Private equity: investing in a sustainable alternative to microplastics

Ubiquitous

You are probably in contact with, or very close to, plastic microcapsules right now.

The tiny spheres are used widely in consumer products – including washing detergents and deodorants, shampoo, cosmetics and sun cream – to trigger the delivery of fragrances or other active agents over time. For example, they are used in in laundry detergents to release appealing scents long after washed clothes have dried. Embedded in everyday products, they have become part of the world’s microplastic pollution scourge.

In this case study, we profile Calyxia¹, a company that has developed a scalable, biodegradable alternative to microcapsules – and which our Plastic Circularity private-equity strategy has invested in to help further its growth in key markets.  

Hard to see, harder to extract

Less than five millimetres long, microplastics typically result from the fragmentation of larger plastic items over time. However, other forms have been deliberately engineered for use in household and industrial products. They include microcapsules, which are used in agricultural products like herbicides and biocontrol agents, and in developing advanced materials.

Once microplastics enter the environment, they are nearly impossible to remove. The pollutants have been found across the world: on remote mountains, in water systems, throughout the food chain, and in human bloodstreams and organs. In fact, it has been estimated that the average person can eat, drink or breathe between 78,000 and 211,000 microplastic particles every year.

Calyxia, a recent investment by our Plastic Circularity strategy, is an innovative business with rich intellectual property. Its biodegradable alternative to plastic microcapsules can disrupt the market for this input into consumer, agricultural and industrial products. By capitalising on this opportunity, its growth could potentially meet our financial and impact objectives.

Next-generation cleantech

Seeking scalable solutions to the plastic-waste problem, we focus on private companies that are transforming the plastic value chain into a circular model across three themes:

1. Innovative materials that use lower-carbon feedstock and no fossil fuels
2. New usage models incorporating repair, reuse and refill models
3. Improved collection, sorting and recycling

Calyxia aligns with the first. The company has developed a viable, biodegradable alternative to the plastic microcapsules so widely used in consumer, agriculture and industrial products.

The firm was founded in 2015 but its patented microencapsulation technology is based on 30 years of advancements in emulsion science and has been spun out of Harvard University and ESPCI Paris. The microcapsules it manufactures are fully customisable, as they can be composed from a wide range of materials and encapsulate many types of active ingredients.

In our view, Calyxia’s high-performance microencapsulation platform has the potential to rapidly gain scale and launch new products. Modular, scalable, cost-competitive and sustainable, the firm’s solutions are well positioned to disrupt in a growing market, in our view. This underpins our investment and impact theses (see Figure 1).

FIG 1. Key reasons for the Plastic Circularity strategy’s investment in Calyxia²

Investment thesis
Existing EUR 4.3 billion market with an expected CAGR of more than 11% to 2030	Economically proven, high-performing technology that is extremely customisable	Highly scalable, modular technology with one production line serving three verticals

Impact thesis
Fully degradable in land or water with no harmful traces or contaminants	50% reduction in GHG emissions and 25-80% less energy used than incumbents	Up to 40% less water and 50% reduction in active agents in agricultural applications

Calyxia has the opportunity to bring biodegradable microcapsules to products in a range of industries –from cosmetics, home-care and agriculture to the manufacturers of advanced materials in the renewable energy, electronics and automotive supply chains. By substituting a form of microplastic with a sustainable alternative, it has the potential to generate positive environmental impact.

Opportunities for disruption

Calyxia focuses on providing microcapsules to three sectors:

Agriculture. Microcapsules are used to increase plants’ ability to absorb inputs such as fungicides, herbicides and biocontrol additives in a controlled way, thereby supporting agricultural yields and reducing the overall volume of chemicals used. A biodegradable alternative to plastic microcapsules prevents their accumulation in agricultural soils, if adopted widely.

Personal care. Plastic microcapsules and microparticles have long been used in both home and personal care products. Calyxia’s alternatives have been designed to replace non-biodegradable microplastics, matching performance levels and offering new release profiles and fragrances, sometimes developed jointly with clients.

Advanced materials. The firm has developed a wide range of encapsulated products containing reactive ingredients. These include catalysts, UV protection additives, specialty lubricants, or ‘optically active substances’ like liquid crystals. They are inputs for an array of materials, including flexible digital displays, rubbers, composites and structural materials for lightweighting cars and planes. By improving the durability and lifetime of materials, they can reduce energy consumption, CO₂ emissions and production cycle times.

Policy pressure

While Calyxia’s biodegradable microcapsules present a high-performing, economical and green alternative for many businesses, policy and regulation momentum against microplastic pollution also support its solutions.

The European Union (EU) passed a ban in 2023 forbidding the use of intentionally-added microplastics in all finished products on its market between 2027 and 2035, depending on the type of product. Meanwhile, California leads on microplastics regulation in the US and is extending its 2015 ban on microbeads, a microplastic used in exfoliating skincare products, to include general microplastics used in cosmetics, household and cleaning goods.

Microcapsules fall under the EU ban. This policy will likely compel businesses in the affected industries to seek sustainable alternatives – and the bloc identified Calyxia as a trailblazer as part of the EnviroCaps project. The flexibility and adaptability of the firm’s offering make it well positioned to help meet this demand, in our view.

Calyxia’s production process is modular and highly scalable, requiring require low levels of capex to increase capacity in contrast with traditional processes. 

Ability to scale

Calyxia’s cleantech approach is proven for commercial use, but its market share is currently small. As investors, we have a clear interest in growing the business and are connecting the firm to potential customers in our networks. Our association with the Alliance to End Plastic Waste, which provides technical advice to our investment team, furthers this reach.

In addition to our investment and commitments by bpifrance and other parties, Calyxia has also secured support from the France 2030 Première Usine programme to expand its commercial and industrial operations, beginning with new headquarters and a second production site in the Paris region by Q1 2025.

Calyxia’s production process is modular and highly scalable, requiring low levels of capex to increase capacity in contrast with traditional processes. Its patented technology platform has been specifically set up to be fully customisable. For example, its modular production and small-sized units can be adapted and installed in customers’ manufacturing facilities rather than needing to be located on Calyxia’s premises. Having integrated R&D and production allows for a short lead time from product design to industrial supply.

Benefiting from a sizable existing market  in need of a more efficient and environmentally friendly solution, Calyxia’s economically viable, customisable product range enables it to work with an extensive range of active ingredients. As a portfolio investment, the business is firmly aligned with our investment objectives, and we are working with the firm to help achieve its stated goal of becoming the leader in a market worth more than USD 10 billion by 2030.