Subscribe to Entrepreneur for $5
Subscribe

How to Unlock Your Company's Value in the 'Circular Economy'

Michael Smith of Regeneration.VC shares how the circular economy works and why it's good for business and our planet.

By
Opinions expressed by Entrepreneur contributors are their own.

Michael Smith, a general partner at Regeneration.VC, sat down with Jessica Abo to talk about his company and the steps you can take to unlock value where you work, especially if you're looking to be part of the circular economy.

Jessica Abo: Michael, great to be with you. Can you first start by telling us what is the circular economy, and why does it matter?

Smith:

The circular economy is really a response to the linear economy, which we live in today, where we take things from the earth, make them into products, consume them, and then throw them away. 91% of all material ends up in a landfill, an ocean, or a natural system. So within a circular economy, we are, from the moment we're making new products, thinking about materials that can be reused. We're thinking about how we use them and trying to keep things extended beyond a single use or limited use. Almost two-thirds of global emissions are tied to the things that we consume every day, the food we're eating, and the clothes we're wearing. So if we can make things in a better way and keep them in circulation longer, we can drastically reduce emissions, can improve life on our planet.

I love your origin story. Can you share what you were doing before you started Regeneration, and what made you want to start this venture capital fund?

Smith:

I had been touring around the world as a DJ in my early twenties and thirties and was seeing the world change around me, the environment, and I really wanted to do something. And I had also been an entrepreneur and set up a business doing music for restaurants, hotels, and retail stores. And after I sold that business, I really wanted to marry my two interests in the environment with investing in a for-profit business. And so Regeneration is the marriage of those two things. We invest in early-stage companies working around circular economy opportunities.

And what is your overall fund strategy, and how do you use capital to drive positive environmental outcomes?

Smith:

We invest across three different areas. The first we call design. These are the materials that go into the products we consume, the fibers in clothes, the packaging, and the food and beverage inputs for the consumer brands. We're buying formulations for beauty products. The second is use. These are the brands and services that use those products. Think about companies like Patagonia and Alternative Meats and things like that. And finally is re-use. So if we're not sending something to a landfill and we're putting it back through the supply chain, what are we doing with it? How do we upcycle what would otherwise be a waste stream into a valuable material?

We've invested in a company called CleanO2 which does all three of these things. First, they have equipment that captures HVAC emissions from air conditioning units and heaters, and it traps a material that is called potash. And that potash is then used to make a new material, a cleaning product, that is sold as a brand, a consumer soap. That's the full chain of circularity. We get active with our portfolio companies. We've made eight investments so far. And we work to accelerate them and to bring them to market quicker so that they can actively compete and really scale out.

Can you tell us about your most recent investment and why you're so excited about it?

Smith:

The most recent investment we've made it into a company called TULU. If you live in an apartment building, you've probably felt that you could share with residents certain things, like vacuum cleaners or maybe consumer products, video game systems. And they have units in your lobby that enable that. They let you unlock additional amenities and opportunities out of your living experience within shared environments, whether it be a scooter that you could take out with a helmet that's much nicer than what you'd find on the street. Printing services so you don't have to have your own printer and paper. We're very excited about what it means for how manufacturers, like Bosch, who's an investor and partner to them, are using that information to make products that can last longer, that can be used more. Where you may only use a vacuum cleaner once a week, in this model, that same vacuum cleaner is getting used many times, and it's displacing each vacuum cleaner, upwards of 50, from being created in the first place. So we're just very excited about the concept of unlocking the sharing economy within living environments.

Are big companies committing to circularity and are they taking advantage of these learnings?

Smith:

You have industry leaders like Apple getting back their phones and making new phones out of them, paying more to get those old phones back, and opening up repair opportunities for the first time in over a decade. You have companies like Amazon working on their packaging and committing to different circular outcomes. You have Nike that's open-sourced strategies of how you can make your business more circular, particularly within the apparel world. Unilever, Procter & Gamble, and so many are committing to this, as well as cities and governments. So there's a huge movement around circularity and we're excited to be a small part of that.

For people who want to unlock circular opportunities within their businesses, what are some steps that you recommend?

Smith:

There are so many ways that you can apply it, but the most basic is, to go through your business now, and think about places that you have wasted. Think about times when you can increase efficiency and improve overall performance. Rank those for how much they're going to cost you, how much they can make you, and how profitable they can become for you. And then do your best to figure out what the environmental implications may be and where new regulation is moving. There's so much to be done here, and it's a really fun way to think about how you can improve the planet and make money.

Latest

How to Unlock Your Company's Value in the 'Circular Economy'

Michael Smith of Regeneration.VC shares how the circular economy works and why it's good for business and our planet.

BBQ Icon Rodney Scott on Blazing Your Own Path in the Restaurant Business

Interview with famed pitmaster and food entrepreneur Rodney Scott of Rodney Scott's BBQ about every day being a good day, the truth behind "overnight" celebrity, and how cooking with soul is vital to sustained success.

3 Easy Ways To Be More Motivated

Want to tackle your to-do list in just two weeks? In this video, Ben Angel tells you how.

The Founder of Mindvalley Wants to Transform and Reinvent Education. Here's Why.

The founder of Mindvalley shares why he started his platform and discusses his new book, "The 6 Phase Meditation Method."

This Teacher-Turned-Entrepreneur Started Tutoring Kids in Parks and Churches. Today, She Runs an Education Company with Nearly One Million Followers

The CEO and founder of Big City Readers talk about why she's on a mission to make reading fun for kids and their parents. Plus, what to do if you're afraid to take a leap in your career.

Melissa Villanueva of Brewpoint Coffee on Creating Avenues for Café Owners of Color

Interview with Brewpoint Coffee CEO and Founder Melissa Villanueva about balancing community and larger ambitions, creating opportunities for people of color, and equity and inclusion in business.

4 Easy Ways to Make More Money By Training Your Brain

Mental rehearsal is a powerful psychological technique that's used by athletes, billionaires, and entrepreneurs to achieve their goals.

5 Tips to Help You Go from Camera-Shy to Camera-Ready

Media trainer Jessica Abo reveals her go-to production tips so you can feel more confident for your next on-air appearance, pitch, or presentation.

Shone Tran of Chicken Meets Rice on Stepping into Food Entrepreneurship

Interview with Chicken Meets Rice co-founder Shone Tran about pulling inspiration from tragedy, taking small steps, and thriving in business with your best friend.

Try This 15-Minute Million Dollar Morning Routine To Energize Your Day

Here are six steps you can take to amplify your energy and grow your income.

This Is Why Being a Podcast Guest Can Transform Your Personal Brand

The Founder and CEO of Scout's Agency shares why a "podcast tour" is the new PR strategy for thought-leaders.

Samantha Trottier and Hernan Regiardo of Mate Society on Creating Content People Like

Interview with Mate Society founders about authentic online connections, making money in the creator economy, and choosing the right brand deals.

9 Ways To Make 'Superhuman Focus' Work For You

In this video, Ben Angel shows you how to improve your focus and do more with your time.

Julian Cervantes of Super Taco Mexican Restaurants on Owning a Family Business

Interview with Super Taco Mexican Restaurants Founder Julian Cervantes about starting a business with little knowledge, having a Plan B, and balancing family and work.

Discover Entrepreneur Series

Whether you need advice on how to get your business off the ground or you’re just looking for inspiration, our video series have something for everyone. Browse our library below to find a series that speaks to you and your interests.