A London-based startup using AI to increase recycling rates has just raised a $19.5 million Series A funding round.
Safi, which was founded in 2021, has built a B2B marketplace for trading recyclable materials such as plastic, paper, and metal. The industry is currently characterized by pen-and-paper processes, middlemen, and a lack of transparency, the startup claims. In contrast, it uses an algorithm to match buyers and sellers, generative AI and embedded finance tools to facilitate deals, and computer vision to check the quality of material ahead of its 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,” CEO and cofounder Rishi Stocker, an early employee at fintech Revolut, told Business Insider. Only then will buyers move to use recycled materials whenever possible, he added.
Using recycled material to make things creates significantly lower greenhouse gas emissions versus virgin sources, Stocker noted. Take paper: Project Drawdown assumes recycled paper produces about 25% fewer total emissions than conventional.
Recyclable materials are traded globally, bought from waste collectors and sold to recyclers who sell the processed material on to be reused. This process mostly happens offline and is stifled by a lack of quality control and digital tools, Stocker said.
Buyers and sellers work with the same partners due to the high level of friction in sourcing and building relationships with new suppliers, despite being able to get a better product and price deals elsewhere, he added.
Safi’s platform digitizes the whole process of trader discovery, quality control, payments, and logistics. When they first sign up, buyers tell the platform what materials they want and why. From then on, it will just show sellers who have that material. While buyers can browse the marketplace, Stocker said most people don’t want to.
Instead, the platform can match traders on their likelihood of doing business together. Deals can be made via WhatsApp, where traders interact with Safi’s generative AI chatbot. Payment terms can also be finalized this way. Material quality is then checked via a photo that is analyzed by computer vision AI before it is sent via digital freight forwarders, which Safi works with to take care of the physical logistics.
The company operates internationally, given the global spread of the recycling supply chain. It has a handful of core markets in Europe – UK, Greece, Spain, Portugal, and Italy – while India is another large market, Stocker said. It is currently focused on consumer recycling but is eyeing industrial streams in the long term.
The round was led by Nosara Capital, with participation from existing investors Lowercarbon Capital and Transition. It brings the company’s total raised to $25 million.
Safi originally set out to raise $10 million, as noted in the pitch memo, but found investors were drawn to its large total addressable market where commodity prices are rising. That’s thanks in part to pressure from manufacturers, consumers, and policymakers to use more recycled material, Stocker said.
The cash injection will be used to double down on its current offering, digitizing additional parts of the supply chain and developing its use of AI, automation, and embedded finance further. The 25-strong team will be doubled by the end of 2025, with roles available in India and Europe.
Check out the redacted pitch memo below:
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