Entrepreneurs' packaging is mushrooming into big bucks

Gavin McIntyre, left, and Eben Bayer, co-founders of Ecovative Design, started out with mushroom-based insulation but switched to packaging material.

GREEN ISLAND, N.Y. -- Turns out that mushrooms -- great in soups and salads -- also make decent packaging material.

Mushrooms are a key ingredient in the pale, soft blocks produced by the thousands in an upstate New York plant that are used to cushion products ranging from Dell Inc. servers to furniture for Crate and Barrel.

More precisely, the blocks are made with mycelium -- the hidden "roots" of the mushroom that usually thread beneath dirt or wood. Two former mechanical engineering and design students, Eben Bayer and Gavin McIntyre, figured out how to grow those cottony filaments in a way that binds together seed husks or other agricultural by-products into preset packaging shapes.

Their five-year-old firm, Ecovative Design, has a toehold in the increasingly lucrative market for eco-friendly alternatives to plastic foams -- and their business is growing like shiitakes on a damp log. Mr. Bayer and Mr. McIntyre are expanding their line for everything from footwear to car bumpers.

Six years ago, they were Rensselaer Polytechnic Institute students growing fungus under their beds for a class project. Today, the young entrepreneurs are more than doubling their production space and recently announced a deal with Sealed Air Corp., the packaging giant known for Bubble Wrap.

Workers at Ecovative inoculate mycelium into pasteurized bits of seed husks or plant stalks, then place the mix into clear plastic molds shaped like the desired packaging pieces, such as a cradle-shaped mold for a wine bottle. The mix is covered for about five days as millions of mycelium strands grow around and through the feedstock, acting as a kind of glue. The piece is heat-dried to kill the fungus, ensuring that mushrooms can't sprout from it. Because the mycelium is cloned, the product does not include spores, which can trigger allergies. The packaging is edible, technically, though it is not recommended as a snack.

"It's low-tech biotech," Mr. Bayer said. He noticed mycelium's "stretchy" properties while growing up on a Vermont farm. The pair switched to packaging material from mushroom-based insulation because it seemed a better business bet.

In a 10,000-square-foot facility in Green Island, an industrial asparagus blancher pasteurizes the feedstock, and a machine that once put chocolate chips on cookies applies the mycelium.

Mr. Bayer said Ecovative, with 42 employees, has attracted more than $10 million in grants and equity investment, as well as some big-name clients. Dell Director of Procurement Oliver Campbell said his firm has a pilot program using the Ecovative product instead of polyethylene foam for shipping a high-end server. "To cushion $25,000 worth of servers with mushrooms, that's kind of a radical thought," he said.

Expanded polystyrene protects everything from dinner plates to flat-screen TVs, but it's made with toxic chemicals and breaks down slowly. Ecovative's product breaks down in six to nine months and is OK to throw on a compost pile.