Old souls in young bodies 

KiwiFibre is kind of a uni project gone wrong, says co-founder Ben Scales. He and Will Murrell started the company in 2020 following a university group project on waste materials.

The pair, now aged 24 and 23 respectively, met at the University of Canterbury while sharing a mutual love of industrial design. 

Through the uni project, the two students got interested in blending nature and engineering to produce a harakeke fibre for the composites industry that is a direct swap for fibreglass and carbon fibre and is far less carbon-dioxide intensive to produce. 

They say the harakeke material can be used in the manufacture of anything from snowboards to race cars to even space rockets, though the initial focus is to supply the lucrative global sporting goods industry. 

Investor and KiwiFibre director Mark Henderson describes the pair as “old souls in young bodies” who he thought were smart to have recognised the opportunities in natural fibres in Aotearoa and that harakeke is a taonga – a highly prized natural resource.

KiwiFibre’s mission is to use regenerative fibres to design solutions that help global industries make a change in the environment and economy and, in doing so, hopes to revive a once flourishing harakeke industry in New Zealand. 

Flax was once the country’s largest export earner with the strong fibre used in a range of products but it dwindled after WWI.

KiwiFibre is working with the newly formed Harakeke Industry Alliance (He Hononga Ahumahi Harakeke) and others to bring a harakeke fibre and byproducts industry back to life.

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The MVP process

KiwiFibre’s first prototype was a harakeke fibre skateboard built on a barbeque in the backyard of their student flat. 

As a student, how do you develop a minimum viable product (MVP) that can attract early adopters and validate a product idea?

Someone suggested the two students enter a challenges held by Entre, the university’s entrepreneurship club for students. Scales and Murrell didn’t know what it was about but decided to give it a go because there were some cool prizes up for grab.  

As a result they learnt some rudimentary business skills, such as what is a business model, how to pitch to investors, and that angel investors don’t have wings.

At the end of 2021 they did the university’s Summer Startup Programme – a 10-week accelerator that helps students fast-track their ideas and launch commercial ventures. Scales and Murrell were attracted to the programme’s $5,000 scholarship that allowed them to work full-time on their business idea during the day, while working at a pub for extra cash at night.

“I was a dishie and Will was front of house and every time he’d come back and give me dishes to wash we’d exchange an idea about something we could build on,” says Scales.

The entrepreneurship process turned out to be the same as that for design, which they were already doing: to identify a problem, talk to people about it, design a solution, and then try to get it to market.

They “played the student card” and got in contact with local and international companies that build all kinds of things – from boats to spaceships. Those conversations led them to fully understand the problem that exists around carbon fibre and fibreglass from a human, environmental and, crucially, a technical perspective, says Scales. 

“There were things these ski and snowboard manufacturers were really dissatisfied with from an engineering perspective about these materials and that really resonated with us.”

In early 2022 they used $500 they had won at Summer Startup to buy some materials, incorporate the company, and set up a website, paying the software developer with bottles of Jack Daniels Sinatra whiskey.

Speaking at various university events garnered the pair the attention of a couple of big companies interested in their idea. But they ignored an email from one as they were too busy studying. 

“They cornered us at uni and said ‘we’re a big company, we really need this problem solved and you can do it for us, these are the volumes we need and this is what you have got to do’,” says Scales.

The problem was the young founders didn’t have the $10,000 needed to make a prototype. They entered and won a Facebook competition run by an energy drink company where the prize was $10,000 and that helped them scrape together enough funds and resources to produce an MVP.

That first customer was American industrial technology company Trimble and KiwiFibre has an ongoing development project with it aimed at replacing fibreglass and carbon fibre in a range of its products.

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Getting funded

“That was the start of the massive international interest that has meant KiwiFibre was really global from day one and investors caught whiff of that,” says Scales. 

One investor offered the pair $100,000 each to drop out of university but they said ‘nah’.

They then got involved with the Phase One Ventures incubator, mixing with other young founders they remain in contact with. Phase One’s founder, Mahesh Muralidhar, is also still a mentor.

They also connected to First Cut, an Icehouse Ventures community for Kiwi founders under 30 where they could get support, hang out with likeminded founders and pitch for investment. 

First Cut raised a $5.5 million third fund in 2022 of which it has deployed $1.5 million to date. It also runs an annual challenge, which KiwiFibre won in 2022, giving the young founders the opportunity to pitch for up to $1 million in investment. 

Icehouse Ventures was lead investor in KiwiFibre’s $1.5 million seed round in late 2022. That round gave the company a 24-month runway and the founders are already working on a $1 million raise for later this year ahead of a much bigger one in 2025.

The term sheets for the first round were written in the same week Scales and Murrell wrote their last university exams – both graduated in industrial design.

“That was a massive week. We were running off caffeine and takeaways,” Scales recalls. “That really brought us from a couple of students with a hobby business that was just a way for us to learn about potential things we could do with our lives to this – the startup world and 'let’s go start a world-changing company'.”

The founders hold a 36.49 percent stake each in KiwiFibre while Icehouse Ventures has 12.4 percent. Other backers include wealthy businessmen Peter Huljich and Tom Sturgess along with Henderson and his wife Soraya, founder of skincare business Snowberry, NZ Capital Growth Partners, and Phase One Ventures.

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Mason Bleakley, who runs the First Cut programme, says they helped the founders in early discussions with customers and to build out their manufacturing process (they have a factory set up in Christchurch). 

Bleakley says it’s not easy getting an MVP to market, which is why few people go down this road.

“Kiwis are really good at it, we actually punch above our weight. In New Zealand it is easier to get access to local manufacturers and customers during the MVP development stage.”

KiwiFibre had already produced its first prototype on a limited budget before its seed round, which meant it had already proved the most uncertain thing about the technology – that it could directly replace carbon fibre and fibreglass. The more milestones you hit before getting funding, the better it is for founders, along with demonstrating they could stay lean, says Bleakley.

“That was a very good attribute and as they’ve gone to the next stage they have definitely shown a lot of engagement with their customers who are leading brands, and building alongside the customers to their demand rather than building on the blind.”

Is being young a help or hindrance in dealing with leading global brands?

It’s a mix of both, says Bleakley. Young founders typically have diverse thinking that means they think outside of the box and generate new ideas. 

Conversely, they’re typically first-time founders and haven’t experienced the hurdles that will arise in a startup, which is why connecting them with experienced founders and providing support is important, he says. 

“If there are mistakes that can be avoided then that is a good thing.”

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The supply chain

After raising capital, the founders had to figure everything else out – from supply chain to manufacturing at scale, to identifying key markets, the sales process, and logistics.

“At the time we had no idea but we were resourceful; we had vision that pushed through all that ambiguity and allowed us to gather people around us to do those things,” says Scales.

They now have a supply chain ready of growers nationwide, mainly centred in the South Island, that have existing harakeke on-farm. KiwiFibre has a test planting site near Lake Ellesmere, and is working with Ellesmere Sustainable Agriculture Inc (ESAI) and many similar groups around Aotearoa to manage the resource.

Henderson, an experienced entrepreneur, is impressed the founders understand the dynamics of harakeke beyond just its commercial and economic impacts, to the social and environmental ones as well. 

He grows harakeke at the Tāwiniwini bio-discovery gardens he established near Wellsford and his company Biotenax supports and administers the R&D initiatives of the Ngāti Ruapani ki Uta ki Tai Co-op, which he currently co-chairs. Henderson is also involved in the Harakeke Industry Alliance involving iwi, universities, research institutes and others. 

Ensuring continuity of supply will be critical to KiwiFibre’s success as it scales, and government funding support will be needed for iwi to increase planting and develop infrastructure for a revived industry, says Henderson.

KiwiFibre is targeting the market that attracts the highest premium for the harakeke material and fully utilises all its properties – the sporting equipment industry.

Those involved in these types of sports – snowboarding and skiing, in particular – are of a more environmentally conscious bent, and the equipment fully utilises the material’s properties such as impact resistance and absorption and vibration damping, says Scales.

“It’s a sexy product to be in, which really helps when the biggest challenge is material perception. Starting from a neat industry and then having that trickle-down effect through the rest of the world is what we’re going after.”

They have supplied the material to a number of customers that are building product prototypes, and KiwiFibre hopes to have signed sales contracts for regular supply within the next couple of years.

They’ve also been doing things like helping build race cars on the side as another high-profile way of showcasing what the material can do. 

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Naivety a plus

The company has been leveraging the New Zealand market to showcase internationally that the material is the ‘real deal’,  says Scales.

“The first thing that customers tell us is ‘this sounds big, I hope it’s true’. We’re able to prove that by working with local manufacturers to prove to the rest of the world that it works. That’s the beauty of New Zealand.”

Scales says others had attempted to do what KiwiFibre has done with harakeke but it took “two young guys that were too dumb to not do it” to circumvent the roadblocks.

The timing works in their favour. 

“Twenty years ago there were a few projects but the education around materials wasn’t there; the market wasn’t ready for natural fibres,” says Murrell.

Henderson says the founders’ youth would normally work against them but in KiwiFibre’s case “I stand corrected –it’s like talking to a couple of 50 year olds”.

The drive to sustainability will be led by young entrepreneurs – something Kiwi investors need to adapt their thinking to, he says.

“When I returned to New Zealand in 2006 the risk appetite here was really pathetic from investment circles, but that’s starting to change. There’s a lot of capital out there and people are starting to realise they can’t stick it in the old, they have to go with the new.”

Only a startup could solve the problem KiwiFibre has addressed, says Scales.

“We’ve done so many weird things that would not normally be investable if it wasn’t for a venture environment and a young startup. Those things were key in getting us to where we are today. Naivety has been a massive advantage for us.”

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This first story of six in The Young Founder series was supported by Icehouse Ventures