Bio-on: the dream of 100% biodegradable plastic destroyed by finance
This is what Massimo Degli Esposti and Andrea Franchini, authors of the book, ask themselves “Bio-On-The Poisoned Unicorn. Thus toxic finance killed the dream of clean plastic.”
Italian Business interview with one of the authors, Massimo Degli Esposti, economic journalist who worked at Il Giornale, Il Resto del Carlino, Il Sole 24 Ore. Degli Esposti directed the Economics editorial team of National newspaper and edited the Corriere Imprese insert for the regional edition of Corriere della Sera.
The first pollution problem is plastics but was there a company in Italy capable of producing a model of clean plastic?
Yes, biodegradable plastic of biological origin, not derived from oil but from the fermentation of food waste. It is a completely biodegradable plastic in 90 days immersed in water.
And what happened to him?
The company, as it was born, was destroyed by a fund, in a truly singular way. In the book I ask myself questions: what is wrong with our financial system? In this great background noise of the Internet and the image society that can cause such damage? All on the basis of ridiculous accusations in some ways, because there is no proof. This fund does not provide a single real, true, consistent piece of evidence that Bio-on was a scam.
Let’s start from the beginning. Was it a company from Bologna?
Yes, the company was based in Bologna, it’s called Bio-on. The two entrepreneurs, Marco Astorri and Guido Cicogliani, come from a series of entrepreneurial initiatives in completely different fields
The classics out of context…
Let’s call them underdogs, as is fashionable today. Marco Astorri is an advertising graphic designer by training and Guido Cicogliani is the scion of a rich family of Italian origin who had achieved success in France, then for a series of reasons returned to Italy. One of their great ideas, when they worked for Benetton, was to produce those magnetic cards with transponders which are used to record passages on cable cars. They applied them for all ski passes, for the London Underground, for Venice transport. They were plastic cards. Until someone said: We have to collect these plastic papers at the end of the season because they invade the woods, the ski slopes, everyone throws them away, why don’t you make something with them that melts? At that point Astori and Cicognani started doing research, until they found a patent dating back to 1926, to make a biodegradable plastic and from there Bio-on was born.
The journalist Massimo Degli Esposti
What year are we in?
In 2007. They went around the world to buy the patent that had ended up in Hawaii, they bought it, developed it and sold their company. From there this adventure began which becomes a coincidence but stops at a certain point in 2019 because there is an American fund that claims it is a bluff.
I read, this fund claimed that Bio-on was a sort of second Parmalat?…
Exactly, but in the meantime, in 2007, they founded the company, collected money from various supporters and companies, for example those of the sugar factories which, having large waste from processing of beets and sugars, had glimpsed the possibility of using these wastes to produce plastic. So they initially financed a laboratory in which they developed the patents, fine-tuned them, studied how to industrialize a rather complex production process because it is biological. Ultimately, the two creators managed to industrialize the process. They built a plant worth 50 million euros and is in Castel San Pietro Terme, in the province of Bologna. They built it, they inaugurated it, they started producing, until they went public on the stock exchange. The interesting thing is that on the stock market Bio-on was worth one billion and 300 million euros, a unicorn. But at a certain point there was this company that said something was wrong.
Can you explain to readers what is meant by unicorn?
In financial jargon, unicorns are those companies that reach a billion dollars in less than five years. And so it had become one of the two Italian unicorns, the other being Yoox which does e-commerce.
You talk about big investors who saw Bio-on’s data and put their money into it…
Yes, keep in mind that Bio-on had huge institutional investors, like the largest investment fund in the world, BlackRock, to name a few. There was Norges Banks, a Norwegian sovereign wealth fund that invests in oil profits. They are funds that have portfolios worth trillions and obviously had carried out all the necessary technological and financial checks before investing in Bio-on. Among the projects there are the creations of the great Kartell, because among the big investors of Bio-on there was also the owner of Kartell, Claudio Luti, who is a great character, leader in the design sector, specialized in the production of furniture and accessories in plastic materials on an industrial scale.
What’s happening in 2019?
In July 2019, an Italian-Israeli financier based in New York, then in reality it was discovered that he was based in the Caymans, but still the owner of a short-listed investment fund, i.e. those that speculate on the downside, published a video in who says that Bio-on is a house of cards, like Parmalat, is a bluff.
And what happens?
It happens that within ten minutes, when the market opens, the Bio-on stock collapses.
But is it that simple to make a stock collapse?
No, it’s not that simple
But did it still collapse?
Here, inexplicably, immediate, instant panic spread. After the video, the shares plummeted. Everyone started selling and a vicious spiral was triggered which then led to the fact that they no longer gave them credit. There was a great collective escape, an investigation was started, until the Bologna Prosecutor’s Office took the accusations of this fund, which is called Quintessential, at face value and officially started an investigation against the directors of Bio-on, not so much on the accusations regarding the technology, the industrial part, whether it worked or not, but on how the financial statements had been drawn up.
I saw the Quintessential video and it didn’t seem significant enough to cause an upheaval.
In the book I distinguish the part of budget accounting which is the subject of the trial, and I do not comment on that but I explain the logic with which that type of accounting was chosen but which is contested, from endorsing the accusations of Quintessential which says that Bio-on was a house of cards. Bio-on had 20 or 30 patents, it had already developed products that were on the market, it had already produced 8 or 9,000 tons of plastic, so the product was there, the technology was there, the plants were there, the value of the company was there.
At trial, what is the type of charge?
The charge revolves around the fact that the financial statements reported turnovers which in reality were accounted for irregularly and consequently all the communication regarding the financial statements, the profits, the turnovers, the signed contracts, it is claimed were forced, compared to reality .
The trial will ascertain this, but how, in your opinion, can it be explained that an entrepreneurial project with so many investors and which seems to have significant solidity collapses after a fund’s video?
I explain it with some critical issues of the financial markets which are very exposed to aggressive operations. This operation in particular was conducted with great media sophistication. Do you think that the video that I dispute, of this financier, was published from Australia, it was released on Youtube at 6 in the morning, but it was preceded by an article on the front page of Il Everyday occurrence. This alarmed all the investors who went to see it, so it went viral within an hour, which is inexplicable. What is certain is that it is disturbing to think that in today’s world, with the Internet, YouTube, social media, etc., a company can be destroyed in this way without any underlying logic, without even reflecting for a moment on the consistency of the accusations.
But why has everyone given credence to these judgments of the fund, even if at first glance the analysis seems very partial in terms of content and exposition?
It reports judgments, opinions of anonymous employees, anonymous scientists, anonymous entrepreneurs, that is, something that makes you laugh. Il Fdaily act it reported, obviously giving credibility, all the reflections and narration of this financier of the fund called Gabriele Grego.
Today che fine facheck this invention, in your opinion?
This invention will probably be continued by whoever took it over. All Bio-on assets were taken over by a Piedmontese entrepreneur, Eligio Martini, who deals with plastics. With around 25-30 million he bought the factory, patents, contracts and everything else. By this summer he should restart the Castel San Pietro plant, so he will start producing organic plastic again.
And the creators?
Astorri and Cicognani finished their experience and were expropriated from their company. They are already fine if they get away with a trial or with an acquittal or with a formal conviction for crimes worth a year and a half on probation, but they have been destroyed, their company has flown away. It is hoped that this entrepreneur, perhaps with a slightly slower pace, without great proclamations, will be able to get the project back on its feet. In Italy if you are very visible it is very easy to have these problems, perhaps less so in America or Great Britain. In America they are more used to innovative companies, start-ups and also to thinking of the stock market as a bet.
There is a little more equal competition…a little. Let’s say you have a few more chances
That’s right, when the competition is big numbers you have to have strong shoulders to handle it. If you want to cross the Atlantic you have to have a rather large ship, it’s different if you go to the Adriatic to go swimming offshore. In my opinion, they had a great invention, a great technological solution, ideas, capabilities, but they were traveling on a fly in the end. We understood each other?