ETF Partners: Looking beyond just the Circular Economy

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ETF Partners’ Patrick Sheehan believes there is a lot of excitement ahead in the circular economy, which is relatively new field for many investors. “It’s not yet a crowded space and there are still very good opportunities.” ETF 3 is a portfolio fund of Tesi.

It is clear that circular economy and investing in the circular economy is high on the agenda of The Environmental Technologies Fund. “We think it’s a very interesting trend,” ETF Partners’ Patrick Sheehan explains.

Sheehan has a strong belief that ETF will find great opportunities in this field. At the same time companies in the circular economy are not the only investment targets ETF is seeking.

“We don’t invest because it’s a circular economy, but because it’s a good business,” he says.

New recycling streams

One of the recent investments that Sheehan comes back to a few times during our discussion is PHENIX, a French company offering retailers an alternative to disposing of unsold food through traditional waste management solutions.

Instead of paying to have unsold products and waste incinerated or placed in landfill, PHENIX’s portfolio of digital services allows retailers to optimise sales of end of life products, connects retailers with charities to enable food donation, and develops new recycling streams to give unsold products a second life. With its digital platform and strong network of partnerships, PHENIX helps retailers, shopping malls and factories move towards “zero waste”.

A close eye on the Nordics

ETF Partners’ headquarters are in London, but Sheehan says the investment focus is very much pan-European with the team keeping a close eye on the Nordics, where investing in environmental technologies is more recognised.

Like most investment firms, ETF invests mostly together with other investors. “We don’t buy companies, we invest in them.” states Sheehan, “We help entrepreneurs grow their businesses”.

Looking for ambitious teams

Sheehan says that ETF carefully evaluates management teams – looking at how able, ambitious, and motivated they are and what help they might needs to succeed. Then it analyses whether the company is offering something highly differentiated or unique.

ETF can typically be most helpful when a company has established a real and sustainable  revenue stream and  needs to scale up internationally. If the team believes there is an emerging success: “We can move quickly and deliver a lot of value!” tells Sheehan.

No gold rush ahead

Sheehan believes there is a lot more excitement ahead in the circular economy field, which is relatively new to many investors. “It’s not yet a crowded space and there are still very good opportunities for entrepreneurs,” he says.

However, Sheehan says he does not expect to see a Gold rush ahead in the sector.

“Investors will be slower to deploy capital than many expect,” he said. “It’s outside of the current investment mainstream, and finding great companies takes more work, in part because the companies exist across a  wide range of traditional sectors.”

ETF Partners

What it is: A London-based private equity fund, Environmental Technologies Fund. Founded in 2006, and investing in growth companies that also deliver a positive environmental impact, the team consists of 14 people from all over Europe.

What it does: Creates value by investing in and helping young European companies that deliver ’Sustainability through Innovation’. Particularly interested in enabling Smart Industry, Smart Cities and Smart Energy.

Funds: ETF 1, 2 and 3. Tesi has invested in Environmental Technologies Fund 3 as the first fund investment of its circular economy programme.

Portfolio: 18 companies, currently. The most recent investments are Phenix (mentioned above), Zeelo (a shared transportation company) and Eagle Genomics (a pioneer in data-driven discovery of human and plant microbiomes).

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