Venture capitalists have always thought one person鈥檚 trash is another person鈥檚 treasure鈥攖heirs. For at least a decade, investors poured money into technologies to聽turn garbage into electricity by burning it. That proved profitable enough. But in the last five years, the economics have changed.
Reclaiming materials has become increasingly profitable as falling energy costs coincided with rising commodity prices. Recycled sources of metal, plastics, glass, and other materials are now more economical than virgin resources for many manufacturers. As a result, 鈥渨aste-to-energy may not be the best way to get most value from waste,鈥� says Jerrold Wang, an analyst at the聽Lux Research聽firm focusing on emerging technology.
Wang authored Lux鈥檚 most recent report on聽venture investment in waste management, which found that from 2011 through April 2016, venture firms invested about $700 million in waste technologies. Over that time, investments for material recycling have increased 186%, hitting about $200 million annually in 2015. Meanwhile, waste-to-energy technologies have declined in the last two years, dropping about 50% from their 2014 peak of $42 million.
Investments in material recycling鈥攑rimarily spent on the development software, data analytics, and robotics to process waste streams more efficiently鈥� represented 65% of venture deals made in the recycling and waste industry over the last five years in Europe and the US, reports Lux. The next two biggest areas of investment were waste-to-energy (21%) and waste-water treatment (14%). The number of venture capital deals financing material recycling grew fastest in last year, more than doubling over 2014.
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