Safi just raised $19.5 million for its B2B recycling marketplace. We got an exclusive look at the pitch memo it used to secure the funds.
- Recycling marketplace startup Safi just raised a $19.5 million Series A.
- The London-based startup secured the funds from Nosara Capital, Lowercarbon Capital, and Transition.
- Business Insider got an exclusive look at the pitch memo it used to raise the funds.
A London-based startup that uses artificial intelligence to increase recycling rates has just received a $19.5 million Series A funding round.
Safi, a B2B marketplace for trading recyclable materials such as plastic, paper, and metal, was founded in 2021. According to the startup, the industry is currently characterized by pen-and-paper processes, middlemen, and a lack of transparency. In contrast, it employs an algorithm to match buyers and sellers, generative AI and embedded finance tools to facilitate transactions, and computer vision to inspect material prior to sale.
“Taking unnecessary costs out of the supply chain, so that the price of recycled material can be competitive with virgin material, that’s the fundamental reason why we exist,” said CEO and cofounder Rishi Stocker, an early employee at fintech Revolut. Only then will buyers demand that recycled materials be used whenever possible, he added.
Stocker pointed out that using recycled materials reduces greenhouse gas emissions significantly more than using virgin materials. Take a piece of paper: Project Drawdown assumes that recycled paper emits approximately 25% fewer total emissions than conventional paper.
Recyclable materials are traded globally, with waste collectors buying them and selling them to recyclers, who then sell the processed material on to be reused. According to Stocker, this process is mostly done offline and is hampered by a lack of quality control and digital tools.
Despite being able to get better product and price deals elsewhere, buyers and sellers work with the same partners due to the high level of friction in sourcing and building relationships with new suppliers, he added.
Safi’s platform digitizes the entire trader discovery, quality control, payment, and logistics process. Buyers tell the platform what materials they want and why when they first sign up. After that, it will only show sellers who have that material. While buyers can browse the marketplace, most do not, according to Stocker.
Instead, the platform can match traders based on how likely they are to do business together. Traders can conduct transactions via WhatsApp, where they interact with Safi’s generative AI chatbot. Payment terms can be finalized in this manner as well. Material quality is then verified with a photo that is analyzed by computer vision AI before being sent via digital freight forwarders, with whom Safi collaborates to handle physical logistics.
Given the global reach of the recycling supply chain, the company operates on a global scale. It has a few key markets in Europe, including the United Kingdom, Greece, Spain, Portugal, and Italy, as well as India, according to Stocker. It is currently focused on consumer recycling but plans to expand into industrial streams in the future.
Nosara Capital led the round, with participation from existing investors Lowercarbon Capital and Transition. It brings the total amount raised by the company to $25 million.
As stated in the pitch memo, Safi’s initial goal was to raise $10 million, but investors were drawn to its large total addressable market, where commodity prices are rising. Stocker attributes this to pressure from manufacturers, consumers, and policymakers to use more recycled material.
The funds will be used to expand its current offering by digitizing additional parts of the supply chain and expanding its use of AI, automation, and embedded finance. The team of 25 people will be doubled by the end of 2025, with positions available in India and Europe.
