Mushroom-based packaging: how a Ukrainian startup is helping drive Europe’s green economy

The packaging industry produces hundreds of millions of tons of materials every year, most of which will take longer to decompose in nature than any modern business will exist. It is precisely this structural contradiction — between short-term use and long-term consequences — that a new generation of companies is trying to solve by building businesses at the intersection of biotechnology and the circular economy.

S.Lab is one such company. The Ukrainian startup team has developed a technology for producing packaging from mushroom mycelium and agricultural waste, which is fully biodegradable in natural conditions and already certified by the international OK Home Compost standard. Over the course of a few years, the company has moved from laboratory prototypes to pilots with major corporations, received support from the EU-funded Greencubator programme, and is building a decentralized production network in Europe and Asia.

Yuliia Bialetska, CEO and co-founder of S.Lab, spoke to Channel 24 about the technological and business logic behind this model: how to combine biodegradability with industrial strength requirements, why local production from local raw materials is a structural advantage rather than a marketing argument, and what the readiness of the Ukrainian market for green packaging says about broader changes in entrepreneurial thinking.

The S.Lab journey: from idea to product

How did the idea to create S.Lab come about — what made you move away from traditional materials and turn specifically to mushroom mycelium and agricultural waste?

The idea for S.Lab was born not in a lab, but on one of Bali’s beaches. A few years ago, while traveling around the island, I saw the scale of plastic pollution with my own eyes for the first time. Many beaches that look like paradise for part of the year were actually covered in plastic waste, much of which came from packaging.

That was when a simple thought struck me: we create materials that we use for just a few minutes, but they remain in nature for hundreds of years. This is especially true for packaging materials that are not recycled and accumulate in landfills, polluting soil, oceans, and even our bodies.

When I came home, I started looking into possible alternatives. That was when we turned our attention to mycelium — the natural root system of fungi, which in nature acts as an extremely effective biological binding material. We were fascinated by the idea of using its ability to form strong structures and combining it with agricultural waste, which is often simply burned or thrown away.

That is how S.Lab came to be. From the very beginning, our goal was to offer an industrial alternative to packaging that could fully return to nature after use without harming the environment.

How did your journey look from the idea to the first real product? What were the biggest challenges at the start, and how did you manage to overcome them?

It all started with experiments with hemp and mushrooms. And while that is only partly a joke, we really did begin by testing hemp waste and trying to create a new material on our own — a biocomposite. Together with my husband, Yevhen, who is the co-founder and CTO of S.Lab, we began researching new materials and experimenting with components until we found the ideal mix: mushroom mycelium and technical hemp residues.

We were literally mixing plant-based raw materials with mushroom mycelium, observing the growth process, changing the formulas, and trying to understand whether this could become something more than just an interesting biological experiment.

At that time, we did not have a large production facility or a laboratory. We had dozens of failed attempts, samples that broke, crumbled, or simply did not grow the way we expected. But gradually, we started getting our first results.

The most interesting part is that our first “testers” were friends, acquaintances, and colleagues. We brought them samples of the material and asked them to tell us honestly what they thought. That was when we heard that it was a very good packaging material and that our potential customers were already ready to buy it.

At the same time, we also realized one important thing: if we wanted to change an entire industry, it was not enough to create an eco-friendly material. It had to be just as functional as traditional solutions. The new material had to protect the product, be reliable, and be competitive in price. And most importantly, we had to be able to produce enough of it to create a real positive environmental and economic impact.

That was when we started thinking like manufacturers solving a real business problem, and we went through many challenges — from developing an innovative technology to finding customers willing to use the new material and work with us to test it.

What Greencubator helped with

What role did participation in the EU-funded Greencubator programme play in S.Lab’s development? What exactly — knowledge, connections, funding — was the most valuable for you?

For us, participation in the programme was one of the turning points in the company’s development. At that stage, we already had initial research results and some very early customers, but moving from laboratory experiments to a real technology required resources. Thanks to the programme’s financial support, we were able to accelerate technology development, create the first prototype of the production process, and file our first patent applications, which became the foundation of the company’s future technological protection.

For climate startups, this is especially important because building an innovative technology takes significantly more time and investment than launching a classic digital product.

At the same time, the value of the programme went far beyond funding. Support from respected international institutions, such as the European Bank for Reconstruction and Development, was a powerful signal of market trust for us. When you are creating a fundamentally new technology, investors and partners evaluate not only the product itself, but also who has already believed in you at an early stage.

That trust helped us open new doors. In the following years, we attracted international investors, launched our first pilots with major corporations, joined global acceleration programmes, and later received support from the Morgan Stanley Inclusive Ventures Lab and other international partners.

So if I had to name the most valuable part, it was the combination of two things: the ability to develop the technology with financial support, and the ability to build a company reputation trusted by leading international institutions. For an innovative startup, both factors are equally important.

Is the market ready for eco-friendly packaging?

To what extent, in your opinion, are Ukrainian entrepreneurs and the market as a whole ready to switch to environmentally friendly packaging? What has changed in attitudes toward the green economy recently?

About 30% of the companies currently using S.Lab packaging are Ukrainian businesses. And that is probably the best answer to the question of market readiness.

Despite the war, economic uncertainty, supply chain disruptions, and the many other challenges Ukrainian entrepreneurs face today, many companies continue to invest in sustainable solutions. From a business perspective, this is not always the easiest choice, as in times of crisis it is natural to focus solely on survival.

But we are seeing something different. Many Ukrainian brands are consciously choosing more sustainable solutions because they care not only about the product they sell, but also about the values they communicate through it. They think about environmental impact, responsible consumption, and what they leave behind.

I believe an important shift in mindset has taken place over the past few years. If in the past sustainability was often considered an added advantage or a marketing tool, today more and more companies view it as part of their identity and long-term strategy.

At the same time, there is another important aspect. Unfortunately, the war has caused enormous destruction in Ukraine. But the future reconstruction process also creates a unique opportunity to rethink how we build cities, infrastructure, and industry.

Today, Ukrainian entrepreneurs, engineers, and scientists are already working on new solutions in energy efficiency, the circular economy, renewable energy, resource management, and sustainable infrastructure. We are not just rebuilding what was lost. We have a chance to create a more modern, efficient, and resilient development model.

And I am convinced that many of the solutions being born in Ukraine today under extremely difficult conditions may in the future become examples for other countries around the world. Because sometimes the greatest challenges become the catalyst for the boldest innovations.

That is why I am very optimistic about the future of the green economy in Ukraine. Despite all the difficulties, Ukrainian entrepreneurs continue to build businesses not only for profit but also for meaning. It is a combination of both factors.

Mycelium itself is a unique natural material. During its growth, it forms a complex network of fibers that bind particles of plant-based raw materials together. This structure provides mechanical strength and thermal insulation properties.

But equally important are the cultivation technology, control of production conditions, and the proper choice of raw materials. We have spent many years optimizing these parameters and developed our own production processes that allow us to obtain a material with stable characteristics.

In practice, we do not just produce packaging — we manage a biological process to achieve a predictable industrial result.

How do you manage to combine the material’s full biodegradability with the strength and thermal insulation properties required by manufacturers? Is this a matter of technology or of the right raw materials?

Це поєднання обох It is a combination of both factors.

Mycelium itself is a unique natural material. During its growth, it forms a complex network of fibers that bind particles of plant-based raw materials. This structure provides mechanical strength and thermal insulation properties.

But equally important are the cultivation technology, control of production conditions, and the proper choice of raw materials. We have spent many years optimizing these parameters and developing our own production processes to obtain a material with stable characteristics.

In practice, we do not just produce packaging; we manage a biological process to achieve a predictable industrial result. And since we use only agricultural waste and mycelium, we can guarantee the material’s biodegradability. By the way, we recently received OK Home Compost certification for our material, which officially confirms this.

Why decentralized production matters

You are developing a decentralized production model in Europe and Asia. Why is this approach — producing on-site from local waste — so important for the future of the industry?

Today, most packaging materials are produced centrally and then transported over long distances. This creates significant logistics costs, adding about 30% to packaging costs, and a substantial carbon footprint.

We believe the future belongs to local production. Agricultural waste is found in almost every region of the world, but its composition varies from place to place. Our technology allows us to adapt production to local raw materials and create packaging right next to the customer.

This model reduces logistics costs, lowers CO2 emissions, creates local jobs, and makes supply chains more resilient.

In my view, this is not only the future of the packaging industry but also the general direction of industrial development worldwide.

What is the future of S.Lab?

How do you see S.Lab in five years, and what message would you like to give other Ukrainian entrepreneurs who are thinking about building a business based on sustainable development principles?

In five years, I see S.Lab as a global company with a network of local production sites in various countries around the world. We want to make eco-friendly packaging not a niche alternative, but a new industry standard.

But it’s equally important to me that S.Lab remains an example of world-class Ukrainian innovation. Ukraine has enormous potential in science, engineering, and entrepreneurship, and today we’re seeing more and more companies successfully competing in the global market.

My message to other entrepreneurs is simple: don’t think of sustainability as a limitation or a compromise. The most interesting businesses of the future are being built precisely where economic benefit meets the solving of real social and environmental problems.

S.Lab’s story shows that Ukrainian green-tech companies are already part of a broader European transformation — not just a technological one, but a values-based one. With support from European institutions, partnership with Greencubator, and expansion into markets beyond Ukraine, startups like this are becoming part of Europe’s shared path toward decarbonization, the circular economy, and sustainable industry. For Ukraine, this means not just creating new products, but shaping a modern recovery model that can be competitive in Europe while also driving the country’s green transformation.

Author: Lev Shevchenko

Source: 24tv.ua