GBP 250K for S.Lab’s Mission to Make Compostable Packaging the New Global Standard

• S.Lab’s scalable, mycelium-based eco-packaging as a sustainable alternative to polystyrene receives GBP 250K from Morgan Staley
• The team relocated from Ukraine to Spain after the war eruption
• The company combines mycelium and agricultural waste, ensuring high strength, biodegradability, and consistent production
• Plans include while-label mini-factories, industry expansion, and making compostable packaging mainstream globally

S.Lab—the Ukrainian manufacturer of mycelium eco-friendly packaging—attracted GBP 250K from Morgan Stanley this September as part of the bank’s Inclusive & Sustainable Ventures acceleration program. This funding opens the startup’s new funding round.

A Beachside Epiphany, a Garage Lab, War, Relocation, and Reinvention in Spain

The founders are Julia Bialetska (CEO) and Eugene Tomilin (CTO). The idea for S.Lab once surfaced during their surfing trip as they found themselves on a beautiful beach sadly surrounded by plastic waste. Upon their return to Ukraine, they immediately started experimenting with agricultural waste and mycelium in an improvised garage-turned-lab.

Beginning in 2021 with the goal of creating a viable and scalable alternative to polystyrene, the company was soon forced out of Ukraine by the onset of Russia’s full-scale war against Ukraine. The team relocated to Spain, rebuilt the company, and set up a new production site in Spain to produce mycelium packaging at industrial scale. In other words, this challenge ultimately accelerated S.Lab’s growth.

Wise Guys Sparking the Recovery

What made this possible in 2022 is S.Lab receiving an injection of EUR 80K from the famous accelerator Startup Wise Guys.

‘It became an important part of reopening S.Lab in Spain. This money went directly into restarting our operation, we used it to move the production to a new location, set up a small lab, purchase some core equipment, and restart and improve the production process. This also allowed us to run new pilots, including one with L’Oréal,’ Ms Bialetska recalls.

‘Investing in S.Lab back in 2022, we saw an high-upside, mission-driven, technology-enabled startup addressing a multi-billion-dollar problem of single-use plastics/foams with favourable regulatory tailwinds. The combination of a differentiated technology of mycelium and agricultural waste, modular manufacturing potential, early signals of demand/traction, and the sustainability megatrend made it quite attractive. Replacing polystyrene/foam packaging at scale by offering a viable biodegradable technology with modular production, you unlock a large, underserved, rapidly growing market. And we really believed that the team was going to be at the forefront of that.,’ Startup Wise Guys’ general partner Dag Ainsoo comments.

The Hemp Advantage

S.Lab’s technology combines specifically hemp with mycelium. The choice of hemp was the result of thorough experimentation. According to the team, many agricultural fibres were tested in the early stages and hemp consistently delivered the best balance of strength, density, and stability for mycelium growth. It appears to be one of the strongest natural fibres available, which is why the final composite performs so well. At the same time, the technology is not limited to hemp and can work with different types of agricultural waste.

Raw material gets sourced from local farmers. To ensure that the packaging material remains stable and predictable, every batch of agricultural waste needs to go through comprehensive laboratory testing before production.

Combating Skepticism

While it’s apparent that many businesses — big and small — welcome the idea of biodegradable packaging and apparel, it’s also easy to imagine some reluctance. According to Ms Bialetska, most of the reluctance that S.Lab occasionally encounters isn’t about sustainability itself, but more about trust.

‘New materials always trigger certain biases and mycelium packaging is no exception. Some companies assume it won’t be strong enough, others worry it might behave ‘like a mushroom’ and start growing, and some simply don’t believe a natural material can match the performance of plastics, even though it’s actually 3x stronger than EPS. These reactions are completely normal, so we treat them as part of the process,’ the CEO tells ITKeyMedia.

‘Our job is to remove uncertainty through communication, testing, and direct conversations. Once clients see the material, run drop tests or try a pilot, the bias usually disappears. The more transparent we are about how the material works, the easier it is for even the most skeptical teams to move forward,’ she continues.

Beyond Boxes: Unexpected Mycelium Applications and Mini-Factories

Even though S.Lab specializes in packaging, the shape and even purpose of items may vary. As long as it can be modeled in 3D, it can be grown. Reportedly, S.Lab did receive unusual requests outside traditional packaging, such as a mycelium ashtray or biodegradable coffins. The startup is also testing its solution for soundproof panels.

In addition to ready-made products, supplying a white-label mini-factories is one of the core parts of S. Lab’s model, currently in R&D. These mini-factories are compact, automated units that can produce mycelium packaging anywhere in the world. This added solution allows S.Lab to reduce logistics emissions, cut costs, and serve clients locally. The startup reports that the first pilot mini-factory is in development, with plans to roll out in multiple EU countries.

In this model, S.Lab keeps its technology fully proprietary with the most sensitive elements (the automation system, software, cultivation protocols, etc.) controlled by the team. Clients operate the mini-factory without getting access to the technological internals. The team also handles installation, maintenance, updates, and monitoring, so the know-how never leaves S.Lab.

Market Focus and a Growing Pipeline

While the company drives clients from different industries, the core markets today are electronics, cosmetics, jewellery, and beverages: the industries where protective packaging matters most and where sustainability is already a strategic priority. For each of them, S.Lab adapts both the product and the narrative: electronics teams care about shock absorption and moisture resistance, beauty brands focus on aesthetics and sustainability reporting, beverage companies look for thermal and protective performance, while jewellery brands prioritise premium feel and waste-free unboxing. S.Lab’s next industries of interest are food and pharmaceuticals, where insulation and safety requirements make mycelium material a strong fit.

‘Our journey isn’t simple, but every step brings us closer to making fully compostable, high-performing packaging a new industry standard. We completed pilots with the mentioned L’Oréal, JTI, and more major companies, validated the material in real logistics conditions, and built a commercial pipeline worth more than EUR 20M. We also got support from top accelerators, including Techstars, BMW Foundation, StartupBootcamp, and now Morgan Stanley’s Inclusive Ventures Lab. Our work has been recognised across Europe through awards such as the Green Alley Award, LuxePack Green Award, Evolución Award, and I was recognised by Women TechEU and Women Leadership Award,’ Ms Bialetska lists S.Lab’s accolades.

Scaling Ambitions: Toward a Future Where Plastic is a Relic

Currently, S.Lab is raising a EUR 2.5M Seed round (part of which is Morgan Stanley’s Inclusive & Sustainable Ventures’ funding) to scale production and finish mini-factories R&D. Other plans include further certification and expanding to new markets.

‘What keeps us going is the desire for our daughters to live in a world where plastic packaging is strange, pointless, and archaic. We believe that what is considered ‘alternative packaging’ today will soon become the new normal. Regulations, consumer pressure, and corporate commitments are all moving in the same direction. Mycelium will play a big part in that shift. Our goal is to make it accessible at scale, so that in a few years you can see everyday products on supermarket shelves packaged in materials like ours — fully compostable, locally produced, and safe for the planet,’ S.Lab’s CEO concludes.

The push to replace polystyrene with a compostable, high-performance material illustrates how climate-positive innovation can be both technologically rigorous and commercially viable. By proving that agricultural waste and mycelium can scale into mainstream packaging, S.Lab challenges the assumption that sustainability requires compromise. Their trajectory hints at a future where clean materials aren’t niche alternatives but the backbone of global manufacturing, reshaping how products move through the world.