A New Venture Fund Raises $100M From Plastic Makers/Users to Stop Ocean Trash

Photo: Malin Jacob, Los Angeles Times

An investment firm called Closed Loop Ventures (they’re the folks behind the NextGen Cup challenge for Starbucks and McDonalds) has raised $100m USD for a fund to make early-stage equity investments into sustainable consumer goods companies, advanced recycling technologies, and services related to eliminating ocean plastic pollution, Bloomberg News reports Rob Kaplan, the Fund’s Founder who used to be the Director of Sustainability at Walmart, believes that the fund’s investments are not only good for the environment but also will someday yield double-digit returns, and if they do, then big bucks from institutional investors will follow and that will be transformative.

Why This Matters:  Yet another whale washed up this week dead from ingesting plastic — this one in Scotland and it had 220 pounds of trash in its belly.  We desperately need solutions to the plastic epidemic.  This fund has enough money to test the hypothesis that impact-investing can change the world and make the circular economy not only possible but also profitable.  Finding a way to stop the flow of the 8 million tons of plastic trash that streams into the world’s oceans annually will not be easy or cheap but these “investors” should be responsible for doing it. 

Circulate Capital’s Investors and Targets

According to Bloomberg News, cutting that garbage flow in half would require an additional investment of $5 billion a year, Ocean Conservancy and McKinsey & Co. analysts say.  The lead government’s program to eliminate the problem of marine debris is a fraction (2% to be exact) of the total of this fund so this funding is sorely needed.  Circulate Capital’s investors are companies that either make plastics (Dow Inc. and Chevron Phillips Chemical Co.) or sell consumer products that are packaged in them (PepsiCo Inc., Coca-Cola Co., Unilever NV, Procter & Gamble Co., and Danone SA).  But there is one interesting partner — the U.S. Agency for International Development  — which is also supporting the fund. Their contribution is an interesting one — they will cover 50% of loan losses up to $35 million, and that allows the fund to take some higher-risk investments.  The fund plans to make 30 or 40 investments of about $2 million to $10 million each, with a focus on India and Indonesia.   The target investments are waste and chemicals recycling firm and the goal is for single-digit returns initially.

To Go Deeper:  A House hearing yesterday examined how innovative finance mechanisms have already been a game-changer.  For example, Connecticut’s innovative Green Bank launched in 2011 moved the state from a public funding model to an investment model that leveraged private funding at a nearly 7:1 ratio, resulting in $1.7 billion of high-impact new clean energy investments in Connecticut in the past eight years.

Photo montage: themindunleashed.com

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