Climate Series

Why Water Needs To Be Part of Circular Economy Investments

By Closed Loop Ventures Group

October 13, 2022

Amidst a climate crisis and high wastewater treatment costs, water reuse technologies are key to keeping one of the most valuable commodities in circulation

The circular economy is the most significant restructuring of global commerce and supply chains since the industrial revolution. The goal? To produce, consume and manage resources so that valuable materials do not go to waste, and damage communities and ecosystems. Since its founding, Closed Loop Partners has made progress to reach this goal across plastics & packaging, organics, textiles and electronics. However, driven by a range of compounding factors, we are at a point where we need to go deeper, and expand this list of materials to include one that is arguably one of the most valuable: water.

Water is fundamental not only in terms of consumption––human beings cannot survive more than three days without drinking water––but clean water is also essential to production. Most of the groundwater we pump is used by farmers to irrigate agricultural land and industries to manufacture the goods we consume. But with the rates of production and consumption fueling today’s linear economy, wastewater treatment is more important than ever. Groundwater is pumped out of aquifers faster than it can be naturally replenished. Increasing frequency and severity of extreme weather events also mean that long periods of drought are exacerbating already diminishing amounts of water, while periods of excessive rainfall are overwhelming the absorption capacity of soil and water treatment infrastructure, causing overflows in sewage and stormwater systems and massive amounts of consequent damage to ecosystems and infrastructure.

Insufficient supplies of water could reduce production capacity for businesses by 44%, disrupting the availability of essential resources like energy, clothing and food and resulting in millions of dollars’ worth of stranded assets. Earlier this year, droughts in Mexico drove a shortage of chili peppers, threatening the production of Sriracha around the world. Sriracha could just be the tip of the iceberg. Droughts are also exacerbating shortages of staple crops like cotton, wheat and corn, which could drive price increases. On the other hand, increasingly frequent deluges of water threaten the systems our societies run on. For example, the recent floods in Pakistan have already resulted in damages reportedly worth over US$10 billion, affecting millions of people and breaking and overwhelming key infrastructure. Overall, according to a CDP report, 69% of publicly listed companies around the world stated that they are exposed to water risks that could generate a substantive change in their business, with the potential value at risk topping out at US$225 billion.

Consumption patterns coupled with climate change are stressing our water sources and systems, threatening the continuity of those very consumption patterns. Amidst this, the diamond-water paradox is glaring––the availability of water directly affects the longevity and quality of our life yet has been one of the most mispriced assets. While water’s historical undervaluation has made investing in it notoriously difficult, we are now seeing market signals that water pricing and value are changing, and this is creating an opportunity for investors.

A sea change in water investing

Wastewater treatment has largely improved over the years, driving up water-associated costs in much of the U.S. and Europe. In New York, alone, the price of water and sewer have both increased nearly 5% YoY, and increased over 26% over the last 10 years (over 2x the rate of inflation).

Source: New York City Water Board Rate History Data

The cost to transport heavy wastewater to water treatment facilities, and then transport the leftover sludge to landfill, ensures that operational costs stay high. Sending wastewater sludge to landfills also opens up new environmental and social risks––unleashing a slew of hormones and chemicals from agricultural and industrial waste into the soil. More capacity is needed at treatment plants, but building new water infrastructure requires significant costs: land, new pipes and labor. As it stands, it is more expensive for customers to get rid of water than to buy it. In fact, for anyone hooked up to a municipal water treatment plant, that is often the case. Water disposal in New York City is 159% more expensive than supply (and has been for the last 30 years).

Despite rising costs to treat water, businesses are faced with numerous pressures to keep used water in circulation. Growing policy––including the EPA’s new regulation that holds polluters accountable for cleaning up PFAS contamination, as well as a new plan that reduces water releases from Lake Powell––is raising accountability standards. Industry collaborations––such as Ceres’ Valuing Water Finance Initiative (VWFI), which engages 72 companies with a high water footprint to value and act on water as a financial risk and drive the necessary large-scale change to better protect water systems, and the UN Water Resilience Coalition, a CEO-led initiative committed to reducing water stress by 2050––are driving broader market attention. Water-related public health crises around the U.S.––in Jackson, Las Vegas, Baltimore, Flint and New York––are pushing additional attention onto expanding potable water sources and addressing outdated water infrastructure. With all these forces at play for industries that output water, investing in water management can reduce waste management costs, and provide a consistent and reliable water input stream. If companies can recycle water back into the system and reuse it as an input, they can reduce costs and relieve municipalities of capacity challenges.

A groundswell of new innovations

Across the board, alternative water sources are increasingly interesting––and importantly, increasingly viable from an investment perspective. This includes on-site generation of water, such as SOURCE Water’s technology to produce potable water from sunlight and surrounding air. This also includes on-site filtration technologies that could create potable, grey or functional water, depending on the end user.

Most recently, Closed Loop Partners’ Ventures Group invested in Accelerated Filtration, a water filtration company based in Midland, Michigan that develops industrial water filtration technologies. The company’s technology helps address the pain point of industrial customers, delivering packaged turn-key filtration solutions for the consistent removal of fine suspended solids in variable water streams.

As investable opportunities in the water space continue to grow, Closed Loop Partners’ Ventures Group continues to watch investment opportunities in water filtration technologies that could provide a strong return on investment to commercial and industrial customers, and allow for water reuse. As water becomes increasingly scarce and increasingly valuable, we look forward to seeing the evolution of the space, and championing the integration of water as one of the most important materials to keep within a circular economy.

Interested in learning more about work to keep key materials in circulation? Visit Closed Loop Partners’ website here.

Closed Loop Partners’ Venture Capital Group Raises $50+ Million Fund II to Scale Breakthrough Circular Economy Solutions

By Closed Loop Partners

December 13, 2021

Fund II surpasses fundraising targets & extends Closed Loop Partners’ first venture fund strategy across sectors to build circular supply chains

NEW YORK, Dec. 13, 2021 — Closed Loop Partners’ venture capital group––the Closed Loop Ventures Group––announced the successful close of its second fund, surpassing its $50 million target to scale breakthrough circular economy solutions across plastics & packaging, fashion, food & agriculture, and supply chain technology. The firm continues its pioneering position as a dedicated circular economy-focused capital provider, investing in sustainable and profitable solutions that reduce waste, increase operational and material efficiency, and protect the planet.

Closed Loop Partners’ second venture capital fund, Closed Loop Venture Fund II, is driven by the success of its Fund I. The strategy of both funds capitalizes on the growing need to shift away from inefficient, linear and extractive supply chains and toward healthier, waste-free circular systems. The Closed Loop Venture Fund II is strategically positioned within the firm’s broader ecosystem that includes growth equity, private equity and project-based finance, as well as the Center for the Circular Economy. The Ventures Group benefits from a broad range of investors including multinational corporations like Microsoft and GS Group, foundations like the Autodesk Foundation, and single and multi-family offices from across the United States, Asia and Israel.

“At Microsoft, we’re advancing a more sustainable and resilient way of producing and consuming products and services. The breakthrough solutions that the Closed Loop Ventures Group invests in help pave the way toward a more circular future, one that aligns with our vision of a zero waste world,” says Brandon Middaugh of Microsoft’s Climate Innovation Fund, an investor in Closed Loop Partners’ funds. “Our investment in the Ventures Group’s Fund II is a key part of our efforts toward our 2030 zero waste goals, driven by the innovators and emerging companies that help make this possible.”

“Venture capital plays a key role in accelerating the circular economy, seeding the next generation of solutions to overcome legacy take-make-waste systems, encourage innovation and help transformative companies scale,” says Taehong Huh, Managing Director of GS Futures, corporate venture arm of GS Group of Korea. “The Closed Loop Ventures Group is blazing a trail for some of the most innovative circular solutions in the market today, and we are proud to be investors in the Closed Loop Venture Fund II––supporting companies that advance the circular shift of our economic system.”

“The need for solutions that advance the circular economy is coming into focus, and investment is key to scaling their impact. Closed Loop Partners’ venture capital team continues to be at the forefront of this work, supporting founders and businesses that are transforming our systems and supply chains for the better,” says Jennifer Kenning, CEO and Co-founder of Align Impact. “Our partnership with the Closed Loop Ventures Group is mission-critical to our work, advancing investments that have massive positive outcomes for people and our planet.”

“Our support of Closed Loop Partners’ venture funds has been a key part of our work to transition our markets to a full circular economy model by investing in the technologies and solutions that overcome barriers to change,” says Joe Speicher, Executive Director of the Autodesk Foundation and Head of Sustainability at Autodesk. As the philanthropic arm of Autodesk Inc., the Autodesk Foundation was an investor in Closed Loop Partners’ first and second venture funds. “We are proud to have been an early investor of the Closed Loop Ventures Group and are doubling down on our commitment to help scale the emerging design and manufacturing approaches that make end to end circularity possible.”

Led by Danielle Joseph, Managing Director at Closed Loop Partners, Closed Loop Ventures Group demonstrates that builder capital with a hands-on, active approach to building the Circular Economy is what many of the most ambitious entrepreneurs are seeking. The dedicated team brings a combined skill set of entrepreneurial, operating and investing expertise. “Closed Loop Ventures Group enables Closed Loop Partners to activate the most innovative solutions emerging in the circular economy and provide those solutions the full support of the Closed Loop Partners network,” says Ron Gonen, Founder and CEO of Closed Loop Partners.

“The Closed Loop Partners team is unique in the venture capital space, proactively bringing to the table their extensive operating experience, network, and strategic expertise on the circular economy,” says Rich Mokuolu, Co-founder & CEO of Partsimony. “We are proud to be among the first portfolio companies of Closed Loop Venture Fund II and we look forward to the continued growth spurred by their investment, as we expand Partsimony’s reach to build more intelligent, resilient, and local supply chains.”

To date, the Closed Loop Venture Fund II has invested in solutions including Partsimony, ucrop.it and dimpora––investments that span supply chain technology, food & agriculture and fashion. Partsimony‘s SaaS network unifies disparate data to help product designers manufacture more locally and with more sustainable materials. ucrop.it operates a collaborative traceability platform that connects farmers to stakeholders across the agriculture value chain, incentivizing supply chain transparency, best agricultural practices and greater value sharing to advance sustainable agriculture on a global scale. dimpora develops sustainable and PFC-free non-harmful membranes to waterproof clothing, to reduce waste and chemicals from apparel production.

“The successful raise of Closed Loop Partners’ second venture fund signals the increasing understanding that circular supply chains represent the future of industry and materials. We are seeing more founders building businesses in the circular economy, and a growing need for early-stage capital,” says Danielle Joseph, Managing Director of the Closed Loop Ventures Group at Closed Loop Partners. “We look forward to collaborating with the broader venture capital community, fostering transparency and open insight sharing to advance breakthrough innovations.”

Across its investments, the Closed Loop Ventures Group sees transparency and digitization as critical tools in building the supply chains of the future, and will continue to support cutting-edge innovations that reimagine and redesign current systems, driven by data and scientific input. They are focused on furthering localized and distributed manufacturing to build resiliency, and accelerating recovery & reuse to reduce a reliance on volatile commodity prices tied to limited virgin resources. Building on its robust thought leadership, the venture capital team at Closed Loop Partners continues to develop its theses on where they want to see additional investment activity and other smart investors participating in the space, including around markets that are misunderstood in traditional venture capital investing––such as biopolymers as plastic alternatives and evolving molecular recycling technologies.

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, 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. Learn more about the Closed Loop Ventures Group here.

About Closed Loop Partners
Closed Loop Partners is a New York-based investment firm comprised of venture capital, growth equity, private equity, project-based finance, and an innovation center focused on building the circular economy. Investors include many of the world’s largest consumer goods companies and family offices interested in investments that provide strong financial returns and tangible impact. Learn more at www.closedlooppartners.com.

Autodesk, the Autodesk logo, and Autodesk Foundation are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. Autodesk reserves the right to alter product and services offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.

Circular Supply Chains Need Intelligent and Distributed Manufacturer Networks

By Danielle Joseph

November 22, 2021

Gone are the fleeting days of component parts showing up just in time for production from an unknown combination of suppliers. After pioneering the just-in-time supply chain, Toyota responded to the Fukushima disaster by stockpiling critical components — such as semiconductor chips — with enough supply for months at a time. That was a decade ago.

Now, Toyota may be doing better than its competitors while a global chip shortage costs the automotive industry upwards of $110 billion in car sales. However, more industries are recognizing the limitations of a just-in-time strategy applied broadly to every component part and raw material across globalized supply chains.

As unforeseen disruptions increase — whether the COVID-19 pandemic or climate-related natural disasters — and as more products demand critical, limited resources, intense fluctuations in demand, labor shortages, inadequate equipment and physically damaged facilities contribute to an instability of manufacturing capacity. Underdeveloped manufacturing capacity leaves industries exposed to risk, price volatility, market dislocations and lost value.

Unfortunately, first-mile stakeholders in the supply chain are often most at risk of losing value in the face of disruptions. For example, demand for lumber sharply increased when homeowners sought to remodel and build new houses during the COVID-19 pandemic. Meanwhile, U.S. sawmills (largely Canadian-owned) had to shut down over 40 percent of their capacity during this same time period. Yet forestry growers — producing timber that becomes lumber — suffered in a buyer’s market and saw prices for timber remain low: When adjusted for inflation, timber prices are at their lowest over the past 50 years.

While the market has since recalibrated and the lumber bubble may be just one instance in which supply was ill-prepared to manage demand, the whole of today’s U.S. manufacturing is just 11 percent of GDP — near its lowest in over 70 years. Underdeveloped manufacturing capabilities from generations of regional specialization pose significant risk to meeting demand and climate goals. U.S. Secretary of Energy, Jennifer Granholm recently wrote: “We have weak domestic supply chains for technologies critical to our economic and national security… China is the only country with control over every tier of the supply chain for critical materials like the lithium we need for vehicle batteries, including 80 percent of raw material refining capacity… Other countries, especially China, produced 85 percent of transformers for our electric grid — while America still produces almost none.”

The automotive, energy and tech industries must contend with critical rare earth metal supply chains needed for everything from batteries to solar panels. These products are reliant on limited resources, often harmfully extracted from biodiverse regions fraught with social inequities. The ability to (re)manufacture and recycle these raw materials efficiently and locally is critical to business continuity in an increasingly resource-constrained world.

The time is now: Advances in automation and machine learning, rising pay globally and increasing risk from supply chain disruptions suggest that onshoring manufacturing is increasingly attractive to many product producers. Against this backdrop, what do resilient and circular supply chains look like? Supply chain managers are finding the right instances to:

  1. Create visibility into manufacturing supply chains to better prepare for and manage risk
  2. Produce with distributed, more regionally resilient supply networks
  3. Source feedstocks locally and from more available recycled content

Smart entrepreneurs are seizing the moment to build more resilient, circular supply chains. Partsimony, a company dedicated to building cognitive supply chains and increasing efficiencies, closed a $2 million seed round led by Closed Loop Partners’ Ventures Group with participation from Contour Ventures, Urban Us and other top institutional and angel investors. Partsimony applies machine learning to build a predictive and dynamic manufacturing market network, helping solve for the manufacturer discovery and price quoting process for complex hardware companies — which can be an opaque, manual and excel-based process today for both the hardware company and the manufacturer. Partsimony provides hardware companies with a better, real-time understanding of their manufacturers’ capabilities and pricing, helping them iterate and commercialize products faster and with increasingly distributed supply chains. Partsimony also supports the manufacturer by serving as a qualified lead generation platform to acquire customers whose products match technical capacity (production methods and volumes) and help manufacturers maximize margin.

Partsimony’s platform demonstrates how increased transparency and intelligence across supply chains can ultimately benefit business, people and the planet through three core activities:

Digitizing supplier relationships creates transparency

When supply chain disruptions happen, hardware companies need better control over their production and transparency into their suppliers to adapt quickly. Case in point: Toyota knew to safeguard its chip supply because of the company’s “no black box” approach, only adopting technologies it truly understands, down to the gases and the metals of each component. This supply chain visibility — down to the material level — is a critical driver of resiliency, and we invested in Partsimony because its platform helps enable this kind of visibility.

Distributed manufacturing supply chains shorten lead times

Adopting a distributed manufacturer network of on-shore manufacturing within existing off-shore manufacturing supply chain networks is increasingly becoming a competitive advantage. This is not about an America-first dogma; on-shoring of manufacturing helps regionalize the production for any supply chain. Doing so shortens lead times and helps diversify the supplier base. Distributed manufacturer networks are primarily about developing resilient and sustainable business practices, with the added benefit of reducing emissions associated with the international transportation of raw materials and finished component parts. Working with customers such as Stanley Black & Decker, Partsimony has demonstrated 96 percent cost reductions and 83 percent lead time reductions.

Data-driven recommendations can leverage engineering insights and incentivize use of recycled content

Design and material selection have an outsized impact on the circular impact of products. A poorly designed product may choose hard-to-recycle and fossil fuel-based materials in formats where the materials are intermingled and difficult to separate for recovery — a product William McDonough would call a “monstrous hybrid.” Now, Partsimony’s AI supports hardware companies in testing novel, more sustainable materials and alternative manufacturing methods in products from the very first point of design. Engineers upload their digital designs or CAD files to the platform, and Partsimony is building its AI to read the structural requirements of the component part and potentially recommend materials from recycled content, as well as alternative manufacturing solutions.

Digital visibility, distributed manufacturer networks and data-driven infrastructures are the circular antidotes to today’s analog and fragile supply chains. The COVID-19 pandemic is not the first black-swan event within this century, and it most certainly will not be the last. Climate-related disasters will continue to upset business-as-usual, just-in-time production and manufacturing. If we want to design more circular products with more socially equitable access, we must also capitalize on the supply chain disruptions in front of us to redesign our supply chain to be more resilient and more circular.

 

Originally published in GreenBiz

Partsimony Closes $2M Seed Round to Help Organizations Build Intelligent Manufacturing Supply Chains

By

October 28, 2021

Closed Loop Partners, a circular economy-focused investment firm, leads the round

New York, NY – 8:00 AM EST, October 28, 2021 – Partsimony is pleased to announce the successful close of a $2M Seed round, led by Closed Loop Partners’ Ventures Group with participation from Contour Ventures, Urban Us, and other top institutional and angel investors. Partsimony is a SaaS network that unifies disparate data from multiple sources to more efficiently manage hardware from prototype through production, bringing superior intelligence to manufacturing supply chains.

Today, hardware companies are dealing with a paradigm shift happening in manufacturing supply chains, witnessing:

  • Increases in Commodity Volatility. Volatile raw material costs impact the availability of basic component parts. Banks expect commodity prices to rise ~10% in the next year with Copper up 90%+ from 2020 (Bloomberg). The uncertainty of component availability impacts engineering designs, production schedules and costs. 
  • Increases in Frequency and Severity of Supply Chain Risks. Unknowns are the new norm. 94% of Fortune 1,000 companies are still seeing residual supply chain disruptions from COVID-19 (Accenture). Supply chain disruptions are becoming more frequent with increasing climate-related disasters, too. 
  • Growing Geopolitical Disruptions. Product costs are driven up by external factors (i.e. reshoring, trade wars, taxes/customs duties, etc.), with additional scope 3 emissions requirements underway.

Executives in the industry recognize that “We’ve been so optimized the last 3 decades on low cost supply that we’ve lost track of resilient supply” (Axios). In this new paradigm, supply chain resilience and speed in decision-making will be an immense competitive advantage for hardware companies. Partsimony is building a cognitive manufacturing supply chain that leverages transactional data to provide deep insights around Manufacturer Discovery, Design Intent, and Supply Chain Resilience.

Similar to a “SaaS hive mind,” Partsimony is building proprietary machine learning models that provide tailored recommendations for both hardware companies and manufacturers, based on their given component design files and manufacturer networks. This enables Partsimony to provide hardware companies with an intelligent manufacturing supply chain infrastructure that is more quickly adaptable to disruptions. 

Partsimony has already been tested and adopted by startups and large enterprises alike. Partsimony uniquely works with a hardware company from initial prototypes up through full-scale production. Case studies from closed beta tests show that the results achieved with Partsimony have saved over 96% in cost reductions and months in lead time.

“Sourcing the right parts on complex hardware products is difficult and has never been more important in this global chaotic and disrupted supply chain. Partsimony’s strong value proposition solves difficult and complex requirements by connecting designers and innovators with manufacturers in a collaboration process that creates intended design outcomes in a cost effective, high quality, and repeatable manner.”

— Marty Guay, Vice President of Business Development, STANLEY BLACK & DECKER

“Partsimony is critical for our business; the platform allows us to spend more time focusing on design improvements than on searching and communicating back and forth with prospective manufacturers.”

— Sam Miller, Founder & CEO, PROTEUS MOTION

The Seed funding will help Partsimony capitalize on this unique moment in global supply chain development and enable manufacturing supply chains to be more resilient.

“We are thrilled to bring Closed Loop Partners’ Ventures Group into the Partsimony family as a partner who brings industry connections, guidance and their fundamental thesis of circular economy to the table. Closed Loop Partners shares our vision of digitizing, optimizing and regionalizing supply chains for efficient and sustainable hardware production,” said Partsimony CEO, Rich Mokuolu. 

“Closed Loop Ventures Group is pleased to have Partsimony as a part of our portfolio. They are meeting a critical need for hardware companies and manufacturers to design with more recycled materials, with less waste, and for recoverability. Their platform aligns with macrotrends of shorter supply chains, more rapid product turns, and increased responsiveness and resiliency to supply chain disruptions,” said Danielle Joseph, Executive Director, Closed Loop Partners. 

This funding round will allow Partsimony to scale their SaaS platform beyond beta and drive value for repeat and new customers. Partsimony is actively working with customers across the automotive, aerospace, robotics, and medical device product segments, and they are open to speaking with all companies building complex hardware products.

About Partsimony

Partsimony is a SaaS network that unifies disparate data from multiple sources to efficiently manage hardware from prototype through production and bring superior intelligence to manufacturing supply chains. Partsimony enables hardware companies and manufacturers to make smart decisions faster, and enhance their supply chain resilience. Learn more at https://www.partsimony.com/ 

About Closed Loop Partners

Closed Loop Partners is a New York-based investment firm comprised of venture capital, growth equity, private equity, project finance, and an innovation center focused on building the circular economy. Investors include many of the world’s largest consumer goods companies and family offices interested in investments that provide strong financial returns and tangible impact. Learn more at www.closedlooppartners.com.

Press Contact

[email protected] 

Rich Mokuolu, Partsimony CEO