Nikhil Arora and Alejandro Velez's plans after graduating from the UC Berkeley Haas School of Business didn't include becoming farmers.

But they took a detour in the spring during a business ethics class, where the two learned that coffee grounds, one of the country's largest waste streams, could be used as a medium for growing mushrooms.

"We loved the idea and thought, 'Hey, there's something we can do with this' - the country's addicted to coffee," says Velez.

Starting out with a fraternity kitchen and a $5,000 social innovation grant from the university, they teamed up with UC Berkeley Professor Tom Bruns, a mycology expert.

Once they achieved success, the next step was quality control: Velez and Arora, both 22, took their mushrooms to the crew at Chez Panisse for a taste test. They got the thumbs up. "Who better than a chef at one of the country's top restaurants?" says Velez.

Bttrventures (the first part of the name is pronounced "better" and stands for "back to the roots") partners with Peet's Coffee, picking up 2 tons of grounds each week. Using spawn from a California supplier, the oyster mushrooms are grown in bags in a temperature-controlled warehouse in Emeryville.

They produce a couple hundred pounds per week and sell to Bay Area Whole Foods stores, where they fetch $10.99 to $14.99 per pound.

The company is also a zero-waste operation: Leftover grounds become compost for gardens at schools and other organizations in Oakland.

Peet's Director of Coffee Purchasing Shirin Moayyad, who helped Arora and Velez procure a steady supply of grounds, says that besides reducing waste, Bttrventures offers another layer of benefit: a high-value food stuff. "We're providing something that we can feed our local community with," she says.

Recently Bttrventures began selling mushroom-growing kits for $20 at farmers' markets. Each bag produces about a pound of mushrooms in up to three flushes.

Cut a cross in the plastic and mist with water a couple of times daily until the first "pins" poke up (about a week). Once pinning occurs, more frequent misting encourages mushrooms to burst through the bag after another week.

As one might expect, a clear bag of coffee grounds and fungus looks a lot like what you'd find at the bottom of the trash can. Velez admits the product lacks a certain ornamental appeal and is hard at work on packaging.

Bttrventures oyster mushroom garden, $20, is available at the following farmers' markets: Parkmerced in San Francisco and Grand Lake in Oakland on Saturday; Stonestown in San Francisco and the Moraga market on Sunday, and Old Oakland on Thursday. Kits are available online at bttrventures.com.