A Brief Overview of Circular Economy Investment

What is a Circular Economy?

The term circular economy has increasing relevance in the field of green tech investing, but is not always well understood. This post explores the concept of circular economy, and how the emerging technologies that are enabling the development of circular economies are creating interesting new investment opportunities for Corporate Venture Capital (CVC) arms.

A circular economy is simply an economic system (usually planned) whose goal is to eliminate avoidable waste and extend the longevity of resources through reuse, repair, recycling, and regeneration. A circular economy can function on a micro-scale, e.g., a smallholding that recycles organic waste as compost and manure in order to fertilize future crops, or an industrial plant that repurposes heat and steam, generated by one process, to power another. 

The basic principles of circular economy can be scaled all the way up to major collaborative enterprises that operate at national or international levels and involve diverse stakeholders. A good example is the ICL phosphate recycling plant at Amfert in the Netherlands, which produces high-grade fertilizers from waste materials, including sewage sludge. 

The use of recycled phosphates reduces dependence on mined phosphate rock (a finite resource) while processing waste streams in a way that eliminates traditional safe disposal challenges and reduces GHG emissions and strain on infrastructure. One of the hallmarks of a successful circular economy is that it is beneficial on multiple levels and creates a win/win situation for all participants – as well as for the environment. 

Establishing profitable circular economies in industry, manufacturing, and agriculture (and also the transport, energy, and service sectors etc.) frequently requires the integration of new technologies and a carefully structured implementation phase that doesn’t impede productivity. CVCs that wish to invest in recycling technologies, or are interested in green tech investing, have a key role in accelerating the wider transition to circular economies across all sectors. 

ICL Planet, the CVC arm of ICL Group, is heavily focused on investment in circular economy technologies and startups. ICL Planet’s incubators and accelerators have created a structured and metrics-driven investment process that is increasing the survivability of startups and shortening their journey to market. 

The Corporate VC Shift Toward Sustainable Innovation

A new trend is emerging in the wider CVC investment sector with funds and programs increasingly prioritising ESG and sustainability in their investment criteria. Industry leaders are realising that businesses that embed ESG principles in their corporate DNA will enjoy a strategic advantage in a rapidly evolving ecosystem that rewards – and may ultimately mandate – sustainable enterprises.

There is already a significant surge in investments in climate tech, circular materials, and waste-to-value solutions as CVCs seek to invest in both recycling and upcycling technologies, and gain a stake in game-changing solutions that can perform as major enablers in the transition to circular economies and sustainability. 

ICL Planet is connecting with academics, founders, and startups that align with ICL Group’s sustainability vision and are targeting scalable solutions in food, agriculture, energy, and materials that are founded on circular economy principles.

The Investment Opportunity in Recycling Technologies

There are a number of key reasons why CVCs are opting to invest in recycling technologies. Recent technological advances, such as the integration of AI into waste sorting processes, are vastly increasing the scope and efficiency of waste recycling – and its profit potential. The World Bank estimates that global waste levels will soar by 70 % by 2050, to reach 3.4 billion tonnes. Effective and comprehensive waste recycling is a challenge that CVC investors can contribute to achieving. 

AI-based innovations like computer vision and machine learning can streamline and optimize waste sorting processes that were previously laborious and time-consuming. Smart robots on production lines are transforming the speed and accuracy of pre-recycling operations and massively improving their commercial viability.  

Plastic waste has caused environmental problems for decades, but advanced chemical recycling can break unwanted plastic products back down to their original chemical components. Pyrolysis converts plastic into oil; depolymerization reverses plastics to monomers, and it is relatively simple to recycle mixed batches or even contaminated plastics. As scalability improves, there is real potential to finally meet the challenge of recycling discarded plastic waste into high-quality core materials. 

Targeted investment in circular economy recycling processes can create highly effective industrial closed loops. These are a form of industrial symbiosis that function when waste or byproducts from one system are channeled into another system as inputs. The financial benefits of a smooth flow that eliminates requirements for waste storage or disposal and transforms problematic waste into resources that can be monetised (while reducing the consumption of finite raw materials) are considerable. 

As a leading industrial company and a sustainability innovator, ICL is keen to advance next-generation recycling technologies that reduce wastage and enable the creation of cost-effective circular economies. Recytex is an innovative member of the ICL Planet portfolio that breaks down blended textile fabrics and transforms them into high-purity, spin-ready fiber components. Waste fabrics are recycled into the manufacturing stream and are incorporated into new textiles. 

Upcycling Innovation: Turning Waste Into Value

Upcycling differs from recycling in that waste products are not broken down into their original constituent parts. Upcycled products are typically repurposed in a way that improves upon their original function or increases their value. A simple example of upcycling is a carpenter who converts discarded pallets or railroad sleepers into high-end furniture.

New technologies are transforming the upcycling and repurposing of byproducts and waste across the material science, biotech, and industrial fields. ICL Planet has built strategic partnerships with startups employing next-generation upcycling technologies. Arkeon is an ingredients company based in Vienna that uses ancient microbes to convert CO² into edible protein ingredients. 

Arkeon is positioned at the intersection of two fundamental challenges: how to remove carbon from the atmosphere and how to deliver lasting food security. The implications of Arkeon’s technological advances are considerable. Corporate partnerships with CVCs like ICL Planet are enabling the development of these types of innovative technologies and bringing them to market. 

Strategic Value for CVCs: Beyond Capital

When CVCs operate as strategic partners and offer infrastructure, industrial validation, and go-to-market support, they can develop a framework that shortens the journey to market and helps a startup to reach its full potential during the development stages. It can take at least a decade for a new product to pass various legal and regulatory hurdles. 

The ability to shave even a couple of years off the time to market can translate into a significant advantage in a rapidly evolving tech landscape. A structured investment framework also ensures that the startup culture grows in alignment with the investor’s core values and corporate vision.

ICL Planet goes beyond basic funding to combine investment with the option for partners to draw on its deep scientific expertise and research facilities, as well as ICL’s manufacturing capacity and legal and marketing resources. 

One of the most notable success stories is the partnership with startup Lavie Bio, an ag-biological company that specializes in microbiome-based ag-biological products. Lavie Bio’s proprietary computational predictive platform utilizes big data and advanced informatics to deliver advanced bio-stimulant and bio-pesticide solutions.

An initial investment of $10 million in 2022 via a SAFE (Simple Agreement for Future Equity) led to a phase of strategic collaboration through ICL Planet that led to the acquisition of Lavie Bio by ICL in 2025. The acquisition delivered clear strategic gains for both ICL and Lavie Bio – and reinforced ICL Planet’s role as a strategic growth engine. 

Structured CVC partnerships deliver tangible and quantifiable benefits for startups and established corporations, accelerating innovation and bringing game-changing recycling, upscaling, and circular economy technologies to market on a sustainable basis. 

The Road Ahead: Strategic Recommendations for CVCs

Investing in tech startups is a complex process that contains multiple challenges – and rewards. There are however, some guiding principles that CVCs that are considering a shift to circular economy investment can follow. 

The first requirement is to develop sector-specific circular investment theses that clearly define market opportunities and goals. Ideally, there should be partnership level input from corporate R&D and ESG teams to identify integration opportunities and weave sustainability and ESG principles into the investment framework from the ground up. It’s also important to leverage open innovation ecosystems (accelerators, universities, and pilots, etc.)

Conclusion: Capital for Circularity

As the industrial and agricultural sectors push towards carbon net-zero,

 and sustainability, there is a growing demand for technologies that facilitate the implementation of circular economies. The idea of a circular economy is no longer an abstract concept; it’s a functional reality that increasingly makes economic sense for companies. Forward-looking CVCs are already keen to invest in recycling and upcycling technologies and build strategic partnerships with circular economy innovators. 

CVCs that can offer a high level of industrial integration in addition to capital funding will operate at a significant advantage when they seek to expand their portfolios. Many highly talented academics and innovators are experts in their own fields but lack the skills and experience to build and launch a successful company. 

A structured investment and development framework (that allocates resources and practical assistance) and is delineated with checkpoints, milestones, and exit points, is the key to effective risk management and consistent strategic gains for CVCs and their parent companies. 

ICL Group has discovered that investing in recycling and upcycling technologies isn’t simply a smart business tactic that delivers a good ROI. It is an essential long-term sustainability strategy that delivers ongoing technological relevance and the integration of new technologies like the Lavie Bio platforms as they emerge. 

It also yields improved market penetration and diversification through collaboration with some of the high-tech and AgTech sectors’ most innovative and talented founders. If you’re innovating within the field of recycling, upscaling, or other circular economy technologies, or want to learn more about a strategic partnership with ICL Planet, talk to us today.