Startups Supplying Scarce Materials And Rare Earth Elements See Abundant VC Funding

It鈥檚 well known that scaling cutting-edge technologies and battery production requires supply-constrained materials such as lithium, cobalt and nickel, as well as rare earth elements sourced from just a few locations on the planet.

Tech giants, automakers and other industrial players have long been cognizant of the supply chain risks. And recent headlines show concerns increasingly into geopolitics.

Startups haven鈥檛 been sitting this one out either. In the past few quarters, a growing roster of venture-backed companies has secured funding for areas including battery and magnet recycling, rare earth-focused mining technology, and even extracting materials from space.

Collectively, they鈥檝e raised billions to date, including some large recent rounds. To illustrate, we used 附近上门 to put together a list of a dozen companies, most funded in the past year, with a mission of supplying scarce materials through recycling or at their original source.

Most venture money going to recycling

The largest investment recipients are focused on recycling, looking to extract scarce materials from devices, scrap, batteries and industrial machines no longer in use.

In this arena, the two most heavily funded startups 鈥� Massachusetts-based and Nevada-based 鈥� are both focused on batteries and have been around a while. Together, they鈥檝e pulled in nearly $3 billion in equity funding and over $1 billion in debt financing to date.

Notably, however, both companies secured most of their funding between 2021 and 2023. That coincided with a more bullish period overall for cleantech equity funding. Since then, sustainability-focused investment has trended lower, with U.S. investors in particular seeing impacts from the administration dialing back support for clean energy initiatives.

Outside the U.S., meanwhile, we鈥檝e seen some more recent, sizable rounds around critical materials recycling.

Out of Canada, in June that it raised $25 million to build a rare earth recycling facility in Kingston, Ontario. It will take magnet-rich scrap and retired industrial products to recycle rare earth elements used in EV motors, wind turbines and consumer devices. Per Cyclic, it鈥檚 an undertapped market, as today, of rare earth elements are recycled.

On the earlier-stage side, two German companies also raised good-sized financings. , which develops technology to draw critical raw materials from end-of-life batteries, picked up a $64 million Series A last spring. And at seed-stage, Munich-based secured $12 million for a plant to recover raw materials from recycled lithium-ion batteries.

Mining attracts capital too, following MP Material鈥檚 footsteps

Startup capital is also flowing to ventures focused on mining critical materials.

Before looking at the latest funding picks, however, it seems worth pointing out that 鈥� the company generating headlines of late around rare earth mining 鈥� is itself a stock market success story with some Silicon Valley roots.

Shares of Las Vegas-based MP shot higher this month following news that the agreed to buy an equity stake in the company, which operates the country鈥檚 only rare earth mine in Mountain Pass, California. A few days later, a $500 million commitment to buy rare earth magnets developed at an MP Materials鈥� facility in Fort Worth, Texas.

Notably, MP was one of the earlier companies to ride the SPAC boom, making its public market in 2020 through a with a blank-check company. The deal included an equity investment from backers including venture capitalist and onetime 鈥淪PAC king鈥� .

More recently, we鈥檝e seen a few startups nab venture and debt financing around mining efforts and technologies targeting scarce metals.

Montreal-based $120 million in debt financing last month from government sources for a rare earth mining in Strange Lake, located in Quebec’s northernmost region. It touts the project, which includes 鈥渄etailed caribou avoidance procedures,鈥� as a strategically important national initiative in a time when Chinese domination of heavy rare earth metals threatens others鈥� ability to build and source high-performance magnets.

, based in Woburn, Massachusetts, also attracted investors鈥� interest, pulling in $76.4 million in fresh financing this year, per a May securities . The company has developed a process to extract valuable metals and rare earth elements from mining waste.

Exits next?

Major U.S. market indices are trading near all-time highs these days, so it鈥檚 looking like a good time for public companies in a lot of industries. But those tied to sourcing of rare metals and battery materials are riding particularly high.

MP Materials, for instance, had a recent market cap around $10 billion 鈥� its highest to date. Rare earth stocks more broadly are also .

Could IPOs and acquisitions for the most heavily funded companies tied to sourcing scarce materials be next? These aren鈥檛 likely to be the fastest-moving spaces for dealmaking, but at least for now some momentum is on their side.

附近上门