Award-winning biotechnology business EcoRegen has made its mark in Malaysia turning palm oil waste into organic fertilizer. As JAMES THOMSON explains, the next challenge for the business will be to manage its rapid growth.
By James Thomson
Award-winning biotechnology business EcoRegen has made its mark in Malaysia turning palm oil waste in organic fertilizer. The next challenge for the business will be to manage its rapid growth.
Last month, Australian biotechnology company EcoRegen was named the inaugural global winner of the Licensing Executives Society Foundation graduate student business plan competition, held in Chicago.
EcoRegen’s chief executive, Khai Yip Mun, says it was a very sweet victory for him and his business partner, Hock Khoo. “We did a lot of preparation beforehand but we didn’t expect we were going to do so well,” Khai says.
The award caps a remarkable period for EcoRegen, which was established three years ago when Malaysian-born Khai Yip and Hock started the Master of Entrepreneurship and Innovation at Swinburne University’s Australian Graduate School of Entrepreneurship.
In their first class, SmartCompany author and former professor Tom McKaskill challenged Khai and his fellow students to come up with a 60 second business pitch. EcoRegen was born.
The company is a biotechnology company, with particular expertise in organic and biological waste treatment, specifically in high-tech composting. While it is based in Melbourne, its main target market is the $10 billion Malaysian palm oil industry, home to 500 palm oil processing plants. EcoRegen provides a composting technology that takes the liquid and solid waste from palm oil production (which contains a lot of methane) and turns it into high-quality organic fertilizer.
Crucially, EcoRegen was able to get its technology approved under the United Nations’ Clean Development Mechanism program. This means plants that want to use EcoRegen’s technology can receive funding in return for the carbon credits the technology generates.
The company has agreements with four palm oil plants and is in negotiation with another 10. EcoRegen receives an upfront licence fee, payment for its technology and a technical fee for performing quality assurance on the organic fertilizer produced by the palm oil plants.
Khai says the hardest part about establishing the business was building a reputation. “We only had EcoRegen as a brand name – we were a nobody. We had to come up with a very detailed and credible business plan and financial plan.”
Winning over the Malaysian palm oil plants was a particular challenged. Rather than try to sell the concept to all 500 plants, Khai and his team concentrated on talking to particular executives. “We took a focused approach. That also showed the strength of the Australian Graduate School of Entrepreneurship, because they provided us with all the tools to do that.”
The key to EcoRegen’s business model is that all of the parties involved – and particularly the palm oil producers – get to share in value created by the technology.
This is not just about making the palm oil producers feel good about going green and meeting government regulations – improving their waste treatment processes allows them to increase production, plus gives them revenue from the fertilizer and, eventually, the carbon credits. “We adhered to the Kyoto Protocol’s key principle of leveraging market incentives to drive change,” Khai says. “We were able to create a model where all the key stakeholders get big returns from all our value creation together.”
Seth Jones, project management at Swinburne Knowledge and an academic adviser to EcoRegen, says the success of the company is a great credit to the university, given the EcoRegen team has been able to harness the skills of experts from other faculties and departments during the last few years.
“It has been like a spider web into other faculties in the universities. The difficulty in the market place for any business is Australia is tiny market,” Khai says. “It’s hard raising money, it’s hard to get human capital. It’s really about how good you’re networks are.”
Khai says EcoRegen’s big challenge is to manage its growth and resources, such as working capital and human capital. He sees speed to market as a key defence against competition, and wants to sign 100 mills within the next two to three years. But that will mean some pretty severe growing pains for the business, which has less than 20 employees.
“We need to look at our operational model and keep refining it.” He says revenue for this year will be $2.5 million, but could be anywhere between “$2.5 million and $25 million, depending on speed to market and site lock-down”. The business has received assistance from Austrade and an export market development grant, and is also looking at using R&D tax concessions.
If his workload wasn’t big enough Khai, who is also an architect, is also renovating his house. “My wife keeps on quoting me that old saying; ‘an architect’s house is never finished’ but we’ll get there.”