Petri Alava On Raising $56 Million To Revolutionize The Fashion Industry With Recycling Technology

Petri Alava went from corporate CEO to founding his first startup at 50 years old. They’ve already raised for Infinited Fiber Company tens of millions of dollars in funding while securing global partners like H&M, Patagonia, and Wrangler. His venture, Infinited Fiber has acquired investment from top-tier investors like Nidoco, H&M CO:LAB, Adidas, and Bestseller.

In this episode you will learn:

• How you go about fixing a business that is not working
• Making the decision to become an entrepreneur
• Building a great team on a startup budget

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About Petri Alava:

Petri Alava is a business developer and strategist with over 15 years of CEO experience in both the B2B and B2C environments. He has held board positions in both well-established corporations and innovative startups. Petri is an expert in waste management who pioneered circular initiatives before the concept was widely understood. He co-founded Infinited Fiber Company with research professor Ali Harlin in 2016 to commercialize a technology that regenerates cellulose-rich waste streams – including discarded textiles, used cardboard, and wheat straw – into Infinna™, a premium-quality textile fiber with the natural look and feel of cotton.

Connect with Petri Alava:

• Crunchbase
• LinkedIn
• Twitter
• Facebook

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m very excited about our guest today. We’re definitely going to learn a lot going from corporate to startups, going from corporate CEO to founding CEO, which is a really big difference, and you name it. But obviously, he’s raised a ton of money, and also, being outside of the U.S., I think we’re going to be learning quite a bit on that, as well, because we have a lot of people tuning in outside of the U.S. So without further ado, let’s welcome our guest today. Petri Alava, welcome to the show.

Petri Alava: I’m happy to join. Thank you for the opportunity.

Alejandro: Petri, you were originally born and raised there in Helsinki, Finland. How was life for you growing up?

Petri Alava: Wow! First of all, I wasn’t actually born in Helsinki. I was born in the middle of Finland. It was a very safe childhood in a small countryside town. I played ice hockey, made many friends, smoking, drinking, whatever. A very nice childhood.

Alejandro: And you did learn quite a bit, as well, from your mother. Your mother was a source of inspiration to you.

Petri Alava: That is right. My mother was born in Lapa, which is on the outskirts of Finland, in the middle of nowhere. She was raised in a very poor family in 1975, the [2:46]. I had an alcoholic father, and [2:51] of the family, and still, she was foreseeing very hard times building a nice career and teaching me that even a woman, when you are patient, when you are pushy, when you determined, you can build a nice career. By doing correct things and being passionate, you can get things done, and that’s what I learned from her.

Alejandro: Very cool. In your case, you were very early on getting into technology, and you did your computer science degree and so forth. Why did you get into computers? What got you in that direction?

Petri Alava: Apart from playing ice hockey, I was also interested in figures, so I was very good in mathematics and physics, and it was very logical. When I was seven years old, I decided that I would become an engineer.

Alejandro: Very cool, and you did your Masters, too, in engineering, so really getting into it. But one of the things that you did was definitely going into the business into a corporate approach versus doing your own startup. Finland probably wasn’t—and I guess anywhere outside of Silicon Valley was probably not that big of a thing doing startups until recently. So tell us about those early beginnings in your career.

Petri Alava: I came out of the university in 1989, so of course, it was very different times. You were typically employed in Finland by big corporates, and that was your lifetime career. That was the time when you started working in the last company and planning your whole life working for one company. I started as a business controller, which is weird for an engineer, but as I was interested in combinational how the figures are in backing the business, and how you can impact decision-making through figures. That kind of work was cash to me. I was also doing some programming, so it was between working the numbers and programming all the programs needed. Then I figured it was far too—it wasn’t my job. I wanted to be selling; I wanted to meet people and to make a different kind of feedback. In 1992, I got the first sales position, which was really nice learning. From there, my career was growing. I got the first PNL response in 1996. I became a CO in the [5:43] in 2001, changing for the first time in my life, a company, and I’m taking the career further from there.

Alejandro: One thing that is very interesting is that those folks that are able to blend well the technical side of it with the business side of it are very dangerous and in a very good way. You’ve seen that with people like Steve Jobs, where they become incredible people at sales and dealing with customers, but then also with understanding the problem and how you solve that problem. I think in your case, having that background, too, in engineering really got you a leg-up when it comes to problem-solving. When you now are in the business world, what kind of obstacles or hurdles did you encounter, and especially, in this case, with this robotics company, you were essentially working on turning around a business. That’s not a small thing, so how do you go about a business that is not working?

Petri Alava: Wow! It goes back to troubleshooting. First of all, understanding in-depth what’s wrong with it with the company, discussing with the customers, and understanding why you’re not getting the right price or whatever is wrong. Let’s say that first is gathering information and understanding what’s wrong. Then get the right people around because one person can’t make the change. So getting the right people around, and then trust daily actions on making corrections and correcting those things and what do you believe is wrong. First, looking at the low-hanging fruits to get an easy pick and get first results quickly, getting trust around that the change is working, and then being passionate and transparent and working thoroughly to change the plan. Also, you must work very much with the people because, at the end of the day, you need to be changing the behavior of the people, so getting people along with you and getting the customers along.

Alejandro: 100%. This was quite an interesting journey for you, but this led you to another role, and this was with Tequila, where you again became the CEO. What were you doing there?

Petri Alava: I was growing a global business. That was a group of companies, group residence. A couple of businesses were having major trouble, so one part of a joke was, we were cutting costs and rate structure in the business, and some part of the business was just growing, let’s say, getting to be for people to learn and getting some proof. Yeah, it was a fantastic time from 2005 to 2015. It wasn’t my best side. We were a [8:38] company, so I was not really appreciating too much the corporate governance issues, risk management pros. I was just learning to make business, meeting customers, making pros. So it was balancing, learning a lot. Today, I understand that governance, risk management issues also need to be in place, but at that time, it wasn’t maybe by my play.

Alejandro: It’s amazing how you go from putting out a fire to putting out another? Who needs a fire extinguisher when Petri is around? It’s amazing. In your case, Petri, you turned 50, and then all of a sudden, you find yourself—now, the contract is terminated, and you find yourself thinking, “What’s next?” Obviously, you’re 50; you’re not in your 20s when you’re rethinking your career and such, but in your case, you started to see the technologies around you. So what happened next?

Petri Alava: I was working around, and I was also considering whether I should be a corporate CFO for a larger company. What was really kicking me was the innovation I heard, an innovation which could be turning different streams into highly volleyball material to be used in fashionable textiles. What was interesting to me was that I also had a background in being a chairman of the board for a waste management company. So I had learned how much societies are changing, how much the legislation is changing, and what’s the potential value of waste, and then learning. I also had the opportunity to discuss with the potential customers of that technology, companies like [10:33] or a corporation from the U.S. What I was learning was that those customers had a burning desire on changing their material strategy, so I saw them. There was an honest willingness to change, and I understood that there may be a potential technology to solve the problems. Of course, technology was about chemistry. I had no background at all in chemistry. I understand that I could maybe give and deliver the experience in building a global business, but I had no skills in chemistry. Then I met a wonderful person, [11:14], a professor of the [11:17] science. He’s an excellent problem-solver. His personality, problem-solving skills, and combining my skills and experience on creating a global business could be something. Of course, I understood right from the beginning that we could be an enabler of the chains in the global fashion industry, and that’s how we started building the foundation of the company and understanding our role as technology geeks, technology providers, and then how to play ourselves into that global supply chain and start making the change.

Alejandro: And this was going from corporate CEO to founding CEO, obviously, a massive difference. Tell us about that adjustment of all of a sudden, this is something new. How did you get yourself up to speed, and what were the main differences or the main challenges that you had to self-develop quickly to be effective in what you had in front of you?

Petri Alava: I think that’s about the biggest battle I had. My wife started an entrepreneur career in 2010. She founded a publishing house. At that time, we had three sons, and the sons started to say, “Mother, you are frittering our lives because we are getting less income. We can enjoy anymore that kind of life we had earlier.” In 2015, I started saying to my kids, “There’s a potential that I also will become a founding CEO entrepreneur.” They were shocked. “Father, you can’t be destroying our lives.” I think that was the battle, and my wife said, “If we can’t take the risk that there are two entrepreneurs in the same family.” She was wanting me to still be keeping track as a corporate CEO [13:25]. When we proved the potential that was existing with the technology, she understood that it’s going to be very important and a once-in-a-lifetime change in making something different because it’s not only about making money. What we are really doing is that we could have a massive impact on the way we live on this planet. At the same time, it was also very appealing on the mental side. I will say that life was very different. Being a corporate CEO, let’s say, most of your days are around people challenges, whereas being a founding CEO, I was working alone for almost 2.5 years. It was so, so different. And there was one thing that was different that I had to sell the business to get some funding. Earlier, I was postponing and convincing the board of directors, and mine was flying in from the business, so there was an existing cash flow, which you could invest in building new business. Now, I have to go around, sell the idea, and I was going to say it would be much easier with my background, with my connections. My first planning, it’s going to take six months. It turned out to be 2.5 years to get the money needed before building the capacity. This technology is also about manufacturing, so you need quite a bit of capital to build the manufacturing capacity.

Alejandro: How much capital have you guys raised to date?

Petri Alava: Around 50 million euros, which I understand for Silicon Valley people, it might sound little. The capital market in Europe is very different. In Finland, to raise is policy-thick and very thorough, so the money is flowing the same way in Europe as it’s flowing in Silicon Valley.

Alejandro: Fifty million euros in Finland is amazing. But you were alluding to it earlier that convincing the investors with deep tech probably early on was a challenge. What would you say was the turning point to get the investors to realize, “There’s something here. Let’s invest.”?

Petri Alava: I think it was that we got it so far with almost no money that we had product available. We were able to demonstrate, for example, to age and improve that you can manage back to high-quality genes from our material, and that was the tipping point that they understood and started to believe, “This is really true. It’s not only about stories.” Before that, it was only a story, and you had a little bunch of dirty fibers, which wasn’t that appealing or convincing. But when they were able to turn themselves into material and type of fabrics or products, that was the tipping point.

Alejandro: Another thing that you’ve also learned when it comes to fundraising is the importance of the sense of urgency. Tell us about this.

Petri Alava: It’s amazing that as we’ve gotten on board strategic investors like Adidas and Zalando and [16:53] and so forth. We were having an amazingly long journey to raise the last capital round. The corporates were not feeling the sense of urgency to close the deal. They were waiting until I had to give them a warning that we are running out of money in two weeks’ time, and we have to look to close the whole operation if we aren’t getting funded. First, we had been working for 12 months to work on papers and contracts, and then the closing was happening in one week. But they were missing within the corporates the sense of urgency and probably were trying to mitigate all the time to risk that maybe tomorrow is even more convincing. Then we had to go so bad that making a threat that we have closed the business if we’re not raising the money as planned. That was a terrible experience.

Alejandro: No kidding. I always tell entrepreneurs that there’s no alignment when it comes to time between investors and entrepreneurs because for the investors, time is their best friend because the more time that they let go by, the more they can see how you execute and need to risk their investment, and timing as a founder is your worst enemy because the less time, the more chances of going bankrupt because you run out of runway. One of the things that come to mind, Petri, is that being in Finland where the startup ecosystem perhaps is now being more developed, I’m sure that the investor ecosystem is going to take longer to develop at the same pace or speed, so how did you go about finding investors in a market that is not as developed as perhaps Silicon Valley or here in New York City?

Petri Alava: Actually, the startup ecosystem is well developed in Finland. Of course, it’s quite a bit smaller, so in Finland, we have only 5.3 million people, so even from that aspect, it’s easy to understand the model is relatively small. In my experience from here was that early on when we were discussing with the typical manufacturing companies, the deed that was not that well-speaking to their terms of wasn’t well-meaning, their expectations as they were looking at business which would scale fast and fail fast. As in our case, we’re working with manufacturing-oriented deep tech as building a factory takes several years, so it wasn’t that interesting for the VCs, which led us to speak first with the strategic investors, fashion companies like Adidas, [19:47], you just name it. Of course, as the solution, we have the technology to turn waste streams into high-quality textile fabrics which look and feel like cotton is highly appealing, so it was much easier to convince the brands and the fashion players that they might deal with us as having relevance. Of course, as they get the investment through in such corporates is a long journey. First, we convinced the material development people, marketing people, brand people in those corporates, and one main we convince that the material is meeting their requirements, they were convincing their investment people that this is the right investment. We have to go through the other rules on getting the decision-maker is a good investment.

Alejandro: What ended up becoming the business model of Infinited Fiber Company?

Petri Alava: We are in a technology license business. Let’s face the fact that the textile manufacturing business is very global. The supply chain is complex. Most of the manufacturing is happening in Asia, for example. China is responsible for producing 70% of all the textile material worldwide. So the market is in Asia, and in order to get through our technology into the supply chain was quite heavy investments. The only way to scale it reasonably fast is through technology licensing, taking the benefit of very large manufacturing companies, get them [21:38] from there.

Alejandro: One of the things I wanted to ask you is, in your case, one thing that you encountered was the challenging part of building the team. When you go from a founding team where they’re getting a piece of the action and the title and all of that stuff, I find convincing people that have a very nice paying job to take a pay cut to join a startup with all the uncertainty, it’s not a small thing. How did you go about really surrounding yourself with the right people and getting them excited enough to take that leap of faith and join you guys in the journey?

Petri Alava: That’s a very good question. I was always a bit jealous of the other startups, which were founded by a larger team having a combination of skills. In our case, I was almost alone. Then I had a half-time partner, Ali Harlin, so we had a very little team and very little results in the beginning. Then we also understood from the beginning the convincing of the manufacturing space and chemical space. We rather look for European people in order to sell very high investments to the customers. As you described, we have to be convincing to professional people, typically at the age of 40 or 50, to be successful in this business, and that turned out to be very challenging. We didn’t have the founder position existing, so we had to be using some other elements. Mostly, the challenge was that the people were feeling and sensing the risks from jumping from a large corporate, pretty stable, safe positions, nicely paid positions to the uncertainty of working in a startup. It was a very long track. Typically, we started to work with some of these people. We were buying some solvency, some little jobs so that they learned to work and get to know us. When they got to know us, the amount of freedom that we can offer and the amount of challenges that we were able to provide was the tipping point that the people were feeling that it was great to work with us. Of course, along the way, we have definitely learned that all the people are not capable to work in this kind of uncertain environment, very fast-paced, industrial or working environment where you are learning on a daily basis, three-year strategies where everything is stable, and you know exactly what to do every day. It hasn’t been successful for all of the people, but being transparent, giving people chances to learn more, giving an impact, giving them freedom to also fail. That was probably the success that we’ve been able to recruit highly professional people from well-paid positions.

Alejandro: for the people that are listening to get an idea on the scope of operations of the company, is there anything that you can share in terms of the number of employees or anything else?

Petri Alava: Yeah. Today we have 40 people. They are all technology people. What is strange for our stories is that even though I said we are in a licensing business, we also learned along the way to be even more convincing on the technology licenses basis. We need to be building a large demonstration-fashioned by also. Now we’re in the process of raising 350 million euros to build a commercial-scale factory in Finland, which will employ 250 people.

Alejandro: Nice. Imagine you go to sleep tonight, Petri, and you wake up in a world five years later where the vision of the company is fully realized. What does that world look like?

Petri Alava: It would mean that all the people all over the world have some sort of connection with the Infinited Fiber, as we call it. This is a global market space where we are working. The brand companies we have onboard are loving the material that we are able to produce, the story of how we make it. And we believe that one day, this material will be available for everyone. It’s affordable; it’s a beautiful story; it’s a sustainable story; it’s all about [26:29] of material. That’s what I believe.

Alejandro: Also, imagine that if I’m able to put you into a time machine and I’m bringing you back to that moment where your contract was terminated, and you were thinking, “What’s next?” Imagine you have the opportunity of sitting down with that younger Petri, and you’re able to give that younger Petri one piece of business advice before launching the business. What would that be and why, knowing what you know now?

Petri Alava: Wow, a very good question. Even though I’m a very optimistic person, thinking when I was sitting alone, and I was thinking about the business opportunity, I was probably, even me, I was able to dream. I speak as it should be to say, in November of 2017, we hired our first person, so it’s not that long ago. Looking from today’s world that in a very few years, we’ve been out signing contracts worth tens of millions of euros per customer for very long-term contracts, commitments to buy the fiber. So I wasn’t believing that this kind of change could happen so quickly when you just have the right team in place.

Alejandro: One thing that comes to mind, too, is, what would you say is a book that you wish you would have read sooner?

Petri Alava: I can’t recall the name of the author, [28:16]. He’s an Israeli guy who wrote the history of humans, both the past and the future. I think they were Homo sapiens, which was highly interesting and highly [28:37] what I was reading.

Alejandro: Why would you say that was such a worthwhile book to you?

Petri Alava: The author’s personality was that he was so wild and free in his thinking that that’s how the future can be, and having the skills and capacity to combine so many facts together and vision of the future very bravely, and that we are becoming robots and there will be superhumans. So it was a really nice story of how the future can be so different that you can’t imagine.

Alejandro: I love it. Petri, for the people that are listening, what is the best way for them to reach out and say hi?

Petri Alava: You can give me a call, send me an email. I’m very happy to talk with you.

Alejandro: What’s your email for the people listening.

Petri Alava: My email is [email protected].

Alejandro: Fantastic. Petri, thank you so much for being on the DealMakers show today.

Petri Alava: It was my great pleasure.

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