Pressing blue jeans into money: Nebraska entrepreneurs search for early investors.

Anyone starting a new business dreads that tricky first step.

Before making money most start-ups must find people with money. That’s were Josh Shear and Jen Carlson find themselves. They are both eager and impatient as they launch an innovative product.

Carlson and Shear are the husband and wife team with a strong mission statement behind their business plans. They want to make quality building materials out of recycled and environmentally responsible ingredients. “There is a reason we are in this,” Carlson explained. “We care about sustainability. We’d like to have a successful business that also makes us money.”

Their company, Lincoln, Neb. based Iris Industries, got an important boost this month when an online pitch for donors interested in backing their innovative project unexpectedly brought in $10,000 in a matter of days. Now the pressure is on to get the first product orders out of their still to be created manufacturing facility.

Their product is unique: a durable, attractive material created from a mixture of recycled blue jeans and resins made from more natural, bio-mass ingredients. It’s called Denimite, as if Superman’s kryptonite was made out of second-hand cotton.

Denimite uses an idea that has been around for many years, recycling fabric, and takes it in unexpected directions. It starts with blue jeans shredded into a soft tangle of cotton fibers resembling furniture stuffing. Using a formula and a mechanical process invented by Shear, the spongy cotton becomes hard as a rock.

The product, simple to explain and billed as socially responsible, appealed to the on-line community monitoring Kickstarter. That is a website connecting people who share their creative ideas with others willing to support them with donations. Carlson and Shear thought Kickstarter members would take a shine to their high gloss product. Carlson said they gave it a try because "it seemed like it would be kind of fun.”

They went in with low expectations. Ordinarily Kickstarter members give small amounts. People who use it try and have a cautious approach since the site does not guarantee projects or look into the background of the people pitching their ideas. The approach is “Buyer Beware” pure and simple.

It may have just been for fun, but posting on Kickstarter paid off for Iris Industries. Not only did they reach their goal, something they did not expect, but attracted the attention of people in the home design and building materials fields from all over the world. Bloggers were writing about the product even before it was being made on a large scale.

“We understood it would be a vehicle to get out name out there and that has worked wonderfully,” Carlson said.

Recently Shear used his prototype pressing machine for the first time to create a sample for a visitor. He started with a block of the blue cotton material, six inches square and about four inches thick. Jamming it into a small paint mixing container, he grabbed a four gallon jug of resin and poured a clear syrup on top of the cotton fibers. Mashing and stirring the mixture made it a gloppy, sticky mass, which Shear gingerly placed on a metal plate inside his small hydraulic press.

“I’m going to smash it,” Shear said happily.

After some high-pitched mechanical whines, the press, exerting thousands of pounds of pressure, completed its work. Three inches of loose cotton compressed into something the thickness of a bathroom tile. This is Denimite, and Carlson is especially proud of how it’s both durable and expensive looking.

“The material is interesting because you can see a little bit of the swirls of the different color cotton fibers within the material,” she said. “It evokes the blue jean look.”

The end result will be a base material for anything from bathroom sinks to skateboards.

The recycled material mixed with the resin does not have to be old denim. “Our idea is replacing other types of materials that would be mined or imported or both,” said Carlson.

Shear and Carlson conducted successful tests to make Denimite with other raw materials including old magazines and sunflower seed shells. They also made a batch using old money shredded to the size of confetti. Bags of the un-spendable currency can be bought from the United States Bureau of Engraving. The result was a speckled green material that, when you know what you’re looking at, evoked the look of the old bills. A major stock brokerage asked Iris Industries to make counter tops out of money but the full-scale machinery is not yet up and running.

In order to get beyond producing Denimite on the smallest of scales it will take substantially more money. The couple is calculating the totals now as they prepare a more detailed business plan before approaching venture capitalists hoping to make money off of new and unconventional businesses.

Some of those pitch sessions are scheduled for January.

Carlson says going big time means some big money but “funding a company can be very difficult and time consuming and as entrepreneurs it’s difficult not to be impatient.”

Coaxing money from investors in Nebraska has challenged the most creative entrepreneur. It’s even harder in Nebraska where between 2007 and 2012 start-up businesses attracted just less than $53 million in venture capital investment. They are especially important to attract at a point where banks are reluctant to offer business loans to riskier enterprises.

Skip Quint, the director of the Center for Entrepreneurship at Bellevue University, said it is difficult to find that early capital from people who want a quick return on their investment.

“What does an investor want to hear”” Quint asked. “He wants to hear 'when’s payday?'”

Quint says investors like business which “scale” quickly or in other words those which get up and running and making money quickly. That gives an advantage to tech companies which might be writing computer code, establishing a website or designing an app for smart phones.

“I think tech and online is easier because they scale so much better and they scale for almost nothing.” Quint said.

Industries that require raw materials and production lines may not be as inviting to venture capital investors because “in manufacturing you just don’t get your sales up as rapidly,” according to Quint.

Carlson and Shears have seen that type of reluctance before, when they started a company two years ago that turned recycled glass into counter tops. They found a backer, but the relationship was problematic and the couple walked away. As they start over with a new business they find themselves with a similar challenge.

Carlson says they have learned “a lot of people invest in tech and so that is the world they understand.” As a result they are not familiar with the nuts and bolts of chemical and industrial engineering “they are less likely to want to be involved,” according to Carlson. ”They are interested in tech. They are not looking to invest in the building materials industry.”

Turning to creative funding methods like Kickstarter for start-up funds may not assure success, but in the right circumstances it has long term benefits. The Denimite project attracted 92 individual supporters from Omaha to Philadelphia to the Philippines. Even the smallest donors, starting at twenty dollars, were given polished blue samples of Denimite shaped into jewelry or drink coasters. One donor, with just hours before the deadline for the solicitation, added more than $5,000 to the campaign.

Skip Quint of the Entrepreneurship Center in Nebraska argues there can be a self-interested motive for some Kickstarter donors. Unlike investors they get no return on their investment. It is a donation. But the recipient of their donation also knows who was generous.

Should the company they had an interest in show real promise, the donor may become a real investor. “There could easily be a long term pay off,” Quint said. The company owners “are going to talk to you because you gave them some money. You gave them some money when no one else did.” That information helps any serious venture capital investor better assess the risk and reward of continuing the relationship.

Carlson and Shear hope to find investors for Iris Industries who believe in their product as well as their philosophy.

After delivering a passionate monologue about striking the balance between what they love to do and how they hope to profit from it, Jen Carlson paused, smiled and added, “American Dream. Everyone likes that.”