Sapro-Tech Investor Update #5 - December, 2024

As we end the year, we felt we would open-source our last investor update of the year. Thank you to the next gen materials who have been so supportive of ours and other journeys this year.

Happy silly season! The team at Sapro-Tech are wishing you all a great sprint to December, and after a holiday and down-tools, a wonderful 2025 ahead. In New Zealand, this is our Summer Period which means long days, times of reflection and maybe a holiday!?

Innovating to make an impact on climate change is not easy, but we are making progress and we have three short weeks to close up our SAFE Note of NZ1m / US 0.6m and get ready for a big and impactful 2025.?

Who would think that raising funding for your start up at the same time as the Xmas Run was good idea?

Key Milestone Achieved?

performance parity with animal leather, tensile strength?

It took:

2.5 years to reach 8%?

6 months to reach 50%?

1 month to hit 100%?

The breakthrough of our new material that is inspired by fungi, is sustainable while the production method, scale, end states & unit economics are game changers.?

Triumphs

• Developing materials that have the desired performance metrics, the formulation being highly tunable, the potential to easily scale production and produce at a price point below animal leather.
• Samples on Tour - so good to have samples, products made by Suzie Eggleton the owner of Velvet Heartbeat and sharing them across Singapore & New Zealand to help people see what is possible. How long before we could see a YY Nation shoe out of production, a Saben handbag and a taylor boutique garment alongside Velvet Heartbeat’s products??
• Singapore Visit - we travelled for a week to attend the Agri-Food Innovation Summit at the Marina Bay Sands Expo Centre. Pitches, one on ones and visits to potential partners including Nestle. Amazing opportunity, creating conversations with investors across Singapore, Hong Kong, India, China, Japan, USA & Australia. It was also great to tour with founders - David from Joules, Jan & Mick from Forever Harvest and Adeline from Kelvius - sharing, learning and traveling together.?
• Breakthrough alert - faster creation of the material [from 10 days to 3 days]; production process transformed [current estimate is new material will take 25% of the previously estimated equipment and automation]; and a greater sense of flexibility already in the end stage of the material [hard material, soft material,water repellent,? all colours possible]. This progress is testament to Keith our founder, Gayani our CSO & lead scientist and the wider team who have been developing new variations and testing these materials, from this mahi (work) comes the insight to create breakthroughs.?

Challenges

• Raising funding in this environment - hard, but the counter is that we have learned so much from talking to 115 investors from across different continents, super insightful.?
• Ghosting from VCs - but we have a new attitude. If no reply, that means no, and move on! One day we will come back as a VC, wait, as some of you may know I did that once
• Working on an extremely tight budget and timelines with all staff on half salary to extend our runway.
• Convincing people that our materials have the desired performance metrics, but then the joy that when they get to see and feel the textiles they realise the materials are fit for purpose and the huge potential these materials have!

Shout outs:

• Sandhya Sriram, the new CEO of Sprout Agritech has been epic in her introductions to her networks in Asia and North America. Thank you so much Sandhya for believing, for pushing and delivering!?
• Kruno Ivancic, international expert in advertising and talent sourcing introduced us to the ventures team at Adidas and got us an incredible opportunity to understand their venturing model and supply chain. Thank you Kruno.?
• Sarah Nolet, the co-founder and GP for Tenacious Ventures & Jez Weston from Climate VC Fund - both these awesome humans get the award for always being responsive, helpful and considered. They might have declined but they have been helpful, they respond to our emails and they don’t ghost you, which is a challenge in the VC industry.?
• Stretch, who is the nick-name for an angel, who came onto a call, liked what he saw and said he would put $25k into our safe. That is what we like!?

FYI

• Sapro-Tech pitches to investors - recently the team hosted an open forum for interested investors. If you would like to watch back - check it out here, it's raw and free flowing.?

We’d love your help

• Looking for development partners - we are now producing material samples to design, so it is time to add prospective customers where we can supply materials for making prototypes, testing material and exploring forms. If you know of any companies who you think could be interested, particularly outside New Zealand then we would love an intro. We already have Velvet Heartbeat, Saben, YY Nation and taylor boutique as partners. [words for customer / partner? intro are below]
• Safe Note Investors - depending on which way you look at our pipeline (over 115 investors across the globe) we have commitments for 60% of our NZ 1m safe, so that means we are on the home stretch to closing the Safe by Xmas. We will take 50-100k cheques from here. A generous 20% discount to those who commit before 18 December. Please get in touch with me or introduce me to people you think could be interested. [words for investor prospect intro below]

Thank you for your support, interest & engagement and we wish you the very best for the rest of 2024!?

Our mission is to make a definable difference to the impacts that are coming from climate change. We will achieve this if we can create materials that go into products that ultimately are kinder to and for the planet. We can’t change human kind’s insatiable desire for beautiful products, but what we can do is give consumers products that are made with more ethical considerations and a lighter impact on the environment. Our impact comes from creating compelling products made from our materials, by our customer partners. We do this, we will achieve our mission and we will create a very valuable company as well. Come and support our SAFE and let's make a difference.?

The Sapro-Tech Team?

Sapro-Tech - Customer Prospect Intro

Sapro-Tech is a startup that is producing next generation materials for the fashion, interior, automotive & packaging industries on a b2b basis. They have just released their first set of materials for customers to make samples and prototypes from. Their existing customer partners are Velvet Heartbeat, Saben, taylor boutique & YY Nation. Sapro-Tech are interested in being introduced to brands who want to apply next gen materials in their products.?

I would be happy to introduce you to Andy, their Chief Commercial Officer. Their focus for the next period are fashion brands & packaging companies who are interested in co-development of materials, textiles & packaging that utilise their patent pending materials made from and inspired by fungi.?

Sapro-Tech - Investment Intro

Sapro-Tech is a startup that is producing next generation materials for the fashion, interior, automotive & packaging industries on a b2b basis.?

The materials they have developed are fully sustainable & low emitting i.e. no plastic, have ability to achieve scale production and a unit cost per m2 of < US $10 which is highly attractive when comparable animal leathers are priced from US $40-100 per m2 and alternative next gen materials are priced from US $30-50 per m2.

To achieve the form Sapro-Teach has e.g. 100% tensile strength of animal leather, they have been able to discover breakthrough elements in the composition of their material. There is the opportunity to apply their IP on a licensing basis to other companies who wish to deliver sustainable materials for their customers. It took Sapro-Tech 2.5 years to get to 8% of animal leather tensile strength, 6 months to reach 50% and the last month to get to 100%, compound scaling of results.

Sapro-Tech is currently raising a SAFE Note of US 0.5-0.75m with a focus on delivering parity with animal based textiles, and to secure traction with more international customers, prior to raising a seed round later in 2025 of US 2-3m. Runway on the SAFE will be Feb, 2026.