Cycle Capital and Demeter: Euro 160m for new Circular Innovation Fund

Photo: In the new Circu­lar Inno­va­tion Fund, the fund mana­gers pool their resour­ces with the aim of promo­ting the scaling of high-growth circu­lar inno­va­tions and busi­ness models in various sectors
1. May 2022

Dusseldorf/ Paris — Cycle Capi­tal and Deme­ter, leading clean­­tech-focu­­sed asset mana­gers, announ­ced the successful first finan­cing close for their new Circu­lar Inno­va­tion Fund (“CIF”) of $160 million and €150 million, respec­tively, with parti­ci­pa­tion from anchor inves­tor L’Oréal.

Anchor inves­tor L’Oréal is contri­bu­ting 50 million euros through its sustaina­bi­lity program L’Oréal for the Future. The fund also bene­fits from a broad range of inves­tors, inclu­ding stra­te­gic inves­tor Axens, family offices such as Haltra and Claridge, as well as private inves­tors and the fund managers.

Through this fund, the fund mana­gers are pooling their resour­ces to scale circu­lar, sustainable and profi­ta­ble growth solu­ti­ons from North America, Europe and Asia that posi­tively contri­bute to climate change miti­ga­tion and the circu­lar use of resour­ces in a variety of sectors, inclu­ding new mate­ri­als, pack­a­ging, recy­cling and waste, logi­stics, eco-effi­ci­ent proces­ses and design. The fund will leverage the invest­ment mana­gers’ expe­ri­ence in venture capi­tal, private equity and infra­struc­ture in the clean­tech sector to address the growing need for market-ready solu­ti­ons and provide capi­tal for talen­ted, entre­pre­neu­rial teams to imple­ment these innovations.

The CIF is a sustainable inno­va­tion fund clas­si­fied as “Article 9″ under the EU Regu­la­tion on sustaina­­bi­­lity-rela­­ted disclo­sure requi­re­ments in the finan­cial services sector. The Fund’s robust, relia­ble, and inno­va­tive impact measu­re­ment metho­do­logy includes due dili­gence and ongo­ing moni­to­ring of criti­cal non-finan­cial metrics, inclu­ding green­house gas emis­si­ons reduc­tions, resource use, and diver­sity within port­fo­lio compa­nies’ invest­ment hori­zons. Fund mana­gers’ compen­sa­tion is also based on the achie­ve­ment of a selec­tion of prede­fi­ned impact targets.

- “In a context of ’now or never,’ as stated in the latest IPCC report, private compa­nies like L’Oréal must play a grea­ter role in support­ing solu­ti­ons that are criti­cal to the future of our planet and huma­nity. At L’Oréal, we believe that impact inves­t­ing is a powerful tool to address the biggest envi­ron­men­tal chal­lenges and acce­le­rate the neces­sary green trans­for­ma­tion. Through the Circu­lar Inno­va­tion Fund, we are joining forces with other commit­ted play­ers to scale circu­lar and profi­ta­ble solu­ti­ons for sustainable growth.” — Alex­an­dra Palt, Chief Corpo­rate Respon­si­bi­lity Offi­cer and CEO of Fonda­tion L’Oréal.

Invest­ments in early-stage venture capi­tal funds

Follo­wing the initial closing, CIF announ­ces indi­rect invest­ments in two early stage funds focu­sed on circu­lar inno­va­tion — the U.S. Closed Loop Venture Fund II and the Euro­pean Circu­lar Bioe­co­nomy Fund (“ECBF”).

Foun­ded in 2014, Closed Loop Part­ners is a New York-based invest­ment firm that includes venture capi­tal, growth capi­tal, private equity and cata­ly­tic capi­tal, and an inno­va­tion center focu­sed on advan­cing the circu­lar economy. The company’s venture capi­tal arm, Closed Loop Ventures Group, laun­ched in 2017 with one of the first venture capi­tal funds to invest in early-stage disrup­tive compa­nies deve­lo­ping breakth­rough solu­ti­ons to acce­le­rate the tran­si­tion to a circu­lar economy. In 2021, the Group laun­ched its second risk fund to build on this stra­tegy. To date, the team has made more than 30 invest­ments in both funds, targe­ting high early-stage returns.

ECBF is the first venture fund to invest exclu­si­vely in high-growth compa­nies in the Euro­pean bioe­co­nomy, inclu­ding the circu­lar economy. The fund aims to make sustainable invest­ments in our future and acce­le­rate the tran­si­tion from a fossil-based to a bio-based economy. In this way, ECBF supports compa­nies with high inno­va­tion poten­tial, attrac­tive returns and sustainable impact.
CIF will also spon­sor a global acce­le­ra­tion program through a part­ner­ship with Cycle Momen­tum. The program provi­des support for seed/series A stage start­ups with cohorts in Europe, North America and Asia over 3 years.

The CIF invest­ment team is actively explo­ring a variety of invest­ment oppor­tu­ni­ties and welco­mes inqui­ries from and colla­bo­ra­ti­ons with foun­ders and co-investors.

About Cycle Capital
Cycle Capi­tal is a sustainable inves­tor and a leading private clean­tech venture capi­tal invest­ment plat­form with $600 million in assets under manage­ment. With offices in Mont­real and Toronto, as well as Qing­dao, China, and a presence in New York and Seat­tle, Cycle Capi­tal invests throug­hout North America and China in growing and commer­ci­ally successful compa­nies that have deve­lo­ped tech­no­lo­gies to reduce green­house gas emis­si­ons and opti­mize resour­ces and proces­ses. Cycle Capi­tal is the foun­der of the Cycle Momen­tum Acce­le­ra­tor and Cana­dian co-chair of the Beyond the Billion Initia­tive — an inter­na­tio­nal campaign to mobi­lize a consor­tium of inves­tors to support women foun­ders.

About Deme­ter
Deme­ter is a large Euro­pean invest­ment plat­form dedi­ca­ted to ecolo­gi­cal change. Deme­ter mana­ges over 1 billion euros and has alre­ady made 200 invest­ments since 2005. Deme­ter invests between 1 and 30 million euros to support compa­nies at all stages of deve­lo­p­ment: inno­va­tive start­ups, high-growth SMEs and infra­struc­ture projects. The 38-strong team works in Paris, Lyon, Bordeaux, Greno­ble, Metz, Madrid and Düssel­dorf. Deme­ter is a respon­si­ble and commit­ted inves­tor and signa­tory to nume­rous initia­ti­ves such as PRI (Prin­ci­ple for Respon­si­ble Invest­ment), CDP (Carbon Disclo­sure Project), iC20, The Shift Project and gender diver­sity initia­ti­ves. All new Deme­ter funds are clas­si­fied as “Article 9″ under the frame­work of the new Euro­pean regu­la­tion on sustaina­­bi­­lity-rela­­ted disclo­sure requi­re­ments in the finan­cial services sector.

For over 110 years, L’Oréal, the world’s leading beauty care company, has been dedi­ca­ted to one thing: fulfil­ling the beauty desi­res of people around the world. Our goal to create the beauty that moves the world defi­nes our approach to beauty as inclu­sive, ethi­cal, gene­rous, and commit­ted to social and envi­ron­men­tal sustaina­bi­lity. With our broad port­fo­lio of 35 inter­na­tio­nal brands and our ambi­tious sustaina­bi­lity commit­ments under our L’Oréal for the Future program, we offer the best in quality, effi­cacy, safety, honesty and respon­si­bi­lity to ever­yone around the world.

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