Subpod, the Byron Bay compost scale-up digging into equity crowdfunding for expansion

After making big inroads into the US market over the past two years, environmental technology company Subpod is gearing up to expand into Europe and Asia after the startup’s composting solution has been embraced as much by the corporate world as it is by ‘hippy’ gardeners.

The Byron Bay-based company, which has notched up $16.4 million in sales from its novel home composting systems since the beginning of 2021 has captured the imagination of a diverse community of influencers globally. It has also gained the backing of a new group of investors after raising $787,000 on crowdfunding platform Birchal.

The latest fundraising round is the third by the company which kicked off in 2018 with an angel investment of $420,000 and last year raised about $190,000 on the US-based Indiegogo platform to launch its Modbed compact balcony system for apartment dwellers in the US.

“The Birchal funding will be used to expand into new markets - Europe, Canada and Asia - and bring on more team capacity,” Subpod founder and CEO Saadi Allan tells Business News Australia.

The US represents about 75 per cent of sales for Subpod, with Australia and the UK rounding out the company’s top three markets.

“We’re operationally profitable at the moment but the funds we have raised will be used to develop the next generation of products and also scale up of team and expertise to allow us to move into new channels such as major retailer in the US, and into Europe and Asia,” says Allan.

The company generated operating profit of $6 million in its first year of full stock production, with earnings rising 214 per cent in the 12 months.

Subpod could be looking at a bigger capital raising of up to $4 million next year to gear up for a potential national US distribution campaign in 2024.

The innovative composting system is gaining traction with city dwellers because it offers a compact, smell-free design where 90 per cent of the Subpod is positioned below the soil of any garden.

“Subpods are simple to use and maintain, requiring just a few minutes a week,” says Allan. “Because they’re buried in the ground, there is no smell. They are also insulated from temperature fluctuations and therefore much more efficient.”

The company’s original model was the revolutionary three-in-one compost system, worm farm and garden seat, a system derived from a prototype developed by Byron Bay artist Andrew Hayim Devries. Devries remains a shareholder of the company.

“It was a much bigger, different system when I came along and we worked with Andrew and brought a team in to commercialise the product,” says Allan.

With more than 63,000 Subpod systems shipped direct to customers in 26 countries since the start of 2021, the company says it is now responsible for preventing more than 14,500 tonnes of CO2 being released into the atmosphere annually.

“That’s the equivalent of taking more than 3,000 cars off the road,” says Allan. “The more Subpods we sell, the more food waste is being diverted from landfill and the less methane is going into the air. Methane is over 20 times more damaging to the environment than CO2.”

Subpod has grown its business through recommendations from a network of influencers, including Australian director, actor and producer Damon Gameau, US ABC News chief meteorologist Ginger Zee and Byron Bay-based lifestyle influencer and entrepreneur Courtney Adamo.

He says the company is pushing into unexpected markets with some high-profile advocates. 

“These also include Laila Ali, the daughter of boxing legend Muhammad Ali, Rose Namajunas, a UFC athlete in the US, and (musician and surfing pro) Jack Johnson," says Allan.

“I’m just using the playbook of digital performance marketing skills that I have picked up over the years to take what is an environmentally friendly product and wrap it into the brands of influencer markets. We also have a whole community of ambassadors in the gardening space.

“People have become engaged because they really do want to do something in their everyday life that’s positive. It’s something people are really hungry for, and our sales growth is testament to that.”

Subpod’s mission is to make composting accessible to everyone by making it as simple as possible and appealing for an urban setting.

“Over 50 per cent of people who start composting haven’t done it before and they’re coming on board because we make it easy,” says Allan.

“We have our online community with video courses supporting them, so people can ask questions and connect with others. It has really lowered the barrier to entry for a lot of people who maybe have always wanted to do composting at home but didn’t know where to start.”

Subpod’s rising profile in the US has led to interest from ‘big box’ retailers in the US who are keen to distribute the company’s products, something that Allan has earmarked for 2024.

“We’re also developing a management system for busy professionals and commercial clients. Subpod units are modular so they can be strung together for larger scale composting.

“We’ve managed to get our systems into US residential developments controlled by home ownership associations which mandate the aesthetics of gardens. Our systems fit into those places where traditional composting might be rejected.

“Unilever in the Netherlands, at the Hive, its global food research and development centre, use Subpods to divert waste from their experimental research kitchens.”

Livingstone Shire Council has also funded Subpods for Great Keppel Island resort and residents, while on its home turf Crystalbrook Byron Bay resort uses Subpods to divert waste from its kitchen. Allan says hundreds of schools around Australia are now using the system to divert waste away from landfill.

Subpod recently moved into new premises at Federal, in the Byron Bay hinterland, where the company has created a new platform form its next phase of growth.

The new headquarters will provide a physical presence for Subpod, to be known as GrowHub HQ, which will be open to the public from February and deliver a visitor experience that includes events and workshops.

“We believe in the appreciation for and understanding of the natural systems that all life depend on must become part of popular culture in the coming decades,” says Allan.

“That is why we do the work we do, to help people of all walks of life divert waste, rebuild soil, grow food and grow community. That means making the means of repurposing food waste available to everyone, regardless of their home set-up or living situation.”