June 2019

Scratch and Sniff

We love some scents and are repulsed by others. The personal and home care industry has spent decades “hacking” our response to scents. We expect personal and home cleaning products to smell in certain ways and scents often reinforce our perception that products work.

Some people have been switching to “fragrance-free” and “unscented” products. Not everyone is clear on the meaning of these terms, however. “Fragrance-free” means that a product does not contain fragrance chemicals. Essential oils (often shown as plant extracts on the label) and other scented molecules added for other reasons may still be used. “Unscented” means that we can expect the product to have little to no odor, which may be achieved through fragrance masking agents.

The International Fragrance Association (IFRA) published, for the first time in 2010, the list of chemicals found in fragrance formulations. This list currently includes roughly 4,000 chemicals including at least 100 found on lists of chemicals of concern.

A sticking issue in this space has been ingredients transparency. Most fragrances are made by a few fragrance manufacturers (“fragrance houses” in industry lingo) that dominate this field. The combined annual revenue of the five top fragrance houses (Givaudan, Firmenich, IFF, Symrise, and Takasago) is somewhere between $15 and $20 billion. Traditionally, the fragrance houses deliver the fragrances to personal and home care brands as a final ingredient, ready to be mixed in the formulation. The houses usually regard the chemical composition of the fragrance as a trade secret and do not disclose it to their brand customers. This has made it hard for brands and retailers to provide full ingredient transparency.

The shifting consumer preferences and pressure from advocates are making the industry and some regulators take a fresh look. Two recently proposed California laws, SB 574 and AB 495 would expand the regulation of cosmetics labeling and fragrance ingredients. SB 574, also known as the “Toxic Fragrance Chemicals Right to Know Act of 2019,” would require cosmetics manufacturers to disclose whether any of their products contain any ingredients that appear on one of 27 lists of chemicals of concern. AB 495 would ban the sale of cosmetics products containing any amount of 14 classes of chemicals of concern, some of which are in fragrance formulations.

These changes are also creating opportunities. Several new perfume brands have ingredient transparency at their core. Examples include Michelle Pfeiffer’s Henry Rose, and also Rich-Hippie, Skylar, and Pour Le Monde. Another example is P2 Science, a company spun out of Yale, making fragrances and other high value functional ingredients from bio based feedstocks. Fragrance industry incumbents have also acquired natural ingredient companies over the last few years. Examples include Givaudan acquiring Naturex for €1.3 billion and IFF acquiring Frutarom for $7.1 billion. There have been several other smaller acquisitions.

Fragrances are one of the many functional ingredients in personal care products that need safer chemistry innovation. We are working on a safer chemistry landscape in formulated products. Stay tuned!

Safer Made Invests in Force of Nature

We recently closed an investment in Force of Nature, an on-demand home cleaning system that uses small amounts of food grade ingredients to produce a safe and powerful surface cleaner and disinfectant. Their product is a safer alternative to cleaning products that contain bleach, quaternary ammonium salts, other antimicrobials, fragrances, preservatives, and other undesirable chemistries commonly found in household cleaning products. The reusable bottle and concentrated refills eliminate the need for single use packaging and reduce plastic waste. A great product for young parents, people with allergies or multiple chemicals sensitivities, or people who like clean. Check it out!

Numbers

98% of people have fluorinated compounds (PFAS) chemicals in their blood.
40,655 chemicals are manufactured, processed, and imported in the U.S. (roughly half of the 86,000 or so chemicals on the TSCA inventory).
50 years is the lifetime of the average plastic bag in the environment.
$1.5 billion is the amount committed for the next five years by members of the Alliance to End Plastic Waste to support innovation, education, infrastructure, and clean-up projects.
6% is the percentage of plastic resin sold that comes from recycled plastic.

Financings

Awair, maker of indoor air quality monitors for homes and companies, has raised $10 million.
BioClarity, a direct-to-consumer skincare brand using plant-based ingredients, raised $13 million.
Blume, a feminine hygiene and wellness startup that's focused on young women, raised $3.3 million.
Cora, a direct-to-consumer brand selling organic feminine hygiene products, raised $7.5 million.
Checkerspot, producing safer bio-based polyurethanes and textile finishes, raised $13 million.
RWDC Industries, a producer of PHA (bio-based and bio-degradable polymers) raised US$22 million.
DouxMatok, an ingredients company with products to enhance the sweetness of sugars and the saltiness of salt with no aftertaste, has raised $22 million.
Nutrition Innovation, which produces "healthier" sugar, has raised US$5 million.
Evolve Biosystems, the producer of an infant gut microbiome supplement, raised $40 million.
Hatch, a destination and lifestyle brand for women before, during and after pregnancy, raised $5 million.
Impossible Foods, a company making plant based burgers, has raised $300 million.
Noblegen, a functional ingredients company based on biotechnology, has raised $18.6 million.
Prima, a wellness brand focused on hemp oil products raised $3.3 million.
Quentic, a provider of environmental health and safety and corporate social responsibility SaaS, has raised €15 million.
Rocean, a countertop device that filters, flavors and carbonates water, raised $6 million.
Solugen, producer of bio-based specialty chemicals, raised $32 million.
Whole Biome, a microbiome company focused on disease therapeutics, raised $35 million.
ZeaKal, a plant science company developing technology to increase the yield and oil content of multiple crops, raised $10 million.
Chanel made in an investment in Silk, Inc. maker of a silkworm cocoon derived textile finishing.

Exits

Beyond Meat raised $241 million in its IPO at the end of May. The IPO price of $25 / share valued the company at about $1.5 billion. Closing price on June 25 was $150 / share, six times its IPO price, valuing the company at about $9 billion. Some investors are happy.