Quick Take
Cruz Foam's biodegradable packing material made from shrimp shells and food waste attracted wide attention and big-name investors, but the Santa Cruz-based company has closed up shop after what one former exec says were struggles to solve the full range of problems its customers needed packaging to address.
Founded in 2017 by two surfers, Cruz Foam set out to replace petroleum-based, bad-for-the-environment, single-use plastic packaging with a biodegradable alternative made from shrimp shells and food waste. The Santa Cruz-born startup attracted celebrity investors, landed commercial customers and earned national recognition for its sustainable packaging technology.
But a promising invention and a viable business are two different things.
Toby Corey, Cruz Foam’s former executive chairman and chief operating officer, said the company struggled to solve the full range of problems its customers needed packaging to address — from protecting products in transit to making the materials easy to use and affordable.
“In my view, Cruz Foam’s greatest challenge was never fully solving the customer’s complete problem,” said Corey, who first joined Cruz Foam’s board in 2020. “Whether protective packaging or cold chain, customers weren’t simply buying sustainable foam or insulation. They were buying performance, reliability, ease of use and economics.”
Last week, Cruz Foam ceased operations and Virginia-based TemperPack announced it had acquired the startup’s intellectual property, including 23 patents and patent applications. The sale gives another sustainable packaging company access to Cruz Foam’s technology, but it does not mean Cruz Foam’s products or business will continue.
Cruz Foam grew out of a project CEO John Felts began while pursuing his doctorate at UC Santa Cruz’s Baskin School of Engineering. Felts and co-founder Marco Rolandi, a UCSC professor, initially explored using the material to make surfboard blanks before turning to packaging.
The company used chitin, a tough material found in the shells of sea life, to develop a foam intended to decompose after 45 days. Its products included insulated shipping boxes for temperature-sensitive goods, mailers, foam blocks and a bubble-wrap alternative.
The company was one of the first to graduate from the Santa Cruz Accelerates program, which helps entrepreneurs connect with mentors, funding and other resources. Then in 2022, actor Leonardo DiCaprio and SoundWaves, a venture firm founded by Ashton Kutcher and Gary Oseary, invested in the company, and both DiCaprio and Kutcher came on as advisors. (Kutcher left Sound Ventures earlier this year to start a separate venture capital firm.) That same year, Cruz Foam opened a new production facility in North Carolina, though company headquarters and research and development work remained in Santa Cruz.
Cruz Foam landed customers like Whirlpool and Santa Cruz-based Verve Coffee Roasters, which used Cruz Foam’s coolers to ship its ready-to-drink beverages. Through a partnership with Atlantic Packaging, Cruz Foam was used for things as varied as packaging weather instruments and protecting wine bottles in transit.
The accolades stacked up: Time magazine named the company’s Cruz Cool cooler one of the best inventions of 2023; Fast Company named Cruz Foam among the most innovative companies of 2024; and it won recognition like the Bronze Award for sustainable design in food packaging from the Pentawards, the world’s leading packaging design awards program.
Despite that momentum, the company ultimately shut down.
TemperPack, founded in 2015, also focuses on displacing plastics with sustainable alternatives. Its acquisition of Cruz Foam’s intellectual property was done through what’s known as an assignment for the benefit of creditors, a process often used by financially distressed companies to sell assets and repay creditors without having to do a formal bankruptcy proceeding.
Jed Dutton, TemperPack’s vice president of marketing, said the sale didn’t include Cruz Foam’s products or operations, or customer records and relationships.
“We know their work and team well, and we’re sorry to see them go,” said Dutton. “John Felts and the Cruz Foam team did pioneering work, and we intend to honor it. Cruz Foam had a talented team and a respected set of investors.”
As of last week, the Cruz Foam website redirects to TemperPack’s site, and emails to the Cruz Foam executives bounced back. Calls to a phone number listed for Felts weren’t answered.
In a post on the company’s social media feeds, Cruz Foam executives acknowledged the company’s end and TemperPack’s purchase, and wrote, ”Nearly ten years ago, when the Cruz Foam team got together, we believed in the power of following nature to create sustainable materials. With the hard work and dedication of the team, we created multi-patented, commercial-grade packaging foam for partners in packaging, food and beverage, electronics, automotive, and luxury goods. The vision of Cruz Foam continues on, and we want to thank everyone who supported us through our journey.”
Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.
