The Estonian company is digitizing reusable packaging with the help of Software as a Service and a reverse vending machine, with a patented returning process through RAIN RFID technology and unique deposit refund payment.
By planning to stem the worldwide flow of plastic waste, the startup is positioned for exponential growth following the European Union Parliament’s 2021 ban on single-use plastics where alternatives are available.
CupLOOP, active in a market of 104.9 billion dollars, aims to scale its reusable packaging circulation system, targeting a late seed 2 million round.
The cleantech startup will use this investment to create the first city closed loop system this year as well as to fuel the growth towards Series A.
We found out more about CupLOOP’s story, which started in 2018, when Marek attended the Tallinn Street Food festival and observed a potential for what later became CupLOOP, in an interview with Lauri Luik, cofounder and CTO.
“Back in 2018, when Marek attended the Tallinn Street Food festival where reusable cups were used, he realized that switching from single-use to reusable packaging was a cool idea, but there was no infrastructure built for it. Everything was manual, painfully slow, uncomfortable, and the deposit money was handled in cash. So, he started thinking about how to change that”, tells us Lauri.
The two met in October 2018, while Lauri was developing a digital payment solution platform, and began to think about how they could do a system that could refund deposit money automatically and digitally.
Christopher, the third cofounder of CupLOOP joined in the beginning of 2019 as a hardware developer because both Marek and Lauri realized that reverse vending machines were needed.
“Since we share a common mission to fight plastic waste and make the world greener, we matched well and formed a great team from the very beginning. Since then, we have been developing fully automated reverse vending machines to switch from single-use to reusable items”, continues Lauri.
For the first 3 and a half years, the team behind CupLOOP devoted their work to testing their ideas in real life, looking for suitable technologies, getting to know the market, and its needs, then developed a business model and started developing the machine and software.
“Today we have reached a technological level that allows us to serve the first customers and slowly start scaling the technology. Development work is ongoing, and every day brings new challenges that teach us and help make our technology better, more reliable, and more convenient for our customers”, says Lauri.
A reverse vending machine for reusable packaging
How does CupLOOP work? In short, the product of the Estonian startup is a reverse vending machine for reusable packages driven by SaaS.
It is based on software that runs the machine and warehouse software where the team has all the data about the packages in circulation.
These softwares communicate with each other, and therefore CupLOOP has an online overview of all the traffic starting from the warehouse and ending in their machines.
“We know precisely which package went into circulation, when and where, how it was priced, when and where it was returned. We also know how many cycles each package has done, and we can provide big data analysis on that information”, explains Lauri, adding that all the packages are tagged with RFID labels.
The cofounder of CupLOOP explains the fact that RFID technology is much better compared to EAN/QR codes because huge amounts of packages can be read instantly, and each package has a unique and easily trackable code (ID).
“Our machine reads those tags instantly (even tens of packages) and processes the data, then refunds deposit money contactlessly onto clients' NFC bank card (or mobile wallet). We also have a solution for different app integrations, meaning that if our clients (reusable packaging service operators) have their own app, we can easily integrate it and, for example, refund bonus points instead of deposit money, depending on the clients' needs”, continues Lauri.
The cofounder of CupLOOP also explains how the customer flow works, jokingly mentioning that they call their service as “Drop, Tap & Go”:
- The client buys food/drink in reusable packaging and pays a deposit (either in cash or with a card).
- When finished, they return the package(s) into CupLOOP's machine & tap their bank card (cell phone) on the bank terminal & collect the deposit.
“From the very beginning, one of our main aims has been to keep our service as easy and simple as possible, making the switch to reusables just as effortless as disposing”
According to Lauri, depending on the material, reusable packaging can undergo 300-1000 cycles. Reusable packaging is more environmentally friendly than disposables, even from the third use onwards.
The founder of CupLOOP continues to say that all of the software and hardware that the startup is using for this solution is done in-house.
New clients on the way
“For production, we collaborate with our CMO, Konesko Autotarvik OÜ, and other manufacturers as necessary to identify the best production methods to achieve the best value for money. Our current CMO partner will enable us to produce up to 10,000 machines per year”, adds Lauri, stating that as the company expands, it will diversify and develop a multidisciplinary team with technical and business expertise.
At this point, CupLOOP’s clients are reusable packaging service operators who rent out reusable packaging, handle logistics and washing.
“Our role is to provide the technology. We have established strong partnerships in our target markets, through which we offer plug-and-play full services to vendors. Our technology is not tied to any specific type of packaging. We only provide RFID tags, allowing clients to choose their own preferred packaging”, Lauri tells us, adding the fact that there has been significant interest in the team’s product from various countries.
For example, apart from their Estonian partners, CupLOOP has already sold machines to several clients including Ozarka and Packback in the Netherlands, Cirqle in Denmark, Nordon in Lithuania, Circleback in Germany, Barepack in France and Thermotex in Germany.
The cofounder of the Estonian cleantech startup add the fact that negotiations are currently ongoing with several companies from different countries such as Finland, Germany, Australia, USA, UK.
At present, the team has produced a total of 47 machines for the clients that have expressed their interest in acquiring CupLOOP’s machines.
100k+ single-use packages avoided using CupLOOP
Like we’ve said earlier, CupLOOP wants to make circulation of reusable cups, containers, and packages simpler and more effective.
So far, by having clients use their reverse vending machines, CupLOOP has helped avoid 100k+ single-use packages.
“If vendors fully switch to reusables, people will adopt it very actively. However, if vendors continue to offer single-use packaging alongside reusable options, people tend to prefer single-use. Therefore, it depends a lot on how vendors promote and market their reusable packaging. We are confident that the shift towards using reusables exclusively is only a matter of time”, adds Lauri Luik.
CupLOOP raises money on SeedBlink
If you’re wondering which was the investment needed to get CupLOOP to this point in its development, we found out that they have raised 1 million euros. The sum has enabled the team to develop a version 1.5 of the machine.
The startup has been backed by SmartCap Green Fund, one of Estonia’s top VCs which mainly supports local early-stage green technology companies active in energy, agriculture, food and the environment and has also received angel investments from Bolt and Pipedrive founders Martin Villig, Martin Henk , Ragnar Sass and others.
“However, the development work on this generation model is not yet complete”, says Lauri.
“Seedblink has proven to be a truly convenient and user-friendly platform for raising money”, comments Lauri, stating that CupLOOP’s next milestones include finalizing the market-ready 1.5 version of the machine, building a licensing model for producers and distributors, hiring a senior software developer, adjusting their development and production capabilities, and fulfilling current orders.