SINGAPORE (June 10): In rural Bandung, Indonesia, farmlands stretch into the distance. Tending them are hundreds of mushroom farmers — mostly women — who earn a subsistence living harvesting the fungi for local markets and restaurants. But a young architect who comes from a family of mushroom farmers believes he can help the mushroom-farming locals earn a better wage.

With an eye on rising consumer demand for sustainable products, Adi Reza Nugroho and his team at Mycotech in Bandung have spent half a decade experimenting with turning the edible fungi into environmentally friendly building material and vegan leather.

“We purchase the [waste] generated from mushroom farming from the farmers. We have worked with four mushroom groups consisting of more than 200 farmers to supply and manufacture raw materials,” says Adi in an interview with The Edge Singapore through Skype and WhatsApp. These farmers supply more than 6,000kg of waste product to Mycotech each month.

“Mushroom farmers [in Bandung] typically earn $3 to $5 a day,” Adi explains. “While edible mushrooms can only be grown [seasonally], our product can be grown all year round. With this new stream of income, farmers can earn up to $8 a day.”

In 2014, Adi carved out a space in his mother’s kitchen and started growing mushrooms in makeshift boxes. He also marshalled a team of mostly architects, and together they started Mycotech. The team collaborated with various research organisations, including Future Cities Laboratory in Singapore, during this time.

It took the team four years to perfect their first product — a solid structure made of mushroom that can be used to build houses, which they later named Biobo. At first glance, the experimental boxes looked like mouldy bread. The idea is to use the root structure of mushrooms, called mycelium, to bind the agricultural base used to grow mushrooms, thus forming a solid block that can be used as building material.

The substrate, which is made of sawdust and other nutrients, is mixed with mushroom spores. Several days later, the fungi will begin digesting the nutrients and bind the substrate together. The spongy block is then moulded into the desired shapes and dried before the mushrooms can sprout.

Earlier this year, Mycotech started selling its made-from-mushroom leather in a collaboration with small fashion brands in Singapore and Indonesia. One of these products, a vegan leather watch, is fully funded on Kickstarter. Its other product, Biobo, resembles a medium-density composite board. It can be used in building construction and for making furniture. Mycotech’s sales grew 548% in 1Q2019 from a year ago. It had a revenue of US$260,000 ($355,892) last year.

The start-up has also drawn interest from a growing list of investors and foundations that want to put money in novel sustainable ideas. Mycotech raised an undisclosed seed round from venture capital firms in the region and individual investors in Indonesia. It is on track to raise a Series A round by year-end to mass-produce its products. The company has not disclosed who its investors are.

Separately, Mycotech has also received grants and funding from the likes of DBS Foundation, which helped it launch its first factory in Bandung. “DBS saw the potential in Mycotech’s business model; its innovative products are not only sustainable and affordable but also create positive social and environmental impact,” says Karen Ngui, board member of DBS Foundation. “[For instance,] this newly developed mycelium-based composite material has the potential to revolutionise the construction material sector and meet its demand in a more sustainable way.”

Fashionable alternatives

Adi has high hopes for the start-up’s leather alternative, as the global fashion industry has come under increasing scrutiny from investors to reduce its use of animal products and cut its carbon footprint. The fashion industry is responsible for 20% of global waste water, and 85% of textiles end up in landfills instead of being recycled.

Global fashion houses such as H&M (trading as Hennes & Mauritz) and LVMH (LVMH Moët Hennessy) have committed millions of dollars to invest in sustainable fashion products — a trend that Mycotech could capitalise on. However, the sustainable fashion industry still has some way to go before being more widely adopted, and the funds committed by global fashion brands to develop sustainable fashion materials still make up only a fraction of the profits these companies generate.

Nevertheless, Adi says Mycotech is ramping up production of its leather alternative. The start-up makes about 14,000 sq ft of leather a year in a rented facility in Bandung and is in the process of securing new and bigger factory space to reach production of one million sq ft a year by 2021. This will allow Mycotech to reach bigger markets such as Australia and Europe. “We are seeing high demand for our product — about 1,500 sq ft a month,” Adi says.

He adds that it takes only five days to harvest the mycelium-based leather, compared with cow leather, which takes two years. The process emits only 7kg of carbon dioxide for 30 sq feet of leather, while processing the same amount of cow leather emits up to 500kg of carbon dioxide. The figures for cow leather are estimates, and they vary across different processes of harvesting and processing the leather. Mycelium-based leather is also cheaper to produce.

To be sure, the made-from-mushroom leather is less hardy than genuine leather in terms of tensile strength. But Mycotech is in the process of developing its product to hit 30Mpa, 10Mpa higher than genuine leather.

Although it is still a relatively new concept, using mushrooms to build homes is yet another potentially winning idea. According to a 2018 survey by Dodge Data & Analytics, construction companies expect that more than 60% of projects will have sustainable elements by 2021, from a current base of around 30%. “[Some of the] top triggers are client demands and environmental regulations,” says Alberto Pizcueta, senior knowledge analyst at Boston Consulting Group.

Mycotech is already running a few pilot projects with its Biobo product. It is partnering with an Indonesian manufacturer to combine Biobo with lightweight steel to create prefabricated building materials. Mycotech has also used its product to build expandable homes in Batam for low- and middle-income households, backed by the local government and funded by Future Cities Lab.

The start-up says Biobo has 90% less carbon emissions than traditional construction materials such as cement, which generates about 900kg of carbon dioxide per tonne. More importantly, the product is generally fire-resistant. “It is also easier to install, as it is a panel, compared with laying bricks. We estimate that we can save 20% to 30% of the construction budget by reducing manpower,” says Adi.

There will be plenty of challenges ahead for start-ups such as Mycotech. “The construction industry has historically fallen behind in the innovation race and this does not only refer to digital[isation] but also to [using] new materials. The low margins and increasing competition make it more and more difficult for contractors to bet on new ways of building,” says Pizcueta. But their fear of new materials costing more is misplaced, he adds. “The use of this new eco-friendly building material could improve the medium- to long-term efficiency of facilities. It may [need] more capital expenditure at first, but less operating expenditure in the medium to long term.”

Today, Biobo is sold at US$20 per board, 25% more expensive than the average medium-density board. Adi says if the start-up could scale up production, the cost would come down to US$10. But scaling quickly and controlling the quality of the product will be his biggest challenge ahead. The company works with hundreds of individual farmers and it will be costly to monitor the quality across these smallholder farms. The team also works with a single type of mushroom, limiting its sourcing pool.

Mycotech will also have to raise substantial funds to complete its new ­factory, which is the least of Adi’s concerns, as some of his current investors have committed bigger sums than before for his upcoming funding.

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