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Back To The Roots Ventures Turns Coffee Grounds Into Gourmet Shrooms

A new business venture capitalizes on waste.
 
 
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This storyfirst appeared on EcoSalon.

I first heard about Alejandro “Alex” Velez and Nikhil “Nik” Arora’s plan to grow mushrooms from coffee grounds about two years ago. At the time, I dismissed it as one of those ideas that sounds great as part of a green business contest for graduate students but that would probably get dropped as soon as the lucrative job offers came along.

And, for awhile, that’s essentially what happened. Nik and Alex did the MBA thing, interviewing for jobs in investment banking and consulting and securing offers from great firms. But fast forward a year: I’m meeting Alex in a dodgy parking lot under the freeway overpass in Emeryville to tour the warehouse of Back to the Roots Ventures, his and Nik’s start-up. He drives up in an old beat-up sedan and hops out in jeans and a plaid shirt … not exactly banker garb.

We head into the warehouse and Alex introduces me to their warehouse manager and a young intern who’s busily packing cardboard kits. “We came to a point where the mushroom thing was really taking off and Nik and I decided to go for it,” Alex explains. “We turned down our job offers and became farmers instead.”

Well, sort of. What started as a small agricultural business is now a booming consumer product business: Nik and Alex’s Grow-Your-Own Mushroom Garden, a do-it-yourself mushroom-growing kit, is currently sold at all Whole Foods around the country. It’s a pretty amazing trajectory for a business that started just over two years ago as a project in the boys’ fraternity kitchen, with a few buckets-full of coffee grounds and some mushroom seeds.

Both MBA students at Berkeley at the time, the two had shared a class focused on potential business uses for the world’s waste products, during which they learned about various uses for coffee grounds. For some reason Alex still can’t quite explain, he and Nik were drawn to the idea of growing mushrooms from the stuff. They began experimenting and eventually managed to grow oyster mushrooms. “We took them over to some people we know at Chez Panisse to have them try them and tell us whether they thought we had something, and they said wow, these are really good.”

That was their first stroke of good luck: Not every MBA student has connections at Chez Panisse. Buoyed by a thumbs-up from that venerable Berkeley slow food institution, the two took their next batch of product to the popular  Berkeley Bowl market. “Then the guy at Berkeley Bowl introduced us to the regional buyer for Whole Foods and once they were interested we started to realize this could really become a business,” Alex later told me.

It may sound like a string of amazing coincidences, but it’s partially the pair’s passion for what they’re doing that has managed to get so many other folks on board so quickly. The Whole Foods buyer loved the idea of mushrooms grown from a waste product and soon had Nik and Alex supplying oyster mushrooms to all of the Bay Area’s Whole Foods, and participating in the market’s  local producer loan program as well. The problem? It’s tough to make money in mushrooms unless you’re running a major agricultural operation, and the Back to the Roots guys weren’t really interested in that. That’s where the mushroom kit came in.

Packed with about a pound of coffee grounds plus the mushroom seeds, the Grow-Your-Own Mushroom Garden promises a pound of mushrooms within 10 days. All you have to do is spritz it regularly with the tiny water bottle enclosed in the kit, and keep it out of direct sun. The kit retails for $19.95 and is available at Whole Foods and through the company’s  own website. To get coffee grounds they need, the two also inked a deal with Peets, which pays them to pick up over 10,000 pounds a week of grounds, and also sells the kits in some of its shops. Meanwhile, the spent mushroom substrate they’re left with after they make the kits turns out to be an excellent soil amendment, which they’re now selling as well.

 
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