Changing the face of Coffee

How a small FoodTech startup proved their skeptics wrong and defied the odds

From left to right: Alejandro, Juan, and Camilo receiving the award from the Danish Chamber of Commerce for Best Startup of the Year 2018

Back when Alejandro was in high school, he never imagined he would be co-running a biotech & foodtech company. He always had an interest in economics and business management, and that is why he pursued a bachelor’s in international business and global management.

Fast forward several years later, and he is now co-running a company whose core operations delve into green chemistry, biotechnology, and immunology, among others.

Alejandro Franco is the CCO and Co-Founder of Kaffe Bueno, an innovative foodtech startup that upcycles spent coffee grounds (a.k.a. – coffee “waste”) into active and functional ingredients for cosmetics, nutraceuticals, and functional foods & beverages. They will redirect 8.1 tons of spent coffee grounds (SCGs) from the landfills this year, giving them new life as a health & beauty or food products. When demand reaches a specific threshold (expected to happen within 18-24 months), Kaffe Bueno will establish Scandinavia’s 1st Coffee Biorefinery.

It has not been easy developing the concept and business model into what it is today. Alejandro and his co-founders, Juan Medina and Camilo Fernandez, were first inspired by the idea of upcycling coffee grounds while attending an international business school in London. After chatting with their Swedish friends, they realized quite quickly that the perception of coffee in Scandinavia (and most of the developed Western world) was very different from their perception as Colombians. To the western world, coffee is just a drink people used to keep themselves awake. To Alejandro, Juan, and Camilo, it was one of their nation’s main sources of livelihood… and a poor livelihood at that.

For years, they watched Colombian coffee farmers get the short end of the stick. The farmers work hard to supply the world with their coffee addiction and get very little in return, while coffee shop owners and large coffee chains and corporations continue to fill their pockets. So Alejandro, Juan, Camilo, and their Scandinavian friends started to talk about the frustrating disparity… a lot.

One day in the fall of 2015, the 3 co-founders were in class learning about the business model canvas. While the majority of the class was still learning what a “Value Proposition” was, they had completely filled out the canvas. Their teacher was impressed. After they handed in their final project, he then took them out for a coffee after class (no pun intended), explained that he was also a venture capitalist, and offered them a deal.

“It was a terrible deal, so we turned it down” Alejandro explains. “But we figured if our teacher was willing to cut a deal with us so quickly based on our final project, maybe this was something worth trying on our own”

Taking the concept very seriously, they started to plunge themselves into the research. They analyzed every market in Scandinavia and started reading one scientific paper or research paper after the next. It was hard work. However, they were super passionate about the topic, and that is what kept them going.

“We knew how big of a problem [opportunity] coffee waste was. In order to solve this problem we knew we needed to better understand the science of coffee in terms of its molecular composition and how we could extract its high-value compounds that remain intact after a cup of coffee is brewed using existing and emerging technologies. In turn, not only reducing coffee’s carbon footprint, but making the most value out of every kilogram of spent coffee grounds.”

After much deliberation, they decided to make their move to Denmark. Finland had the highest coffee consumption per capita, but Denmark was well-known for its strong biotechnology hub and recycling infrastructure. In addition to that, Denmark offered them a startup visa permit, making them the clear winner. After setting up all the deals necessary with coffee suppliers and businesses in Colombia, they arrived in Denmark in 2016. They had no network, no Danish language skills (they couldn’t even pronounce their own address), and no empirical knowledge of the country. However, they were ready to sell and upcycle high quality Colombian coffee.

The struggle did not end there, however. Like with every startup, it is hard to nail that perfect business model the first time. At first, they tried selling coffee online. That didn’t work out so great, so then they tried selling to cafés. Unfortunately, cafés usually bought from large resellers, and therefore they could not compete with the bulk volume prices their competitors were able to offer. However, they quickly found out that people were complaining about the crappy coffee they got from their offices, so they started to sell coffee there. The coffee sales were then used to finance their livelihood and allow them to continue their R&D on upcycling coffee waste. So, while they were selling coffee by day, they were secretly planning a coffee upcycling revolution by night.

Plotting the coffee upcycling revolution

And that wasn’t the end of the uphill battle. Even though the team had worked crazy hard to develop their business plan, they still had another 3 things working against them:

1. They were young (early 20’s)

2. They were not from Denmark

3. They didn’t have a scientific background

As a result, they were met with a lot of skepticism and resistance as they pitched their idea to one business investor after another. Circular and Bio Economy were not as popular back then as they were today. Often they were met with comments like “What are you doing here?” right after they did a pitch explaining why they were there, or “I’m impressed that someone with your background can have these ideas.” The Danish business world seemed to be continuously resisting them.

Alejandro pitching at Kickstart

However, the Kaffe Bueno team did not let these setbacks, or the fact that they were foreigners, deter them. “You can do one of two things: You either complain or you act on what is not of your liking” Alejandro explained. And while there were plenty of nay-sayers, at the same time there were many Danish people and institutions that were supporting them, like Agro Business Park and Spring Nordic (formerly CAPNOVA), so they knew they were on the right track.

They continued to reinvent themselves and re-evaluate their business. After extensive research and playing around with countless different ideas, they realized that the best way to preserve the SCGs was to break it down into their major building blocks: lipids, antioxidants, amino acids, sugars, etc. They came up with a bio-preservation system and were finally granted their 1st Innovation grant from Innovationsfonden. This allowed them to partner up with the Danish Technological Institute (DTI) as well as access to the technology they needed to prove they could extract the coffee oil. Finally, their vision was becoming a reality.

And those investors who laughed at the Kaffe Bueno team? Luckily, the team did not take the criticism of those early investors personally and kept in touch with them. After seeing paper after paper published about the Kaffe Bueno’s success, they finally said, “Ok, we can talk now”

Where is Kaffe Bueno now? They recently signed a contract with Givaudan, the world leader in flavours and fragrances. Kaffe Bueno has granted them exclusive distribution rights and are working on further development. You can also find their ingredients in branded products across the UK, Denmark, Germany, Austria, Netherlands, and the USA. They are also looking to close their next round of funding for September. In the long term, they hope to establish refineries around Europe, USA, and Asia. Moreover, they are continuously developing high-value ingredients by fractioning both the oil and the residual grounds. This allows them to fully unlock coffee's health potential, operate on a zero-waste basis and increase society's access to more natural solutions for health, nutrition, and skin conditions.

“Last but not least, the industries (personal care, nutraceuticals, functional foods & beverages) we serve are very innovation-driven. They are always looking to improve people’s health while providing indulging experiences, and this all roots from scientific developments. This has led us to several patent applications in enabling technologies, green conversion processes and ingredient applications.”

Some of the many products that can be made using Kafflour (upcycled coffee flour)

What would this mean for the world’s carbon footprint? Argan oil, for example, comes only from Morocco. All the oil is exported and travels around the world so it can become a very tiny part of a cosmetic product. Coffee oil has very similar properties to Argan Oil, and if big companies like L’Oreal decide to use locally sourced products like Coffee Oil instead of Argan Oil, it would mean a dramatic reduction in emissions for that industry.

Alejandro’s advice for future foodtech startups? Don’t stop moving and don’t give up. Expect to do a lot of grinding, try to be resourceful and don’t take things personally. If people keep saying “no” to you all the time, it simply means you have to re-evaluate and re-iterate. Entrepreneurs are also not born knowing everything. Most entrepreneurs have no idea what they are doing when they start their business: they just start learning, trying, failing, and repeating this cycle until they make it happen.

As we close off our interview, Alejandro tells me the story of someone who recently reached out to him about a new business idea. The girl was super-excited initially, explaining about how she wanted to collect the food waste from businesses and make new uses out of it. As Alejandro explained all the things she would need to consider, her face slowly dropped. It seemed like a lot of work, and she didn’t know anything about the topics Alejandro was talking about, so she decided it wasn’t possible.

“The fact that you don’t know it today doesn’t mean you can’t learn it and do something about it tomorrow”

You can learn more about Kaffe Bueno and how they are changing the face of coffee by watching the video below and checking their website at https://www.kaffebueno.com/