InMotion Ventures has participated in a $55M Series B round for Cyclic Materials. The round was led by led by ArcTern Ventures, with participation from Microsoft’s Climate Innovation Fund, BMW iVentures, Hitachi Ventures, BDC Capital’s Climate Tech Fund, Zero Infinity Partners, Climate Investment, Fifth Wall, Energy Impact Partners, and Planetary Technologies.
Will Morgan, Investment and Scouting lead, and Louis Fearn, Principal, explore why we invested.
The market
The story of rare earth elements (REE) reveals how something nearly invisible can wield extraordinary influence over our world and global supply chains – simultaneously hidden in plain sight, and practically irreplaceable.
REE are a set of seventeen chemical elements in the periodic table, alloys of which are essential to the production of permanent magnets. Permanent magnets are known for their exceptional properties, including their ability to maintain a strong magnetic field and their high resistance to demagnetisation.
The strength and durability of permanent magnets had made them fundamental to the world’s most critical infrastructure. Today they’re used extensively in EVs, wind turbines, data centers, robots, consumer electronics, aerospace, defence and industrial systems.
Unsurprisingly demand for critical minerals such as REE is at an all time-high. This has resulted in a supply-demand imbalance that is being exacerbated by supply-chain monopolisation and a lack of suitable alternatives.
China dominates the magnet and REE supply chain (93% of magnet production and 90% of REE processing). The country is also the largest user of REE, implying it will one day want to reserve its supply for domestic use. Global single source resource dependencies pose a sizable supply chain risk, and China’s domination is rapidly becoming a bottleneck in the face of a predicted doubling in Neodymium (ND)-Magnet consumption (the strongest type of permanent magnet) by 2032.
The situation is further complicated by the fact that less than 1% of permanent magnets are recycled today. Technological barriers, including the difficulty of separating rare earth magnets from other materials in end-of-life products, as well as the energy-intensive nature of recycling processes, have kept recycling rates low. As demand for REEs is predicted to double by 2032, the need for innovative, scalable solutions to recycle these elements has never been more urgent.
What Cyclic Materials does
Cyclic has developed a circular supply chain solution for recovering REE and other critical materials from a variety of e-waste sources. They aggregate, disassemble, separate and purify end-of-life feedstocks into mixed rare earth oxides and other minerals for re-use in the production of high performance magnets.
Cyclic’s patented two-stage process enables scalable recycling of end-of-life products containing rare earth magnets through a hub-and-spoke model. First, end of life products containing rare earth magnets – such as electric motors, electronic devices, disk drives, MRI machines, wind turbines – are received and the magnets separated using Cyclic’s proprietary Mag-Cycle technology.
The second step takes place in the “hub” facility where ReePure hydrometallurgical technology is used on the isolated magnet material to convert them back into high-value raw materials, the performance of which rivals that of virgin REE. The output materials (MREO, Copper, Aluminum and Steel) are then sold back into the market, or returned to a respective manufacturer for re-use in their own closed loop supply chain.
We believe that Cyclic’s unique end-to-end process and enduring business model will enable compelling economics when compared to the extraction and transportation of newly mined materials.
Why we invested
InMotion Ventures backs startups tackling the critical enterprise challenges of our era. A secure supply chain is key to business resilience, especially in respect to critical resources. With the global demand for magnets containing REEs forecasted to increase dramatically by 2030, the market is at a critical juncture.
Establishing new sources of critical materials is vital to support the electrification of the global economy, and Cyclic provides a domestically sourced alternative to virgin mined rare earth elements. With technology that derisks the global REE supply chain the business is already a market leader.
The startup’s Hub & Spoke model recycles magnets and rare earths from a diverse range of feedstock, returning all value streams to virgin quality. Their unique technology is magnet-agnostic. Crucially, it does not require the dismantling of scrap prior to processing. This sets them apart from other players in the recycling space. The high-throughput process is low cost, scalable, domestic and significantly more sustainable than mining virgin materials. Cyclic’s process has an estimated 63% lower carbon footprint and uses 95% less water.
To date, the business is the only source of recycled rare earth oxides. This first mover advantage has allowed the team to secure high-value partnerships with feedstock providers, including a multi-year agreement to supply recycled copper to Glencore. Unsurprisingly, they have also attracted an impressive list of OEM customers, all looking to de-risk supply chains and drive down costs. Against a backdrop of escalating geopolitical tensions, Cyclic’s market leading position is only being strengthened.
Finally, the team’s exceptional expertise was a decisive factor in our decision to participate in this round. The founder and CEO, Ahmad Ghahreman, is a hydrometallurgist, entrepreneur and operator driven by 15 years of cleantech experience. Ahmad co-invented Jetti Resource’s technology, holds a PhD in Materials Engineering and is a leading HydroMet researcher with over 3,000 citations.
Congratulations to everyone at Cyclic Materials for raising a significant Series B round from an impressive consortium of investors. We look forward to supporting Ahmad and the team in this exciting next phase.
We’re always interested in speaking with exceptional founders setting new benchmarks in quality, technology and sustainability. If you are a founder, or know a company in the space, please get in touch with the InMotion Ventures team via our funding form.