Circulate Capital is betting that small investments, partly funded by a few notable backers, can help address one of the world’s biggest pollution problems: plastic waste.
“Plastic waste is not just a global crisis that threatens economic recovery, the climate and nature. It’s also an investment opportunity that can turn it from a scourge into an engine for economic development, ”said Rob Kaplan, who founded Circulate in 2017. Originally, the company wanted to support companies in India and Southeast Asia, such as: Sorting companies that help reduce the amount of plastic waste that ends up in the ocean.
In 2019, it launched a $ 106 million loan and project finance fund, the Circulate Capital Ocean Fund, backed by a handful of large multinational corporations, including Coca-Cola Co., Danone SA, Procter & Gamble Co. and Unilever PLC. The company now plans to raise a $ 50 million fund to expand both its investor base and investment mandate.
Circulate is one of a small but growing number of companies investing in companies that contribute to what is known as the circular economy, a business model that aims to eliminate the waste produced by companies, continuously reuse products and materials, and regenerate natural systems . According to a report by the nonprofit Ellen MacArthur Foundation last year, an estimated 30 private market funds, including private equity, venture and debt strategies with a focus on the circular economy, were valued in the first half of 2020, up from just three in 2016.
A number of large multinationals are funding these companies’ efforts as part of a broader effort to reduce both the total waste that their own companies produce and the amount of virgin material they use.