That the investor provides not only money, but also knowledge, experience and, where appropriate, infrastructure, strategic and business advice and a network of contacts. This is also important for us because, as soon as we have the opportunity, we would like to travel to the US for a longer period of time to build out a network with potential investors on the ground. We are prepared to learn more about the US market and then enter it.
Two years have passed since Poliloop was founded. How have the short and long-term goals changed?
Krisztina Lévay and I both went to the Faculty of Pharmaceutical Engineering at the Budapest University of Technology and Economics. About halfway through our training, we started to think about what we would do after our school years. We wanted to find a new way in our field, so we quickly came to the conclusion that on the one hand we wanted to embark on a project that was environmentally friendly and contributed to our long existence on Earth, and on the other hand we didn’t see this achievable in a large organisation. We decided later that plastics could be the starting point for our research, as this is an area where we can use both our chemical engineering and bioengineering backgrounds. We didn’t even wait until the end of university to start working, we used our own resources to rent a lab, where we worked for more than ten hours a day after classes, even on weekends and during school holidays.
Our innovation is a biotechnological process that can break down lightweight, typically single-use plastics (PET bottles, food packaging…) into organic sludge, compost, in just six to eight weeks, without releasing any harmful substances such as methane. Decomposition is a great achievement in itself, as single-use plastics are among the biggest polluters, but the real speciality is that the material produced by decomposition can be reused to make, for example, bioplastics, thus joining a kind of circular economy.
We have now reached the point where Poliloop is not just a research project, but an organisation, a company. Of course, there were lows. The question has always been how we get up from these. Vespucci Partners also played a key role in our success. We have always tried to learn from our mistakes and look towards the future, drawing the necessary conclusions. The very idea of setting up a company was dictated by the need for broad applicability, as we thought that in a business structure, we could reach a spectrum with our technology where we truly bring change to the world. We are approached by large companies from all over the world, who come to our meetings with great ambitions and challenges. Several Fortune 500 companies have already indicated that they would like to work with Poliloop, as the plastic question is becoming increasingly important, and they don’t just want to talk about the solution. The key is to get our technology to as many places as possible, as quickly as possible, and the key is to cooperate with mega-companies, because they have the logistics and infrastructure to deal with a problem as big as plastic pollution.
Our long-term goal is to become a biotech company with a broad portfolio, not a one-trick-pony startup. We think we have every opportunity to do so, as some estimates suggest that the biotech sector, estimated at $360 billion in 2016, could grow to $727 billion by 2025. Of course, feasibility depends on the possibilities. Of course, like all startups, we want our company to be as valuable as possible. Setting common goals with our investors can lead to a long and fruitful relationship. We feel that both Techstars and Vespucci Partners are supportive partners in this endeavour. Fortunately, in both organisations we find that using the term family is not just an empty phrase, as they are constantly helping us.
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