European Union (EU) lawmakers this month announced plans to reduce waste and increase recycling across the bloc, with proposals to collect and process 45% of 16 identified “strategic” raw materials by 2030. These include metals such as copper, which is used in everything from computers and TVs to household wiring and electrical generators.
At the same time, numerous startups have raised significant venture capital dollars for technologies that help people and industries reuse and recycle materials like plastic; batteries; carbon fiber; carpet; and indeed metal.
One such startup is Metaloop, a seven-year-old Austrian company that connects scrap metal sellers with buyers, which today announced it has raised €16 million ($17 million) in a Series A funding round.
By “sellers” we do not mean individuals or companies who collect scrap metal for the express purpose of selling it; in all likelihood, they already have the requisite knowledge and networks to leverage their material gains. No, in the world of Metaloop, a vendor will most likely be an industrial entity where scrap is a byproduct of something else they make – and where they don’t have the expertise to monetize their residual waste. These can be industrial manufacturers ranging from small local SMEs to multi-billion dollar multinationals in the automotive, electronics or construction sectors.
“The scrap metal market is not transparent and difficult to navigate for them,” Jan Pannenbäcker, co-founder and CEO of Metaloop, explains to TechCrunch. “It is also unclear who the market participants are and what the prices are in a constantly moving commodity market. But at the same time, scrap is very valuable and perfect for recycling.”
The global scrap recycling market was estimated to be a $58 billion industry in 2021, a figure estimated to nearly double by the end of the decade. The reasons for this are numerous, including the crucial role that metals play in the industrial spectrum; the fact that metals are finite (and therefore sensitive to scarcity); and perhaps the most important factor of all: metals are highly recyclable, at least compared to other materials.
“Metal can be recycled endlessly,” Pannenbäcker continued. “Recycling metal replaces new metal from mining and reduces greenhouse gas emissions.”
Extracting fresh metal from ores is indeed extremely energy intensive, with recycling being a much better solution if sustainability is key; for example, the energy required to smelt aluminum from scrap is approximately 5% of the energy required for mining.
Trade-in of iron
Founded in 2016 in Graz, Austria, Metaloop was originally called Schrott24 and focused on the “small end of the value chain,” such as private individuals and artisans. That business actually still exists, but only represents a “low single-digit percentage” of Metalloop’s broader revenue stream.
Buyers looking for untapped scrap supplies can be anyone from smelters to steel mills and foundries. Via Metaloop, sellers list their available scrap, which is then linked to buyers. Metaloop then assumes responsibility for execution, contracting forms, and orchestrating all transportation logistics.
This effectively positions Metaloop as a ‘registered merchant’ – it technically does all the buying and selling, taking legal responsibility for the transaction, without actually owning any physical assets such as yards or trucks.
This also allows Metaloop to ‘bundle and aggregate’ quantities of metal, meaning that if, for example, a buyer is looking for X amount of copper, Metaloop can combine loads from multiple sellers to complete a transaction. And it is because of this that Metaloop succeeds in creating value through economies of scale.
“By aggregating volumes, identifying better buyers, and offering additional services such as transportation and financing, we can improve pricing for sellers, provide material to buyers that they otherwise would not have had access to, and [we] earn a margin in between,” Pannenbäcker said.
And so Metaloop essentially serves to address the opaque ‘dysfunctional’ metal trading market, and make it more manageable for companies whose core function is not metal trading. While buyers – such as smelters – can gain better access to what is becoming an increasingly scarce secondary raw material supply chain.
As is the case with many traditional industries, Pannenbäcker says that today the scrap industry is largely managed through manual processes and Excel spreadsheets, with transactions often only taking place between local players, due to a “general lack of trust.”
It is worth noting that there are some technology platforms in related sectors, such as Reibus, which focuses on new (rather than scrap) metals. And then there is Metalshub, which is more focused on mining. When it comes to online marketplaces specifically aimed at scrap metal trading, Metaloop appears to be on to something.
Although Pannenbäcker did not reveal specific customers, he said Metaloop currently serves 600 customers around the world. The company also claims a team of around 50 people, about half of which are based at its Austrian headquarters, while the rest are distributed globally.
To date, Metaloop had raised €4.2 million ($4.5 million) in seed funding, and for its latest $17 million Series A, it ushered in New York’s FirstMark Capital as lead investor, with participation from FJ Labs, Statkraft Ventures and Silence VC. .