CycleWood Solutions Launches Compostable Trash, Yard Waste Bags

Xylobags first hit the shelves at Ozark Natural Foods last month, and the brand's creators hope it is the first step in becoming a household name.

CycleWood Solutions created the compostable bags for garbage and yard waste over the past four years, starting out in a business plan competition for master's degree students at the University of Arkansas' Sam M. Walton College of Business.

"They took it from just the idea to being on the verge of changing the plastics industry," said Joel Fontenot, managing partner at Trailblazer Capital in Dallas. The capital venture firm began backing cycleWood nearly three years ago and has invested nearly $3 million into the company.

The business won several competitions and received grants for additional early money.

The project started when co-founders Kevin Oden and Nhiem Cao were part of a team in Carol Reeves' entrepreneurship program. The team's original idea was to use their collective engineering, plastics and manufacturing backgrounds to form a company using renewable resources to create environmentally friendly products.

The focus was replacing high-density plastic bags using a blend of lignin and other polymers to create products that will completely break down in about 12 weeks. Lignin is the byproduct when wood is processed at paper mills or other lumber facilities.

The bags are certified compostable by the Biodegradable Products Institute.

"Our bags come from nature and go back to nature," Oden said. "We are taking something that is not being utilized and taking it to its highest level."

Fontenot said the company was an attractive investment because of the growth potential in green products.

The U.S. Environmental Protection Agency reported the amount of yard waste diverted from landfills to compost facilities quadrupled between 1990 and 2012. Americans composted more than 19 million tons of yard trimmings in 2012.

Oden said they are in talks with national retailers to get their products in stores across the country. The company's 13-gallon garbage bag and 30-gallon lawn and leaf bag are available at Ozark Natural Foods.

Matt Newman, assistant grocery manager at Ozark Natural Foods, said the store started carrying the bags in early July.

"We have a triple bottom line and part of that is sustainability," he said. "Plus we like to help startup companies whenever we can."

He added many of the coop's customers like to compost.

Oden said they are in talks with several cities.

Brian Pugh, Fayetteville waste reduction coordinator, said many companies come to him with proposals to change bags, but he doesn't anticipate the city shifting away from their current bags anytime soon. Fayetteville's compost program began in 2001.

Houston approved using Xylobags for its yard waste program, said Sandra Jackson, a spokeswoman with Houston's Solid Waste Management Department.

Houston area retailers will sell a six-pack box of 30-gallon bags for between $3.99 and $4.50. Newman said Ozark Natural Foods sells 10 packs of the 13-gallon trash bag for $7.69 and the 30-gallon compost bag for $9.69. He said the prices are in line with similar products.

Oden said the company has come a long way from the prototypes Cao produced in the garage of his Fayetteville home.

"While it was a very sad piece of film, it was still very exciting to have a product to hold," he said.

The bags are manufactured at Polymers Center of Excellence in North Carolina, and production has jumped from 150 to 2,000 pounds per batch. Oden said he hopes to hit 5,000 pounds per batch by year's end.

Bags aren't all cycleWood is creating. They have partnered with other companies to make items such as cutlery and dog waste bags.

The company's compostable film can be blended with traditional plastics and could "take tens of thousands of tons of virgin oil-based plastics out of the system," Fontenot said.

Increased production could open the doors to bringing some manufacturing back to Arkansas. Oden said they are in talks with Arkansas Poly in Van Buren and Future Fuel Corp. in Batesville.

The firm maintains an office at its original base in the Genesis Technology Incubator at the Arkansas Research and Technology Park in Fayetteville but had to move main operations to Dallas last year.

"I told the team when we got to a certain point I would need them to move to Dallas. We can get them help faster here in Texas," Fontenot said.

Mike Harvey, chief operating officer of the Northwest Arkansas Council, said the area has seen growth in so-called angel investors who provide smaller money amounts, but said there's a need for investors willing to put in $500,000 or more into a company.

"I'm a firm believer in growing your own companies," Harvey said. "Shame on us for not being able to keep them."

Fontenot said Trailblazer Capital would like to find more companies to back in what he calls underserved Midwest and mid-South cities and is willing to work as a partner to provide next-level investment. The firm no longer maintains a "Texas-only" mandate, he said.

"The older we become as a firm, the more flexibility we have as a firm," he said.

CycleWood was the investment firm's first venture into green material products. Fontenot said since they were able to create a fully biodegradable film the project is a "home run." He said, whenever you change a product's makeup, you are going to run into people who need to see to believe.

"When they can touch, feel and see it, they believe it," Fontenot said. "It looks and feels just like plastic, and this dramatically changes the perception. We are getting people to buy into the idea."