When Haas School of Business seniors Alex Velez and Nikhil Arora approached vendors in January, many questioned why the soon-to-be graduates were going into the mushroom-selling business.

Now, the duo is launching BTTR Ventures, a company with an environmental conscience that will help turn used coffee grounds into mushrooms for public sale.

With its first crop expected to hit stores in late May, the company will acquire waste from local cafes, turning coffee grounds into rich fertilizer for their specialty fungi, Arora said. In addition, they will receive the mushroom spawn required to grow the fungi free of cost.

"We're taking one of the largest waste streams and ... turning that into a nutritious food source and a valuable product too," he said. "We're diverting the waste."

Once the grounds have been used to produce the mushrooms, the fungal compost will be donated to City Slicker Farms in Oakland, Velez said, adding that BTTR Ventures hopes to create 10 urban farming jobs within six months.

"We want to really try to create a closed loop, zero waste system," he said.

Because its primary expenditure is warehouse space, the company will have minimal production costs, enabling them to offer their mushrooms for four to eight dollars per pound, depending on the grocer, Arora said.

He said several businesses, from waste providers to prospective buyers, have expressed interest in the low-cost product.

Gunter Pauli, founder of the Zero Emissions Research and Initiatives Foundation, said the company's business model has already proven successful internationally, creating green jobs and reducing emissions.

"I think they not only will be profitable, I think they can become a green job machine in the Bay Area," Pauli said. "Coffee and tea waste is one of the most abundant waste streams in America."

Though Americans consume few mushrooms per capita, Pauli said the business will become increasingly lucrative as it continues to drive prices lower.

He said the duo's plan to develop a national network of local growers is reasonable, as coffee waste is available from cafes and businesses across the country.

But agricultural and resource economics professor David Zilberman said the mushrooms could become a smaller specialty product because of their cost relative to other produce. He said the company must market its environmental friendliness and high quality to garner support.

"It's a small niche, but it's maybe a viable niche," he said. "This is not something that will sell at a large scale."

Arora said he hopes the company will flourish locally and provide an example for similar business models.

"We're growing higher quality mushrooms that are going to your store a day after they've been grown," he said. "No one else can offer that."

Tags: HAAS, MUSHROOMS, SUSTAINABILITY