This New $100 million+ VC Fund Aims to Solve the Ocean Plastic Crisis in Asia
Grow Your Business, Not Your Inbox
“Planet or plastic?”
This was a poignant question posed by a series of stories published in the National Geographic magazine in 2018, about the global plastic problem.
Two years later, the situation is no better.
Disposing plastic is not easy. It takes centuries to decompose, doesn’t add any value to the soil (in fact, it causes soil leaching), and inevitably ends up in water bodies, where it then kills marine life, and contaminates the water with microplastics, rendering it unfit for consumption.
An estimated 8 million tons of plastic waste enters oceans annually, via land use, and makes up as much as 95 per cent of all marine litter today.
And Asia is the biggest culprit of all because most of the plastic affluent in the ocean comes from Asia - mainly China and Southeast Asia - in the form of single-use plastic, a majority of which is used for packaging purposes.
Efforts to ameliorate the plastic problem include government initiatives that ban single-use plastic and levy higher taxes on companies that dump plastic in the oceans, and efforts from social, not-for-profit enterprises that have met with success in getting the conversation, and some action, going, but apart from CSR activities, the private sector has been largely detached from the cause.
The start-up space though has been buzzing with innovative ideas and solutions to solve the problem using state-of-the-art technology, nanobots, and artificial intelligence, and even though external investment has been slow, more and more venture capitalists have been getting interested in companies with a social angle.
One such investor is Singapore-based VC fund management company Circulate Capital, which, in December 2019, launched a $106 million fund dedicated to solving Asia’s plastic crisis - the first of its kind in the world.
“By catalyzing capital and efforts, we can turn ocean plastic from a problem into an economic opportunity for Asia,” says Rob Kaplan, founder and chief executive officer of Circulate Capital.
The VC company plans to provide both debt and equity financing to start-ups in the waste management, recycling, and circular economy space in Southeast Asia, and has already identified more than 200 investment opportunities.
“Our goal is to advance the circular economy and cradle-to-cradle businesses by crowding-in capital for waste management and recycling solutions at scale that address the ocean plastic crisis in South and Southeast Asia,” said Kaplan in an interview with Entrepreneur Asia Pacific.
The investment will range from $2 million to $10 million.
If Not Plastic, Then What?
Start-ups developing plastic alternatives last year hit record funding of $850 million as VC companies wrote out big cheques to grow this up and coming sector, according to data analysed by Crunchbase.
From straws and plates made of seaweed, to rice-based glues, companies are coming up with innovative and cost-effective alternatives, and it’s these types of start-ups the Circulate Capital Ocean fund (CCOF) plans to target.
“If you walk into your kitchen and the sink is overflowing, you should probably turn off the water first and get the bucket and mop second,” says Kaplan.
“Along the same lines, as investors, we see the most investable opportunities in the the prevention space, to stop the flow of plastic before it reaches the ocean,” he adds.
Upcycling or recycling plastic into other products has also been a trend in this space, and the fund said it was interested in those companies too.
Ultimately though, Kaplan said, the fund and its investors - which includes companies like PepsiCo, Procter & Gamble, Dow, Danone, Unilever, and Coca-Cola, among others - expect to solve supply chain issues, and see a “tangible movement of the needle on the issue of plastic waste and the development of a more circular economic model.
Whether these multinational corporate giants would themselves adopt plastic alternatives remains to be seen, especially after comments from Coca-Cola at the World Economic Forum recently where the company said it would not do away with its plastic bottles.
Last year, Coca-Cola was ranked the world’s top plastic-polluting company, according to Break Free from Plastic - a campaign against plastic packaging.
PepsiCo came in third.
To be fair though, Coca-Cola has said it aims to make at least 50 per cent of its packaging out of recycled materials by 2030, and roll out aluminum containers for water, instead of using plastic.
And any efforts at all are better than none at this stage.
5 Interesting Asian Startups in the Plastic Alternatives and Recycling Space:
- Banyan Nation, India: Provides recycled plastic to large brands by using a mobile software platform which connects waste pickers to materials that need to be recycled.
- Kabadiwalla Connect, India: A two-way software platform that connects waste pickers with waste and recycling facilities.
- Tridi Oasis, Indonesia: Produces sheet grade recycled plastic. The company is planning to expand into higher quality recycling, and expand their sourcing area for feedstock.
- RWDC Industries, Singapore: Aiming to combat petroleum-based, single-use plastic products with sustainable materials, the startup uses the outputs of a microbial fermentation to produce a naturally occurring polymer, which fully biodegrades in soil, water, and marine conditions within weeks.
- Evoware, Indonesia: The company, whose tagline is “please litter me”, makes food products packaging material, such as single-use coffee, shampoo, and medical supply sachets, using seaweed and algae. The packaging nourishes the soil and water when it decomposes and breaks down.