Circularity Capital, a private equity firm established in 2015 that specializes in investing in circular economy companies, announced a few weeks ago the closing of its largest circular economy investment fund.
After closing an initial £60 million fund in 2018, the Circularity European Growth Fund II (CEGF II) closed subscriptions reaching €215 million. CEGF II will continue Circularity Capital's chosen strategy of investing in growth-stage companies in Europe's circular economy.
Circular economy: a $4.3 trillion opportunity
According to the Accenture analysis the circular economy represents a $4.3 trillion value creation opportunity globally, while having the potential, according to the Circularity Gap Report 2021, to reduce greenhouse gas emissions by 39%.
With the capital raised to date, Circularity Capital has completed ten investments in companies including ZigZag, an award-winning SaaS platform to eliminate wasteful retail returns, Shark Solutions, a Danish company and global leader in advanced recycled PVB products, and Grover, https://www.grover.com/ the leading consumer-tech subscription platform, which raised $330 million in funding early last April and is currently valued above $1 billion.
Investors in Circularity Capital's new fund are pension funds, insurance companies, and family offices in Europe, the United Kingdom, and North America. CEGF II is classified as "Article 9" (i.e., among the funds with the highest ESG focus) under the Sustainable Finance Disclosure Regulation (SFDR), the new European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing, and to increase transparency on sustainability claims made by financial market participants.
Jamie Butterworth, founding partner of Circularity Capital, and before that part of the team that founded the Ellen MacArthur Foundation in 2010, stated, "We founded Circularity Capital in 2015 with the belief that circular economy companies deserved a specialized investor with the right experience, insight and network to ensure they reach their full potential. We have invested heavily in building specialized capacity to source, select and grow circular enterprises, and we can now clearly see the benefits of this strategy."
Sector in motion
That investment in the circular economy sector is on the rise and attracting increasing interest is beyond doubt. As a matter of fact, last April saw a number of important steps forward in different sectors and by a variety of actors.
On Earth Day, April 22nd, L'Oréal announced its participation in the new Circular Innovation Fund by contributing €50 million as part of its L'Oréal for the Future sustainability program to this new €150 million fund. The Circular Innovation Fund "CIF", circularinnovationfund.com a global venture capital fund focused exclusively on circular innovation, is a joint venture between Cycle Capital of Montreal and Demeter of Paris, pioneers and leaders in cleantech capital management. The fund invests in growth-stage companies in North America, Europe, and Asia that develop novel and biobased materials, circular packaging, innovations in recycling, waste, and logistics, as well as eco-efficient processes and designs and circular business models.
Circular Innovation Fund has among the examples of potentially investable companies the circular fashion startup For Days, service that recycles old clothes returned by consumers with the Take Back Bag, while offering a catalog of circular, recyclable and eco-designed clothing. Another company of interest to CIF is Aphea.Bio, committed to developing agricultural products such as biostimulants and biocontrol agents that reduce the application of chemical fertilizers and control fungal diseases sustainably in corn and wheat supply chains.
Backed by a roster of strategic advisors and investors, including actor Leonardo Di Caprio and circular economy and Cradle2Cradle pioneer William McDonough, the newly formed venture capital firm Regeneration.VC announced a few weeks ago the final closing of its first $45 million fund. The company focuses on seed and Series A investments in circular and regenerative approaches in three specific areas: design (packaging and materials), use (products and brands), and reuse (reverse logistics and marketplaces).
Finance against plastic pollution
In late April, the European Investment Bank (EIB) pledged to invest up to $20 million in Circulate Capital Ocean Fund I-B to combat plastic pollution, climate change, and promote the circular economy.
The Circulate Capital Ocean Fund I-B (CCOF I-B) is managed by Circulate Capital, the Singapore-based investment management company that finances and invests in start-ups and SMEs in India, Indonesia, Thailand, Vietnam, and the Philippines operating in the circular economy sector. CCOF I-B aims to raise a total of $80 million and is, at present, seeking additional investors. Alongside CCOF I-B, Circular Capital also manages a second fund: the Circulate Capital Disrupt, which invests in plastic reduction technologies, innovative materials, alternative delivery models, recycling technologies, and applying big data and artificial intelligence to expand circular supply chains.
"Preserving the health of our oceans is critical to addressing climate challenges and preserving our economic prosperity. Through the Climate Bank Roadmap and the EIB's Clean and Sustainable Oceans Program, we are committed to investing in climate action and environmental sustainability around the world," said European Investment Bank Vice President Ricardo Mourinho Félix.
Circulate Capital's inaugural investments involve innovators implementing solutions in the areas of biotechnology, sustainable fashion, and smart materials, as well as digitizing the recycling value chain to combat plastic waste and climate change. The companies currently in CCOF-I's investment portfolio, including the U.S.-based Arzeda and Circ and India's Lucro, RicronPanels https://www.ricron.com and Recykal, represent some of the most cutting-edge innovations in the industry and have technologies with strong potential for financial, environmental and social returns in Asia and beyond.
Image: micheile.com (Unsplash)