STERLING, Va., Oct. 9, 2024 — Molg Inc. (“Molg”) announces the closing of $5.5 million in seed funding to scale the company’s circular manufacturing processes for electronics and electrical components. Closed Loop Partners’ Ventures Group led the round, with participation from Amazon Climate Pledge Fund, ABB Robotics & Automation Ventures, Overture, Elemental Impact and Techstars. The company plans to use funding to scale production capacity and meet growing customer demand for circularity and automation.

The funding round is closing at a pivotal time, amidst growing urgency to keep electronics in circulation and recover the critical minerals needed to support the clean energy transition. Today, tens of millions of tonnes of electronic devices are discarded or become obsolete each year. In 2022, only 22.3 percent of e-waste was recycled, according to data from the UN Global E-waste Monitor, resulting in the vast majority of electronics being sent to landfill, where they release greenhouse gasses and chemical substances into the environment. Over $62 billion worth of critical minerals and precious metals are also left unrecovered within electronics waste, missing the opportunity for reuse and remanufacturing for clean energy supply chains. As these materials grow increasingly scarce, expensive and geopolitically sensitive, more solutions are needed to ensure they are kept in circulation.

“After a decade in consumer electronics manufacturing, we founded Molg because we saw firsthand how current design, production and recovery processes—or the absence thereof—contribute to the massive problem of e-waste,” said Molg cofounder and CEO Rob Lawson-Shanks. “Achieving true circularity requires a fundamental shift in the underlying systems that support demanufacturing. It starts with better design and is enabled by dynamic automation. This funding allows us to accelerate our work at both ends of a product’s life, designing for circularity from the start and recovering valuable devices, components and materials through automated disassembly.”

Molg is tackling the e-waste challenge through a comprehensive circular manufacturing process powered by robotics and design. Its robotic microfactories can autonomously disassemble complex electronic products to recover valuable components for reuse, remanufacturing or recycling. The team also partners with leading manufacturers to design electronics with circularity in mind—ensuring one product’s end is another’s new beginning.

“We invested in Molg because they are rethinking how critical materials can be recovered from electronics, addressing a historically overlooked source of valuable resources. Their process maximizes the value of recovered materials and allows for local recovery where materials are most needed––important parts of advancing the circular economy,” said Aly Bryan, Investor on the Ventures Group team of Closed Loop Partners, a firm focused on building the circular economy. “They are helping to unlock a scalable solution that not only reduces environmental impact but also strengthens supply chains by recovering materials domestically.”

Molg has its headquarters and manufacturing facility in the heart of the data center industry in Northern Virginia. The company’s seed round of funding will be used primarily to scale production to meet customer demand for circular supply chains.

“Amazon remains committed to our decarbonization efforts and supporting technologies that aim to improve the circularity of our supply chains,” said Sam LaPierre, Investor at Amazon’s Climate Pledge Fund. “Efforts to improve hardware demanufacturing and material recovery, such as those developed by Molg, are promising technologies that can help advance the recycling and material recovery industries at scale. We are excited to support the growth of Molg, a company at the forefront of unlocking circular supply chains for electronics.”

Molg has already installed robotic disassembly Microfactories at Sims Lifecycle Services and is rolling out to ITAD facilities of leading hyperscalers. The team also works on circular design with leading companies like HP, Dell and ABB Robotics & Automation Ventures to redesign products for the automated recovery of valuable components, remanufacturing and recycling.

“Our investment in Molg will open new possibilities for using industrial robots in the recovery and recycling of data center equipment,” said ABB Robotics Managing Director Business Line Industries, Craig McDonnell. “By helping to enable the automated disassembly and responsible disposal of disused electronics, we are excited to be playing our role in transforming the circularity and sustainability of the data center sector.”

“We invested in Molg to help solve two critical challenges: dealing with mountains of toxic waste that are growing every year, and meeting the rapidly increasing demand for critical minerals in batteries, data centers, and electronics,” said Elemental Impact CEO Dawn Lippert. “Molg is an example of how innovation in AI and robotics can be good for the planet and consumers: why would we landfill precious metals when we can recover them domestically and reuse them?”

“The AI boom and rapid expansion of data centers is coinciding with an energy transition that demands an immense supply of critical minerals. Molg helps hyperscalers and electronics manufacturers tap into the supply of retired servers and other e-waste that still contain immense material value,” said Overture Climate VC Managing Partner, Shomik Dutta. “Molg’s robotic solution not only moves the industry towards circularity; it presents a supply that is cheaper and more domestically secure.”

About Molg
Molg tackles the growing e-waste problem by making manufacturing circular. The company’s robotic microfactory can autonomously disassemble complex electronic products like laptops and servers, helping keep valuable components and materials within supply chains and out of landfills. Molg partners with leading electronics manufacturers to design the next generation of products with reuse in mind, ensuring that one product’s end is another’s beginning. To learn more, visit molg.ai.

About Closed Loop Partners
Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments: its investment arm, Closed Loop Capital Management; its innovation center, the Center for the Circular Economy; and its operating group, Closed Loop Builders. Closed Loop Capital Management manages venture capital, buyout private equity and catalytic private credit investment strategies. The firm’s venture capital group, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough solutions for the circular economy since 2016. The Closed Loop Ventures Group’s portfolio includes companies developing leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy. Closed Loop Partners is based in New York City and is a registered B Corp. To learn more, visit closedlooppartners.com

About ABB Robotics & Automation Ventures
ABB Robotics & Automation Ventures (ABB RA Ventures) is the business-led strategic venture capital unit of ABB Robotics & Discrete Automation, part of ABB’s corporate venture capital framework: ABB Ventures. Since its formation in 2009, ABB Ventures, formerly known as ABB Technology Ventures (ATV), has invested around $500 million into startups having a close fit to its electrification, robotics, automation, and motion portfolio. For more information, visit www.abb.com/ventures

About Elemental Impact
Elemental Impact is a non-profit investing platform that invests in climate companies and projects with deep local impact. Elemental has a 15-year history of investing in real world solutions that make neighborhoods and homes cleaner, healthier, safer, and more affordable. The investing platform scales climate technologies through a three-tiered approach: deploying catalytic capital, providing project expertise, and prioritizing community partnership. Elemental’s portfolio is active nationwide as well as in more than 100 countries and has raised over $10B in follow-on funding.

About Overture
Overture Climate VC is an early-stage climate tech fund with a focus on helping founders win government support and navigate regulatory complexity. For more information, visit https://www.overture.vc/

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

Behind the rapid and improbably simple exchange of products in stores, from cashier to customer (and back, as clothes are often returned), are legacy supply chains struggling to keep up with the speed required of retail today.

The rapid pace of trends and increasing volume of returns are up against slow supply chain timelines and complex logistics. This translates to a lot of excess clothing––most of it ending up in landfill. Textile recycling and recovery systems are also not yet scaled to recover all these items; often, the best case scenario is items like jeans turning into home insulation. They don’t become new jeans again.

The high cost of waste, to both retailers and consumers, has sparked the need for change, but the apparel industry has ebbed and flowed in its transition to circularity. Yet, in the past six months, the tides have been turning. What makes the next decade the time for the industry to rise to the challenge of an urgent waste crisis?

Retailers are hurting––and change is the only option.

The proliferation of style requirements, and long timelines between a brand placing their order and receiving it, have made it increasingly difficult for retailers to purchase only what they need––and to design in ways that minimize overstock and oversupply. The result is anywhere from 12-40% of clothing is unsold at the end of the season[1]. These are clothes that the brands have already paid their manufacturers for and are now taking losses on through liquidation channels. Even when a product does make it to a consumer, it will likely be worn fewer than seven to 10 times before being discarded,[2] a result of increasing consumer demand for the new and novel and manufacturers’ decisions to prioritize lower cost, lower quality construction to bring products to market quicker.

In parallel, return rates are soaring––up to 20-30% of all products purchased.[3] This costs retailers up to $30 per returned item––or even 2/3 the cost of an item––regardless of whether they’re going to be able to sell that product again.[4]  This is made more challenging because a large percentage of returns are damaged on their way back to shelves[5]. Those never make it back on shelf to begin with, even if they were efficiently processed and listed for resale. Every year, more than 9 billion pounds of material end up in landfill from consumer returns.[6] It’s no surprise that historically lenient policies for returns are beginning to fade away[7] as retailers wrestle with finding a balance between top quality customer service and operating a profitable business.

As retailers struggle to right the wrongs of legacy business models, circularity could create opportunities to reduce cost and waste together.

Consumers are aware––and want to see change.

The average consumer purchases 53 new items per person per year––U.S. consumers throw away more than 80 pounds of clothes in the same timeframe.[8] Consumers are increasingly engaging with “returnless refund” models, where retailers offer to refund a consumer a purchase and allow them to keep the product to save shipping and processing costs on returns[9] (which make very clear that the ultimate destination should they have returned the product is landfill), and are asked to engage directly with the disposal themselves. Legacy donation-led systems have also come under increased scrutiny, and it’s become clear just how much business-as-usual results in products being shipped overseas or ultimately landfilled.

In parallel, large retailers are promoting resale and takeback channels at unprecedented levels (see Trashie’s recent announcement with Steve Madden for their takeback recycling program), not to mention the mainstreaming of resale through models like ThredUp, The RealReal and others. Rental is also on the rise again, and it’s creating a sense of community, as our portfolio company, By Rotation, has demonstrated.

In other words, consumers want to be a part of the solution.

High profile “failures” are encouraging all of us to think again

Earlier this year, early innovator in textile recycling, Renew:cell, declared bankruptcy[10]––a sobering moment for all of us who work in this industry. The reality is that less than 1% of textiles are recycled into new fibers annually,[11] and while the necessity of textile recovery is widely recognized, it’s been seen as a Sisyphean task by the industry.

The cost to purchase end-of-life materials is often high. This is driven up by competition with cheaper downcycling options that do not require the same level of stringent sorting as more complex molecular processing technologies. Most of those technologies are currently operating sub-scale, with significant upfront capital requirements to grow to a point where they can produce at parity to virgin fibers.

Where is the opportunity? Necessity is the mother of invention and we’ve seen a remarkable evolution in the willingness of brands and institutional investors to support first-of-a-kind facilities supporting next life textile collection, sorting, processing and recycling in the past twelve months. An evolving capital stack is positioning us to help emerging technologies achieve scale more quickly, as more innovators come into the market to focus on lower cost solutions.

More sophisticated capital partners, and a new crop of innovators––let’s do this!

We’re (finally) all in this together.

In short, if you’ve been an innovator working to advance textile circularity, or a brand responsible for reducing waste in your supply chain, the past decade has been challenging.  But in the past two years, the narrative has shifted, and we believe the momentum has returned. Brands, consumers and innovators are coming together with urgency––because the problem of textile waste is not just one for the planet. It is an existential threat––and opportunity––for the industry itself.

At Closed Loop Partners, we’re excited to be on the front lines of this transition. We hope you’ll join us.

If you are interested in continuing to engage on this topic, Closed Loop Ventures will be co-hosting a session during New York Climate Week with the Los Angeles Cleantech Incubator. Please reach out if interested in attending at [email protected].

Note from the Author:

I am lucky to have gotten to evolve my thinking on the apparel industry in real time with a host of industry experts over the past few months. Many thanks to the Circularity24 team from Trellis––and my co-panelists from Eileen Fisher, Fillogic, Debrand and Loop, the team at Home Delivery World, innovators in textile design, reverse logistics, and recycling––including CLVG portfolio companies Browzwear, Hyran, Fillogic and so many others for helping to push my thinking.

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

[1] Source: https://www.theguardian.com/fashion/2024/jan/18/its-the-industrys-dirty-secret-why-fashions-oversupply-problem-is-an-environmental-disaster

[2] https://stateofmatterapparel.com/blogs/som-blog/10-scary-statistics-about-fast-fashion-the-environment

[3] Source: https://3dlook.ai/content-hub/apparel-return-rates-the-stats-retailers-cannot-ignore/; https://coresight.com/research/the-true-cost-of-apparel-returns-alarming-return-rates-require-loss-minimization-solutions/; https://medium.com/@shaku.tech/the-challenge-of-high-return-rates-in-the-fashion-industry-ab51878d0073

[4] Source: https://www.modernretail.co/operations/the-case-for-and-against-return-fees/;  Source: https://www.modernretail.co/operations/the-case-for-and-against-return-fees/; https://www.letsbloom.com/blog/true-cost-of-ecommerce-returns/

[5] Source: https://www.cnn.com/2021/01/30/business/online-shopping-returns-liquidators/index.html; https://www.newyorker.com/magazine/2023/08/21/the-hidden-cost-of-free-returns

[6] Source: https://www.fastcompany.com/90756025/product-returns-are-wasteful-for-companies-and-the-planet-heres-how-to-change-that; https://earth911.com/business-policy/rescuing-product-returns/

[7] Source: https://www.cbsnews.com/sacramento/news/more-retailers-doing-away-with-free-returns/; https://retailwire.com/free-returns-are-starting-to-disappear/

[8] Source: https://fashionunited.com/global-fashion-industry-statistics

[9] Source: https://www.cbsnews.com/news/returnless-refunds-retailers/; https://www.gotrg.com/company/news-events/news/this-is-everything-to-know-about-returnless-refunds-and-keep-it-options

[10] Source: https://www.renewcell.com/en/renewcell-decides-to-file-for-bankruptcy/

[11] Source: https://www.mckinsey.com/industries/retail/our-insights/closing-the-loop-increasing-fashion-circularity-in-california

Over the last decade, the use of reusable water bottles in particular has grown––many of us are familiar with the ubiquitous airport water fountains––but broader options for refill remain somewhat underwhelming. It’s, in a word, still.

Many circular reuse models today are appealing to environmentally driven consumers. While this is a growing demographic, it is still not scaled. The question remains: how do we get reuse into the mainstream? How do we get it to, in a word, sparkle?

To gain mainstream traction and drive a shift, solutions need to be better without compromise. Along with environmental benefits, they need to be more delightful and cost less to the end consumer.

Enter Aerflo. John Thorp and Buzz Wiggins, co-founders of Aerflo, started on this journey as outdoor adventurers frustrated that the beverages they wanted to drink only came in single-use, disposable packaging. Together, they embarked on building a solution that would make it possible to enjoy these beverages without waste and create a user experience that catered to the on-the-go lifestyle––all driven by a circular model.

Demand for sparkling water is on the rise in the U.S., with the market anticipated to grow at a compound annual growth rate of over 12% from 2023 to 2032. Today, we are not only seeing a diversity of options on retail shelves, but also a wave of innovations making it possible for consumers to make their own sparkling water. We have seen the growth of at-home countertop devices, such as Soda Stream and Aarke, and in-office spaces with Bevi, introducing a shift away from single-use packaging. But for consumers who want sparkling water on the go, single use has been the only option.

After years of building, John and Buzz launched Aerflo with the first-of-its-kind portable Aerflo Aer1 System that can turn any drinkable water source into refreshing sparkling water with the press of a button. The bottle houses a carbon capsule that can carbonate four full bottles of water. It is designed so that users can see carbonation happen, to gauge how much sparkle to add. The small bubbles mimic those in sparkling water sold in stores, bringing sparkling water to consumers without the need to ship glass bottles or cans filled with water thousands of miles. By inspiring and enabling reuse, Aerflo helps reduce waste and greenhouse gas emissions.

John and Buzz started with the concept of bubbles-on-the-go. How delightful would it be to add bubbles to beverages anywhere in the world, elevating the experience of drinking water, whether someone was on top of a mountain or running through New York City?

Every detail was carefully considered and crafted, ensuring that convenience and taste were not compromised for circularity––a critical factor to the success of reuse.

When capsules are empty, customers ship them back to Aerflo (in the same packaging, and with a return label pre-affixed). This immediately triggers the customer’s next order to be sent––so no subscription is needed. In the company’s fully automated, circular refill facility in New Jersey, the returned Aerflo capsules are cleaned, inspected and refilled before being shipped out to the next customer.

The model is entirely circular. Aside from the clear environmental benefits (each capsule can prevent the need for 330+ cans in its lifetime) this system drives cost savings for customers (60%+ less than single use) and gives the option of still or sparkling at any moment.

Over the past decade, Closed Loop Partners has reviewed hundreds of reuse models through our Closed Loop Ventures Group; we have also tested reuse models in-field and conducted reuse research through our Center for the Circular Economy. And now, Closed Loop Ventures Group is thrilled to announce our investment in Aerflo, a company offering what we believe is a natural choice for on-the-go consumers looking for an elevated experience.  Aerflo drinkers don’t need a subscription or commitment and the company offers better value: it is less expensive on a per liter basis than buying carbonated bottled water and offers a more delightful experience to aerate water anywhere, helping make reuse an everyday habit.

About Closed Loop Ventures Group at Closed Loop Partners

Closed Loop Partners has been a leader in the reuse movement for almost a decade. Today, we are actively catalyzing the shift to reuse through our investments and in-market tests––unlocking critical insights and supporting reuse solutions in the field to prepare them for scale. From years of in-field testing and deep research, we have proven that to build successful reuse systems, we need to make reuse a natural choice.

Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments: its investment arm, Closed Loop Capital Management; its innovation center, the Center for the Circular Economy; and its operating group, Closed Loop Builders. Closed Loop Capital Management manages venture capital, buyout private equity and catalytic private credit investment strategies. The firm’s venture capital group, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough solutions for the circular economy since 2016. The Closed Loop Ventures Group’s portfolio includes companies developing leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy. Closed Loop Partners is based in New York City and is a registered B Corp.

About Aerflo

To learn more, visit https://aerflo.co/.

Disclaimer

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

Microbes are behind well-known industrial processes: from yeast for leavening bread or producing ethanol to acetic acid bacteria for vinegar production. These processes typically start with some sort of carbohydrate or sugar-rich feedstock, in which the living organisms are added and allowed to eat their way through the feedstock in a process known as fermentation. Closed Loop Partners has long been exploring the prospect of using microbes to advance circularity, such as creating energy from food waste––as seen through the work of one of our earliest portfolio companies, HomeBiogas. Today, we are seeing even more opportunities for microbes to change the way we produce, and this drove our investment in Capra Biosciences.

Capra sits at the confluence of synthetic biology, resilient supply chains for national defensive strategies, and sustainable consumption. Capra leverages a unique microbe to consume organic feedstocks (like food waste) and convert those materials into high value molecules that are direct replacements for petrochemical-derived products. This can range from molecules used in cosmetics to high value lubricants.

In taking these waste feedstocks and upcycling them into some of the highest value end products, Capra demonstrates how synthetic biology sits at the heart of the circular economy:

• Reducing reliance on extractive industries: Capra is displacing petroleum-based feedstocks for hydrophobic chemicals. This eliminates the need for extractive mining processes and instead leverages waste feedstock to produce high value commodity products at a price point that is competitive with market incumbents.
• Leveraging waste feedstock: Synthetic biology is often reliant on sugars as feedstock for the microbes, which come from net new agricultural production. Capra is starting with food-waste derivatives that are widely available. By giving these materials another life, Capra diverts food waste from landfill and offers a more sustainable product.
• Process-flow material recovery: An ideal system is one in which the microbes and solvents can be recovered after one pass through the system, leaving a close to zero waste process and positively impacting unit economics.
• Distributed, on-site generation: Capra’s technology design allows for continuous flow and modularity, meaning they can convert waste carbon sources such as food waste into high value chemistries onsite. By keeping production and distribution local and integrated, their process helps reduce emissions associated with transportation.

Given the promise of synthetic biology, we are proud to be backing the expert team of Liz Onderko, PhD and Andrew Magyar, PhD, co-founders of Capra Biosciences. We have compiled a diverse syndicate of support, including SOSV, GS Futures, First Bight, E14 and others to support Capra in their work to make high performance and affordable renewable chemicals for the circular economy. Learn more about Capra Biosciences here or reach out to [email protected].

About Capra

Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments: its investment arm, Closed Loop Capital Management; its innovation center, the Center for the Circular Economy; and its operating group, Circular Services. Closed Loop Capital Management manages venture capital, buyout private equity and catalytic private credit investment strategies. The firm’s venture capital group, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough solutions for the circular economy since 2016. The Closed Loop Ventures Group’s portfolio includes companies developing leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy. Closed Loop Partners is based in New York City and is a registered B Corp. Closedlooppartners.com.

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This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Partners or any company in which Closed Loop Partners or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Information provided reflects Closed Loop Partners’ views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. 

The way scrap metal is processed today is a mystery to most outside the industry. When a car or an appliance reaches the end of its useful life, most of us often rely on a junk removal service––or hope that the retailer selling the new equipment will take the old one with them on the way out. What happens after that?

Emily Molstad, Caleb Ralphs and their team at VALIS Insights have spent the past five years getting to know these markets in minute detail. Imagine spending days and nights captivated by how metals are processed in the U.S. after they’re done being used. Imagine coming face-to-face with the information asymmetries in the system that result in mixed metals being shipped overseas instead of recovered for local use. Imagine having hundreds of conversations with processors, metals refiners and customers of virgin and recycled metals to better understand why the system is built the way it is and where there are opportunities to improve it. That’s what this team has done so comprehensively over the past few years, driving toward the creation of their AI-powered software that is closing the loop on a circular economy for metal fabrication.

Today, used metals are still dramatically under-recovered in the U.S. Recycling rates for many non-ferrous and ferrous metals lag below 60%, despite the high resale value of these materials. As of the latest data from the EPA, only 27.8% of ferrous metals (those containing iron) were recycled in 2018––and nearly 7.2% of all municipal solid waste landfilled in 2018 was from steel––equivalent to 10.5M tons. The reality is often worse for non-ferrous metals (such as aluminum, copper, nickel) which may only be sorted for recycling after their heavier ferrous counterparts are removed.

These insufficient recycling rates for metals can be attributed to losses during material processing. Current recycling technology and processing capabilities struggle to address the growing complexity of mixed metal products, leading to contaminated and downgraded metal recovery. Scrap processors have historically recovered only certain metal commodities that were perceived to have higher resale value, leaving out other various mixed metals from the sorting process and shipping them overseas. As a result, significant volumes of aluminum, copper, nickel and cobalt are lost from our domestic supply. However, increasing domestic demand in the U.S. is driving up value for these types of materials, and tools like VALIS’s solution help scrap processors understand the monetary value of the metals they are currently selling overseas.

Closed Loop Partners has long understood the complexities of end-of-life commodity markets––we’ve been investing in the space for a decade and recognize that challenges exist at every stage in the value chain––collection, sorting, resale and ultimately recovery into the next life. For large format composite metals––such as automotive, appliances and heavy machinery––collection has rarely been a problem. These products are bulky enough that they typically end up in processing facilities around the country. The challenge is what happens after that.

We invested in VALIS because their software improves the sorting process of mixed metals and allows domestic processors to maximize the resale value of the outputs, keeping more metals in local circulation. By capturing data on commodity prices and input materials and delivering high-value insights on material and processing trends, they help optimize sortation processes to capture the most valuable metals that might otherwise be overlooked. With more optimized and predictable sortation, processors can command higher prices for higher quality outputs.

As the U.S. faces an extreme shortage of critical metals that are required for the renewable energy transition, solutions like this are increasingly important. Copper, nickel, aluminum, graphite and steel among others are seen as critical and are expected to be in . Many companies have now mandated chain-of-custody and fair labor validation of the minerals and metals used within their supply chains. VALIS helps create lower cost, resilient and transparent supply chains for these metals domestically––and focuses on metal recovery from current waste streams rather than incremental extraction. This provides multiple benefits including reducing waste, enhancing local economies and lowering the emissions footprint of the recycled metals.

Overall, VALIS helps recover more pure metals from our existing waste streams, reduces the complexity of the end products that are being sold for the next stage of processing and can help get metals back in circulation faster. They do all of this, while providing the traceability that’s so essential in today’s critical mineral supply chains. VALIS is improving the business case for scrap processors today, while creating new opportunities for greater material recovery from the urban mine. It makes economic sense. It makes emissions sense. And yes, it makes material sense. That’s the circular economy.

About Closed Loop Ventures Group at Closed Loop Partners

Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments: its investment arm, Closed Loop Capital Management; its innovation center, the Center for the Circular Economy; and its operating group, Circular Services. Closed Loop Capital Management manages venture capital, buyout private equity and catalytic private credit investment strategies. The firm’s venture capital group, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough solutions for the circular economy since 2016. The Closed Loop Ventures Group’s portfolio includes companies developing leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy. Closed Loop Partners is based in New York City and is a registered B Corp. Closedlooppartners.com.

About VALIS Insights

VALIS Insights is building AI-powered software that makes recycling more profitable, material supply chains more sustainable and closes the loop on a circular economy for metal fabrication. With VALIS technology metal recyclers gain visibility into their material quality and make data-driven process decisions to extract more value. Founded in 2022 by experts in metal recycling and data science, VALIS is dedicated to delivering the software and data solutions needed across the recycling value chain to ensure the materials of yesterday are properly recovered for the manufacturing of tomorrow. For more information visit https://www.valisinsights.com/.

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Partners or any company in which Closed Loop Partners or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Information provided reflects Closed Loop Partners’ views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision.

At Closed Loop Partners, we focus on investing in the circular economy––advancing solutions that reduce waste through material reduction, alternative materials, reuse and end-of-life solutions like recycling. Through our work, we help reduce the 45% of all emissions derived from the way we make and use products––and where relevant to materials management, we also address the 55% of emissions that are tied to energy production.

Our most recent investment through the Closed Loop Ventures Group in Boston-based company Found Energy embodies this crossover between energy production and materials management. Found Energy upcycles contaminated aluminum into clean hydrogen fuel, while also returning the aluminum to its pre-processing state, creating a fully circular loop for the material. By treating aluminum scrap with a catalyst and then activating it with water, Found Energy creates 1) energy in the form of hydrogen and steam and 2) alumina trihydrate (ATH), a raw material used to manufacture aluminum.

The process unlocks two major benefits:

• Onsite Energy Generation: Any equipment manufacturer, processor or even materials recovery facility can produce their own on-site, clean hydrogen fuel and steam using energy dense aluminum as a means of energy storage. On-site production helps alleviate the challenge of expensive hydrogen transportation and storage.
• Upcycling: Aluminum alloys otherwise destined for downcycling may be reintroduced into the supply chain as alumina trihydrate that can then be processed into virgin-grade aluminum.

Why does aluminum recovery matter?

Aluminum is already one of the most abundantly recycled metals on the planet and can be recycled many times over. More than other classes of recyclables, there is broad consumer participation in aluminum recovery (by recycling cans), and the prevalence of aluminum as a lightweight structural element in manufactured goods (such as automobiles and appliances) means that ample end-of-life aluminum is processed every year. In fact, 75% of all aluminum ever produced is still in use today. Recycled aluminum only takes ~5% of the energy needed to make new aluminum and reduces the need to mine for bauxite––the most common ore needed for aluminum.

However, while recycling rates for aluminum are generally high, they differ substantially by product, alloy and region, ranging from as low as 20% to as high as 80% for some packaging products. We have learned that in the depths of smelters, aluminum recycling is limited to recovery within established alloy classes (meaning two or more metals or a metal with another non-metallic addition). Given that aluminum is 2x more energy dense than diesel and 5x more energy dense than methanol, there is value in finding opportunities to keep more aluminum in circulation as both a material and energy source.

The main challenge with recovering scrap aluminum is removing tramp elements, which cannot be separated easily by current smelting processes given the high melting temperature of aluminum (660° C). This means contaminated aluminum is often downcycled or ends up in landfills.

Found Energy has discovered a clean energy solution for scrap aluminum, working at the intersection of circular economy principles and the clean energy transition. After building this technology for years during his time at MIT and motivated by his work at NASA, co-founder and CEO Peter Godart brought Found Energy to life in 2022.

Unlike other energy solutions we have seen, Found Energy considered end-of-life from the very beginning of their development process, while using scrap aluminum as a wholly recoverable material source for energy generation plus storage. We fully support the transition to renewable feedstocks for clean energy, while recognizing that the structures required to facilitate clean energy transfers, like solar panels and wind turbines, often utilize extractive or single-use resources that frequently end up in landfill after they are decommissioned. We believe that it is better both economically and ecologically to keep these materials in circulation, and up until recently, had yet to find an energy technology that is inherently circular––inclusive of the materials used in the machinery and the renewable feedstock.

We were impressed with the elegance of a solution that uses a ubiquitous metal as a novel hydrogen source, is highly mobile, and can be distributed. Distributed assets will continue to be a priority in places where heavy materials would otherwise be transported long distances, or where permitting and absence of transmission infrastructure can keep manufacturing operations from scaling up their energy loads as needed.

To create a truly waste-free future for renewable energy, we must support the circularity of materials, alongside clean energy innovation. Reducing carbon through circular processes like material recovery and re-manufacturing is critical to reaching our CO2e mitigation goals and living in an ecosystem that is resilient to further climate shocks. Found Energy is helping pave the path forward.

About Closed Loop Partners

Closed Loop Partners is a leading investment firm advancing the circular economy. The company is comprised of three key business segments: its investment arm, Closed Loop Capital Management; its innovation center, the Center for the Circular Economy; and its operating group, Circular Services. Closed Loop Capital Management manages venture capital, buyout private equity and catalytic private credit investment strategies. The firm’s venture capital group, the Closed Loop Ventures Group, has been investing early-stage capital into companies developing breakthrough solutions for the circular economy since 2016. The Closed Loop Ventures Group’s portfolio includes companies developing leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy. Closed Loop Partners is based in New York City and is a registered B Corp. closedlooppartners.com.

About Found Energy

Found Energy is a Boston-based company building rechargeable aluminum fuel power systems aimed at eliminating carbon emissions from heavy industrial applications ranging from industrial heating (7% of global CO2 emissions) to maritime shipping (3% of global CO2 emissions). Building off technology developed at MIT that enables metallic aluminum to split water, our energy delivery systems safely generate hydrogen and/or industrial heat on-site at >5x the volumetric energy density of liquid hydrogen, >3x that of methanol and ammonia, and >25x that of Li-ion batteries. By integrating storage, transport, and generation into a single package, our technology solves some of the biggest pain points in renewable energy transmission and storage.

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

Over the past few months, the dialogue around sourcing critical minerals for the clean energy transition has reached a fever pitch. In March, we highlighted the three pain points to critical mineral recovery that have been largely absent from discussions: (1) valuable streams of recoverable domestic materials are currently overlooked; (2) existing processing techniques are leaving value on the table; and (3) geographic silos are disadvantaging both suppliers of recovered materials and manufacturers. Today, we’re excited to share how one of the newest portfolio companies of Closed Loop Partners’ Ventures Group, Molg Inc., is moving the needle on critical mineral recovery through advancing design-for-disassembly and deconstruction.

Molg uses robotics and design software to ensure one product’s end is another’s new beginning––enabling a circular manufacturing process. Led by Co-Founders Rob Lawson-Shanks and Mark Lyons, Molg provides a full suite of solutions to improve the disassembly of existing electronic products––from servers to laptops to handheld electronics. We invested in Molg because circularity is at the core of why and how this team operates. They think outside the box of traditional, linear systems, understanding that just because products have always been designed one way, doesn’t mean that process should continue. They are also committed to recapturing as much material as possible––including those previously designed in non-recoverable ways––recognizing that even products lacking optimized designs can be recovered profitably at scale. That’s a circular economy.

• Molg is targeting a historically overlooked source of critical materials in the U.S.: end-of-life electronics. Much of the unused critical materials needed for advancing the clean energy transition are not domestically available at scale in the U.S. and may be sourced from regions challenged with human rights breaches, water scarcity or geopolitics. However, much of the minerals needed already exist in our end-of-life electronics in the U.S.––both in commercial and individual use cases. Molg is committed to capturing and recovering the materials from these sources and, through direct CAD integrations, has a pathway to do so for a diverse variety of products.
• Molg’s robotic disassembly processes maximize the value from recovered materials. Traditional recovery processes prioritize shredding materials and then using chemicals to deconstruct those materials down to monomers, capturing only those worth the highest value, and losing value in the process. By starting with disassembly, Molg can close a tighter loop––keeping still usable materials in their original form factor––and accelerating reuse while ensuring feedstock that can be recycled.
• Molg’s micro-factory approach allows for localized recovery where the materials are most needed––minimizing transport costs that may otherwise challenge recovery economics. End-of-life electronics are heavy and transporting them costs money. By advancing pathways to disassemble electronics on-site through their micro-factories, Molg allows processors to get to single source feedstocks sooner, removing the need for sortation and processing that may have required transport before recycling could take place.

What the Molg team is building is just one part of the broader recovery ecosystem. The involvement of the entire value chain is needed––from aggregators, sorting and recertification infrastructure, metal processors and manufacturers who are prepared to use recycled feedstocks in their processes. This also includes designers prepared to take on the challenge of designing for disassembly, and regulators who view these waste products as a primary source of materials and worthy of being prioritized. There is a promising opportunity ahead for critical minerals, and at Closed Loop Partners, we’ll continue to invest in companies that strive to push circularity for these materials forward.

Interested in learning more about Molg? Tune in to Circularity23 where the team will be pitching for Accelerate for Circularity!

About Closed Loop Partners

Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments. Closed Loop Capital Management manages venture capital, growth equity, buyout and catalytic private credit investment strategies on behalf of global corporations, financial institutions and family offices. The Center for the Circular Economy unites competitors and partners to tackle complex material challenges and implement systemic change to advance circularity. Circular Services employs innovative technology within reuse, recycling, remanufacturing and re-commerce solutions to improve regional economic and environmental outcomes, and build resilient systems that keep food & organics, textiles, electronics, packaging and more, in circulation and out of landfill or the natural environment. Closed Loop Partners is based in New York City and is a registered B Corp. For more information, please visit www.closedlooppartners.com.

About Closed Loop Ventures Group

Closed Loop Partners’ venture capital arm launched in 2017 with one of the first venture funds dedicated solely to investing in early-stage companies developing breakthrough solutions for the circular economy. The Closed Loop Ventures Group targets leading innovations in material science, robotics, agritech, sustainable consumer products and advanced technologies that further the circular economy.

The Closed Loop Venture Fund II builds on the venture capital group’s first fund’s strategy, supported by an existing portfolio with strong financial performance, coupled with robust environmental and social impact. HomeBiogas, one of the early investments of the Closed Loop Venture Fund I is a leader in developing biogas systems that transform organic waste into clean energy and bio-fertilizer. They announced their $94 million initial public offering (IPO) in Israel in 2021, accelerating the company’s growth into additional markets, including North America. To date, the company has sold over 10,000 systems in more than 100 countries. Algramo, another investment of Fund I, developed a reuse system powered by vending machines that dispense household products into smart reusable packaging. With the investment and support of Closed Loop Partners, the Chile-based company expanded into North America, now piloting their reuse systems in New York City, while also having piloted with leading brands such as Walmart and Unilever in other geographies.

About Molg Inc.

Molg tackles the growing e-waste problem by making manufacturing circular. The company’s robotic microfactory can autonomously disassemble and reassemble complex electronic products like laptop PCs, servers, and handheld electronics, helping keep more valuable materials within supply chains. Molg partners with leading electronics manufacturers to design the next generation of products with reuse in mind, ensuring that one product’s end is another’s beginning. To learn more, visit molg.ai.

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

The chip shortages in 2020-21 increased awareness that, from steel and aluminum to rare earth minerals, the U.S. market has far fewer processed materials available than we need to meet the growing demand for electric vehicles, battery storage and transmission lines needed to maintain a 1.5-degree future. And the push to secure access to a finite, price-competitive global materials supply was only heightened by the Inflation Reduction Act’s domestic sourcing requirements for assets like electric vehicle batteries.

This growing need has prompted efforts to fund new extraction domestically and to secure feedstock from international regions––often with challenging environmental and human rights records but higher volumes of available supply. Onshoring and near-shoring of key aspects of manufacturing––once seen as cost prohibitive––are now seen as cost-of-doing-business to access the U.S. market. Less prevalent is the consideration of how to create more sustainable domestic sourcing channels for the critical minerals needed to support the manufacturing being announced in the U.S.

That is not to say that “recycling” is absent from the conversation. Indeed, a handful of large battery recycling companies have garnered significant attention and capital––the most recent being a $2B conditional loan commitment from the Department of Energy Loan Programs Office to Redwood Materials. However, much of what is being invested in today relies upon energy- or chemical-intensive processes that prioritize recovery of the highest-value-by-dollar-amount materials. The result is that other materials––steel, aluminum, copper––can be left behind in the process. Those materials that are recovered––like lithium, cobalt, nickel––may end up requiring significant re-processing to be re-usable in a new battery.

It is important to advance the “large loop” circularity narrative of recycling materials all the way back to their base, raw material form; however, enabling smaller, cost-competitive loops alongside this can move the needle on material availability in the near-term. These include optimally leveraging used materials and minimizing processing costs to get these materials back to the manufacturing lines where they are needed. This is essential as we redefine our hierarchy of mineral recovery––from one that leads with extraction to one that leads with recovery as the primary source for materials.

At Closed Loop Partners, we see significant opportunity to elevate recovery as a core part of the critical minerals conversation. Namely that (1) valuable streams of recoverable domestic materials are currently overlooked; (2) existing processing techniques are leaving value on the table; and (3) geographic silos are disadvantaging both suppliers of recovered materials and manufacturers.

• Valuable streams of recoverable domestic materials are being overlooked

It is no secret that there are major concerns about the near-term availability of end-of-life batteries to feed existing recycling lines. At the same time, sourcing newly mined materials for electric vehicles has become a challenge for many automakers, and recent announcements demonstrate a push toward net new, domestic extraction for materials like cobalt.

There are diverse used material streams that can serve as the feedstock needed by new battery manufacturers. This includes everything from scrap created during the initial battery manufacturing process to end-of-life electronic waste and, even, recovery from seawater, clay or waste streams from other manufacturing processes.

Innovation that takes the country’s natural endowments into account is better positioned to move the needle on critical minerals access. These include not just minerals under the ground, but also those above it––being scrapped off the line, waiting in line at an end-of-life electronics processor, or even in our junk drawers at home. And there is an investment opportunity in recovery technologies that view those waste streams not as liabilities but as feedstocks for the energy transition.

• Existing processing techniques are leaving value on the table

While current methods for battery recycling, such as pyro and hydrometallurgy, are well suited to recover cathode materials––lithium, cobalt, nickel and manganese––there is still opportunity to innovate and improve recovery mechanisms, ideally that preserve and catalyze reuse of anode materials or casings––graphite, iron, copper, steel, aluminum––many of which may not be fully recaptured in processing.

We know it is possible to extract more value from existing waste streams to loop materials back into supply chains––and de-manufacturing is a core enabler of that. Instead of starting a recovery process by shredding the existing product, we can prioritize deconstruction. This allows for the preservation of materials in a usable form rather than a return to the base elements (for example, direct cathode-to-cathode recovery, versus a reversal to lithium carbonate that needs to be reprocessed to be usable in a battery again). Not only does this require fewer steps for reintegration, but it may also be less energy intensive––and still gets domestic materials back to the manufacturers who need them most.

Similarly, existing operations in traditional industries, such as mining and oil and gas, have room for incremental recovery of materials that are currently viewed as waste products. Mine tailings, for example, are a natural waste product of the mining process and there are thousands of tailing dams––both active and inactive––around the world. There is an opportunity for innovation that focuses on reprocessing and recovering the critical minerals still present in those tailing dams. These “waste” streams from traditional extraction processes can become valuable sources for materials needed in battery manufacturing. They can also have secondary benefits, such as improved water quality, revitalization of biodiversity loss and more.

• Geographic silos are disadvantaging both suppliers of recovered materials and manufacturers

North American electric vehicle battery manufacturing has continued to accelerate, with nearly 1,000 GWh/year of manufacturing capacity expected to be online by 2030. The manufacturing footprint is broad––stretching from California to Eastern Canada, Texas to Florida to Massachusetts. Unfortunately, the planned capacity for critical minerals recovery is less distributed.

As operators of the largest private recycling company in North America, Closed Loop Partners knows well that the most important aspect of profitability in waste recovery is the ability to optimize the full ecosystem processing cost––and transportation is a significant part of that equation especially when an end-of-life product is heavy. There may be opportunities for more proximate, localized or modular processing, as well as more structured recovery infrastructure.

Putting Recovery at the Center of the Debate

We have the opportunity today to build the new supply chain for electric vehicle battery manufacturing with circular economy and recovery principles embedded from the beginning. Prioritizing recovery over additional mineral extraction allows us to localize supply chains and feed new capacity for domestic manufacturing of semiconductors and batteries for electric vehicles. It hedges over-exposure to finite supplies of raw materials that have, historically, only been accessible in specific, higher risk geographies around the world and, in doing so, creates a hedge against pricing volatility in those markets. If done well, it does all of that at a lower cost than full lifecycle mineral extraction and with a lower emissions footprint than legacy recycling infrastructure while diverting high value waste from landfill. It builds long-term resilience––all while driving transparency, connectivity and agility into our domestic processing capacity for critical minerals.

Core to our investment approach at Closed Loop Partners is a belief in the power of the ecosystem. The circular economy, by definition, requires collaboration across stakeholders. It requires a shared understanding of fully loaded costs to get something back in circulation and a commitment to make it work in the least emissions-intensive, most cost-efficient way possible––not just for a single entity in the value chain but for all of them. Sourcing critical minerals is no different. Now is the time for a new wave of collaborative innovation that puts novel recovery front and center in our journey toward sustainable, cost competitive, low carbon and low waste materials for the energy transition.

Special thanks to the GreenBiz23 team and my fellow panelists from the Future Proofing Critical Minerals Supply panel, to my Closed Loop Partners team––especially Jessica Long, Danielle Joseph, Andrew McColm, and Anne-Marie Kaluz––and to the countless corporate partners, investors, and start-ups innovating across this ecosystem that have already pushed my thinking here. I look forward to many more discussions on the topic!

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

New York, NY, Feb 14 – Hyran Technologies (Hyran), a collaborative, AI-driven fashion supply chain planning and production platform, announces investment from Closed Loop Partners’ Ventures Group. Through their platform, Hyran aims to optimize product development and manufacturing while reducing excess production and textile waste. The company envisions a future that disrupts traditional methods for inventory planning and enables collaboration between factories, suppliers and brands with value chain alignment and shorter design-to-shelf cycles.

Overproduction is one of the primary sources of waste in the fashion industry today, as waste has historically been seen as a cost of doing business in a globalized supply chain with strong competitive pressures that strained brand and supplier relationships. Orders are often overestimated and misaligned with demand signals, resulting in large volumes of overproduced apparel that are ultimately sent to landfill. Not only does this exacerbate the global waste crisis, but it also results in economic challenges for both fashion brands and suppliers. Rapid trend changes, increased geopolitical risk and pressures to adopt more sustainable practices have increased risk for those who continue to operate with legacy supply chain infrastructure.

Hyran’s platform intends to leverage real-time upstream and downstream supply chain data, providing brands and suppliers with visibility into raw material availability and manufacturing capacity, and connecting them with point-of-sale demand signal. This aims to better match production with customer demand by using artificial intelligence and machine learning techniques to generate optimal, real-time production plans spanning multiple tiers in the supply chain. Led by co-founders Ahmed Zaidi, University of Cambridge Computer Science PhD with decades’-long family business in apparel manufacturing, and Jordan Zhang, software engineer who built robust machine learning platforms that scaled within leading tech ecosystems, Hyran is bringing together the best of fashion and computer science to build a solution for the industry and for the planet. Ultimately, they aim to help brands build data-driven supply chains, minimize unsold inventory and reduce waste.

“The fashion industry accounts for an estimated 8-10% of global greenhouse gas emissions and is under increasing pressure to address its contribution to global waste,” said Caroline Brown, Managing Director at Closed Loop Partners and former CEO of global fashion houses. “In the face of a great need for new technologies to support a sustainable transition in the retail supply chain, the entrepreneurs at Hyran are envisioning the future of production.”

“Hyran Technologies’ vision is to reduce waste and excess inventory in the fashion industry by enabling speed and flexibility in the supply chain, rather than by trying to predict demand months ahead of time, as is standard practice now,” said Ahmed Zaidi, Co-Founder and CEO of Hyran Technologies. “By breaking down historical silos and strengthening connections between manufacturers and brands, we aim to tackle fashion’s overproduction problem with a fundamentally new approach. Our team of fashion industry and AI experts looks forward to working with manufacturers and brands across the industry, as we build the more transparent, connected, agile fashion supply chains of the future.”

“To build efficiencies and reduce waste in supply chains, we must first build connectivity across shared interests, and Hyran’s platform aims to make this possible,” said Danielle Joseph, Managing Director and Head of the Ventures Group at Closed Loop Partners. “Hyran’s focus on breaking down long-standing silos in the fashion supply chain can enable collaboration and unlock shared economic benefits, ultimately aiming to minimize waste generated through the supply chain. We look forward to working with the team to scale solutions advancing a waste-free future for the fashion industry.”

As Hyran takes flight in the coming months, they are seeking partnerships with manufacturers, brands and retailers with the interest and ability to explore data-driven supply chain management within their operations. Hyran has now begun discussions with brands and manufacturers to find partners keen to integrate these capabilities into their supply chains.

About Hyran Technologies

Hyran aims to help fashion brands minimize unsold inventory and waste and maximize profit by increasing the speed and flexibility of the supply chain. Emboldened through the challenges of a decades’-long family business in apparel manufacturing, combined with deep expertise in AI, the Hyran team brings novel technology to antiquated systems––helping fashion brands and suppliers collaborate toward a more agile, connected and waste-free future for fashion. This supplier-led, AI-optimized planning approach helps meet consumer demand while minimizing excess production and waste, and the costs that go with it, throughout the supply chain. Better for people, better for brands, better for the planet.

If you’re a supplier looking to differentiate your value proposition and better serve brands in your network, or a brand trying to get consumers the products they want when they want them, reach out here to explore if you could be a strong candidate for early product discussions with Hyran. 

About Closed Loop Partners 

Closed Loop Partners is at the forefront of building the circular economy. The company is comprised of three key business segments: an investment firm, innovation center and operating group. The investment firm invests in venture, growth equity, buyout and catalytic private credit strategies on behalf of global institutions, corporations and family offices. The innovation center, the Center for the Circular Economy, unites competitors and partners to tackle complex material challenges and implement systemic change to advance circularity. The operating group, Circular Services, has twelve recycling facilities in operation today, and provides holistic, circular materials management to close the loop on valuable materials for municipalities and businesses throughout the United States. Employing innovative technology within reuse, recycling, remanufacturing and re-commerce solutions, Circular Services improves regional economic and environmental outcomes by building resilient systems to keep food & organics, textiles, electronics, packaging and more, in circulation and out of landfill or the natural environment.

Closed Loop Partners is based in New York City and is a registered B Corp. For more information, please visit www.closedlooppartners.com.

About the Closed Loop Ventures Group at Closed Loop Partners 

Closed Loop Partners’ venture capital arm launched in 2017 with one of the first venture funds dedicated solely to investing in early-stage companies developing breakthrough solutions for the circular economy. The Closed Loop Ventures Group targets leading innovations in material science, robotics, agri-tech, sustainable consumer products and advanced technologies that further the circular economy. The Closed Loop Venture Fund II builds on the venture capital group’s first fund’s strategy, supported by an existing portfolio with strong financial performance, coupled with robust environmental and social impact. To learn more about the Closed Loop Ventures Group, visit the Closed Loop Partners’ website.

Disclaimer:

This publication is for informational purposes only, and nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy any interest in any investment vehicle managed by Closed Loop Capital Management or any company in which Closed Loop Capital Management or its affiliates have invested. An offer or solicitation will be made only through a final private placement memorandum, subscription agreement and other related documents with respect to a particular investment opportunity and will be subject to the terms and conditions contained in such documents, including the qualifications necessary to become an investor. Closed Loop Capital Management does not utilize its website to provide investment or other advice, and nothing contained herein constitutes a comprehensive or complete statement of the matters discussed or the law relating thereto. Information provided reflects Closed Loop Capital Management’s views as of a particular time and are subject to change without notice. You should obtain relevant and specific professional advice before making any investment decision. Certain information on this Website may contain forward-looking statements, which are subject to risks and uncertainties and speak only as of the date on which they are made. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. Closed Loop Capital Management undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Past performance is not indicative of future results; no representation is being made that any investment or transaction will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

The company is at the center of one of today’s most pressing opportunities, as supply chain bottlenecks and logistics challenges elevate the need for streamlined, efficient movement of goods into and out of our homes and businesses. Today’s complex logistics system is coupled with a manufacturing system weighed down by overproduction, opacity and waste. The fashion industry alone has an average 40%[1] overproduction rate. This overloads production facilities and raises costs for brands as they hold unsold inventory for long periods. Eventually, most surplus products are landfilled or destroyed, wasting valuable resources. While legacy supply chains went unquestioned for many decades, their inefficiency has been apparent amidst the bottlenecks of the last two years.

The COVID pandemic accelerated the growth of e-commerce, and in its wake, return rates soared to over 20%[2]. Brittle retail supply chains bogged down by overproduction were unable to handle the spike. Today, if a garment is returned at all, it takes weeks or months until it is available for sale again––if it ever makes it back on shelf at all. This means that unsold and returned inventory can sit in a box for half of the apparel markdown cycle, and when it finally goes back to the retailer for sale, it is often already shopworn and damaged. This says nothing for the excess carbon emissions associated with the transport of that good through the network as returns make their way back to central distribution hubs.

The retail system operates as an omni-channel network and its weakness lies in its silos. If 100 pairs of jeans are shipped, they travel in one direction before branching into different sales channels: wholesale, retailer and e-commerce. These silos are often disconnected and managed by different parties. When items across these three channels are unsold or returned, they end up in consolidation centers mixed with different products. Brands have little to no data on that inventory. Without the backend infrastructure to connect these three channels and consolidate information, a holistic view of managed inventory is impossible––making it similarly challenging to reallocate products into the optimal sales channels. Inventory ends up in holding patterns instead of getting where it needs to go.

Networks, technology and infrastructure need to change quickly, but it’s never been more expensive to do so. Industry is looking for ways to use existing infrastructure more efficiently. That’s where Fillogic comes in.

Breaking Down Silos

Fillogic recognizes that if the same product (for example, a pair of jeans) is allocated across a brand’s wholesale, retail and e-commerce channels, then the three channels should be connected on the backend. That way, outbound, unsold, returned or lightly worn inventory can be reallocated to a channel where it will most likely sell, helping brands reach business goals and meet customers where they are while minimizing inventory idling in warehouses or backed up in transit.

Their technology intercepts unsold garments at the middle mile and redirects them across the appropriate channel. This reduces the need for retailers to markdown in stores to move inventory. Instead, they can resell these products––which are often part of the nearly 40% of inventory that’s sold at discount––at full price or at a slight markup, through a different channel or in a different store, and more quickly than should these items have languished in the existing logistics infrastructure.

To add speed and efficiency, Fillogic operates within existing spaces close to retailers and customers. They repurpose shopping malls and under-utilized retail spaces into local market logistics hubs that connect the retail network. They see opportunity in forgotten spaces: the truck tunnels and elbow joints––bringing value back into overlooked assets rather than building more infrastructure. They optimize existing inventory, both outgoing and returning, to unlock new revenue streams for brands, enable better margins on the sale of unsold items and the resale of returned goods, advancing reuse and meeting customer demand in the process. Ultimately, this keeps valuable products that otherwise could have gone to landfill in the hands of consumers.

Paving the Path for Growth

Closed Loop Partners’ Ventures Group invested in Fillogic in early 2022, recognizing the need for supply chain transparency to increase utilization of goods and keep those materials in circulation. According to the Circularity Gap report, 70% of greenhouse gas emissions are related to material production and use, bringing the circular economy, and increasing utilization rates of manufactured products to the center of climate conversations. Advancing more circular supply chains plays a key role in increasing resource efficiency and resiliency to bring products to market while limiting waste.

As more retailers cross geographic boundaries, Fillogic faces growth opportunities in North America and beyond. Bill Thayer, Founder and CEO of Fillogic, is developing retail partnerships alongside a close-knit team, many of whom have had long careers in logistics, store operations, ecommerce and technology. In Bill’s words, “[Other players have] spent hundreds of billions of dollars building logistic networks. At Fillogic, we feel that network already exists. By connecting [those sites] with technology, operations and infrastructure, we can use under-utilized infrastructure more efficiently…operating as nodes on existing supply chains and making that middle mile more efficient.” Fillogic’s technology platform connects these heavily siloed, disparate systems, a hub network that uses underutilized spaces, and a delivery marketplace that connects those two assets. Together, all three assets create an affordable, efficient, cost-effective and sustainable network using existing infrastructure where people live, buy new clothes and make returns.

Ultimately, Fillogic is helping to increase the resale and recapture of consumer goods. By doing this, Fillogic is optimizing existing processes––reducing costs, timelines and the percentage of excess or unsold inventory. This is a win for both financial officers and sustainability managers––and that’s the circular economy.

[1] https://www.voguebusiness.com/sustainability/fashion-waste-problem-fabrics-deadstock-pashko-burberry-reformation

[2] https://www.cnbc.com/2022/01/25/retailers-average-return-rate-jumps-to-16point6percent-as-online-sales-grow-.html

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