Key takeaways

• Regulations: The industry benefited from several government initiatives. Notably, the US government allocated over USD 192 million to advance electronic waste (e-waste) recycling, indicating that they are actively pursuing the national recycling targets. Meanwhile, efforts were initiated in the UK to enhance awareness and foster recycling practices overall. 

• Product updates: There were 14 product updates recorded during Q2 ( vs in Q1, which were 19). Majority of these were centered around the recycling space, indicating a potential rise in e-waste recycling rate by as early as 2025. Notably, players such as Nth Cycle and Lithion Recycling announced commissioning and plans to build new recycling facilities. A major setback in the bio-based materials space was Bolt Threads halting the production of its Mylo material due to the lack of funding and inflationary pressures. However, there was some early progress in the development of bio-based leather products from Desserto and LØCI.

• Partnerships: There was a notable increase in collaborative efforts to develop recycling technologies and commercialize products utilizing bio-based materials. We observed 49 partnerships during the quarter (vs 34 in Q1). Notable partnerships included product/technology developments to jointly build recycling facilities or launch recycling technologies to keep waste, particularly plastic, and e-waste out of landfills.

• M&A: We observed one key acquisition during the quarter (vs four in Q1 2023). The acquisition (TerraCycle acquiring CRS) was driven by the idea of consolidating expertise to advance the recycling of electronic lamps.

• Funding: Circular materials startups raised a total of USD 741 million in Q2 2023 (up 37.1% YoY, but down 74.6% QoQ). The QoQ decrease was mainly due to Redwoods Materials’ massive USD 2 billion loan last quarter (excluding this, QoQ funding fell by only 20.1%). Q2 witnessed a trend of seed funding rounds for newer startups that wish to commercialize their technologies (five rounds), as well as substantial investments in larger, more established disruptors like Northvolt (USD 400 million raised in June). 

• The short- to medium-term outlook for the industry remains positive, driven by active efforts from industry players to establish recycling facilities, particularly for e-waste, plastic, and textile recycling. The expansion of these facilities is expected to improve recycling rates, which currently stand at less than 15% for materials like e-waste and textiles. Additionally, the ambitious recycling targets set by the US and UK bode well for the industry.