Startup Making Paper From Rock Seeks More Pre-IPO Funding

(Bloomberg) -- Making paper out of rock isn’t just a novel idea — it saves water, is both recyclable and potentially biodegradable and uses a mineral resource available anywhere on earth.

TBM Co., a Japanese startup known for its technology that turns limestone into business cards, plastic folders and food containers, is seeking to raise another round of funding to expand overseas before it prepares for an initial public offering in a couple years.

Goldman Sachs Group Inc., trading house Itochu Corp. and Toppan Printing Co., Japan’s largest printer by sales, have already invested in the manufacturer. TBM, which raised 1.6 billion yen ($14 million) and 3.1 billion yen in its latest two rounds, is looking to secure several billion yen, according to Chief Executive Officer Nobuyoshi Yamasaki. The goal is to establish overseas partnerships before seeking an initial public offering, he added.

"Our next round is for overseas expansion, both for production and sales," the CEO said at the company’s Tokyo headquarters. "We want to expand aggressively overseas, and to do that we need the funding to hire more people."

Read more about the process of turning stone into paper.

As result, TBM is pushing back its planned timing for an IPO by about a year, to 2021, according to Yamasaki. The company was valued at 56.3 billion yen in its latest financing, he said.

Although TBM hasn’t disclosed its latest annual sales, Yamasaki says revenue will grow at least fivefold in the coming year. The company recently won a contract to supply beef-bowl franchise Yoshinoya Co. with menus made with Limex, its limestone-based paper product. A new mass-production factory near Sendai, north of Tokyo, will come online in 2020 to produce 30,000 tons of Limex products per year.

TBM started by selling material for business cards. The material is smooth, like laminated paper, and is much harder to tear or bend. That makes it ideal for restaurants; more than 400 sushi restaurants run by Sushiro Global Holdings Ltd. across Japan also use Limex paper for their menus. The material can be recycled and turned into paper products, or more durable items such as folders, bowls and plates.

One key feature of Limex material is that it can be made without using water. By comparison, it takes about 85 tons of water to make a ton of regular paper. That also requires 20 trees, while TBM’s process uses less than a ton of limestone, in addition to 200 kilograms of polyolefin. The company also says greenhouse gas emissions are about 20% less than traditional paper printing.

Yamasaki, a former used car salesman who left school at 15 and began his career as a carpenter, established TBM in 2011. The process of turning stone into paper originated in Taiwan, according to the company’s website. The CEO began importing the material to Japan and later developed the Limex technology.

Yamasaki’s goal is to sell, cumulatively, 1 trillion yen in revenue through the mid-2030s. He plans to license Limex to manufacturers outside Japan, especially in limestone-rich, water-poor areas such as Saudi Arabia and California.

--With assistance from Masumi Suga.

To contact the reporters on this story: John Fraher in London at jfraher@bloomberg.net;Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net, Reed Stevenson, Jeff Sutherland

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