AMDP Proposal Memo (Final)

TO:                 Professor Hansen, CEO, AMDP

FROM:          Emily Tsai, Research and Development Analyst, AMDP

DATE:            October 7, 2020                

SUBJECT:     Potential Investment Recommendation – Colorifix                                       

 


As a Research and Development Analyst of AMDP, I am writing this memo to express my discovery of a potential investment opportunity for the company called Colorifix.  Upon conducting thorough and extensive research, I am recommending Colorifix as the next investment for AMDP. Colorifix is a biotechnology startup in hopes to innovate the textile industry. To begin my formal memorandum proposal, I will first identify the terms from AMDP standard- triple bottom line, corporate social responsibility, social enterprise, and carbon footprint. It will then be followed up by my research in the company background, company vision, financial growth, and expert opinion. To conclude the proposal, I will end with a final recommendation for this potential investment.



Triple Bottom Line

Triple bottom line (TBL) is an accounting framework that consists of three dimensions. It is the company’s commitment to focus on social and environmental concerns in alignment to profit. In theory, there are 3 P’s that equate to environmental responsibility:


  • Profit: This is defined as a traditional measurement of corporate profit (Revenue minus Cost)

  • People: This factor measures how socially responsible an organization has been throughout the lifespan as it takes into consideration the business operations such as suppliers, clients, employees, and community.

  • Planet: It measures how environmentally responsible a firm has been to prevent pollution, toxic waste, and other harm to mother nature


The main takeaway is that the “triple bottom line aims to measure the financial, social, and environmental performance of a company over time,” (Investopedia).

 


Corporate Social Responsibility

A type of business practice that focuses on pursuing financial gains in addition to being socially and environmentally accountable (Investopedia).



Social Enterprise

A business that sets a specific social objective to optimize profits while maximizing the benefit for society and the environment (Investopedia).



Carbon Footprint 

A carbon footprint equates to the total amount of greenhouse gases (carbon dioxide, methane, nitrous oxide) that is generated by our actions. The carbon footprint is calculated by carbon dioxide equivalent (CO2e). In other words, any emissions that are part of a business operation are carbon dioxide equivalent. A reduction in carbon footprint is highly encouraged as it directly correlates to the destruction of our ecosystem, climate, and the planet.



Company Background

“Colorifix is the first company to use a biological process to produce, deposit, and fix pigments onto textiles,” (Colorifix). The startup company was founded in Norwich, England in 2016 by three Cambridge University scientists named Dr. James Ajioka, Orr Yarkoni, and David Nugent. The three colleagues were in Nepal’s Kathmandu Valley developing a device to measure pollution in the region’s water (Chan). Three years later, Colorifix was created due to the strong passion behind these founders to develop biological sensors to reduce water contamination (Colorifix). 


The company Colorifix specializes in biological dyeing processes in the commercial coloring of the polyamide-based jersey, polyester, and cotton fabrics. Currently, Colorifix is in the research and development process to apply biotechnology to other natural and synthetic fabrics. The technology used by Colorifix helps convert commodity agricultural by-products into pigments that enable the safe textile manufacturing process. This synthetic biological method created a wide range of naturally produced colors from organisms such as microbes, plants, animals, and insects. The engineered microorganisms transfer vibrant colors onto fabric while enabling safe textile production to reduce pollution and minimize the industry’s carbon footprint.

 


Company Vision and Mission Statement

“Our vision is to bring about real change in the textile industry,” (Colorifix). Sustainability is at the core of the Colorifix mission statement in hopes to innovate solutions for global issues. The goal involves removing petrochemicals into non-polluting renewable chemistry.


  • 10x Less Water

The United Kingdom alone used approximately 20 billion liters of water in the dyeing process. However, Colorifix can reduce that to about 10 times less water than the conventional dyeing process. 


  • 100% Natural

All of the dyes from Colorifix are biologically produced. The main feedstock is sugar molasses, which is a waste by-product of sugar production available worldwide. The microorganism is fueled by sugar and nitrogen, which replaces the regular chemical.


  • Non-Toxic

The whole process is renewable and a non-toxic additive as the dye that is produced, deposited, and fixed onto the fabrics is without any heavy metals, organic solvents, or acids.


“Colorifix sources and replicate true colors from nature,” (Colorifix). The company focuses on brand quality while providing chemical-free solutions. The dyeing process uses non-toxic additives, localizing production by reducing transportation cost and carbon emission. The synthetic biology removes harsh chemicals in the creation or deposition of dyes.



Financial Growth

Colorifix, a company that revolutionized the textile industry, has raised a Series A round of $3 million of impact and strategic investors by December 2018. Just within 2 years of the launch, the company secured it’s 3 million investment, led by Challenger 88 with participation from Cambridge enterprise. The round was headed by Challenger 88, who has strong links in the fashion industry. The top 5 investors at Colorifix include H&M CO: LAB, University of Cambridge Enterprise, WENVEST Capital, SAGANA, and Primera Impact.



Expert Sources and Market Opinion

According to CNN, the dyeing industry uses more than 8,000 chemicals such as sulfur, arsenic, and formaldehyde, which all are extremely harmful to wildlife and human health. Milly Chan believes that 

“this company thinks bacteria can help fix fashion’s water pollution problem,” and states that the technique used by Colorifix is made in a lab through a genetic replication process that makes copies of the bacterial cells every 25 minutes creating sustainable shades. “The device Orr and his team developed a test water pollution in Nepal used genetically modified bacteria that changed color when exposed to hazardous chemicals,” (Chan). Additionally, Colorifix can deliver a total of five grams in color-packed bacteria to a dye house, reducing the carbon footprint on transportation.


In the article, “CDP: Fashion Companies Slow to Recognize Water Pollution Risk,” by Alyssa Danigelis, the Environmental + Energy Leader CDP data found only seven companies that acknowledge water pollution as an issue across the value chain. Colorifix is recognized as one of the seven companies who piloted industrial-scale biological dyeing alternatives that contain no hazardous chemicals and reduce the usage of water by 90%. The company also requires its supplier to constantly report water performance through the Higg Index, incentivizing high-performance orders, and conducting periodic site visits.



Final Recommendation

Colorifix is a disruptive innovation that changed the textile industry. The company was created to reduce the environmental harm to water pollution in the United Kingdom. Colorifix aims to reduce water usage by 10 times in the dyeing process, focus on 100% natural dye production, and concentrate on non-toxic chemical production and usage. This demonstrates social and corporate responsibility as it touches base with the triple bottom line. The constant improvement in the reduction of carbon footprint aligns with AMDP’s business model. The company is decreasing pollution through minimal dye transportation. Therefore, I am recommending Colorifix as the next investment for AMDP. I believe with the rapid financial expansion and strong industry network, Colorifix will be the leader of the textile industry. 











Citations


  • Release, Press, et al. “Synthetic Biology Start-up Colorifix Raises $3m Series A Round to Scale Its Revolutionary Textile Dyeing Solution.” SynBioBeta, 12 Jan. 2019, synbiobeta.com/synthetic-biology-start-up-colorifix-raises-3m-series-a-textile-dyeing/. Accessed 2 Oct 2020.














  • “Bringing life to colour and colour to life.” Colorifix, 2020. https://colorifix.com. Accessed 3 Oct 2020.

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