Podcast #2005.06

Founding Circulate Capital and signing competing corporate LPs

With Rob Kaplan

Listen on Google Play Music

About Rob Kaplan: Founder and CEO of Circulate Capital, an investment management firm dedicated to incubating and financing companies that prevent the flow of ocean plastic waste to the world’s ocean and advance the circular economy in South and Southeast Asia.

About Sumeet Singh: Sumeet is CEO at GoMassive. He has over 15+ years of experience in finance and fundraising. At GoMassive he focusses on Pollution & Climate Tech Investments. 

Sumeet: What about you Rob? What is your background and how did you go about founding circulate capital?

Rob: I’ve been working in environmental sustainability for my entire career. It started in more of the public policy sector and non-profit sector. Then I transitioned to the private sector because I got very interested in the limits of government to solve the environmental challenges that I was most passionate about. Also the potential and power of a business to solve these challenges in a more efficient and effective and scalable way.

So I spent about 10 years in corporate in the beverage industry, and then retail at Walmart, leading sustainability initiatives. I was responsible for a number of supply chain investment and partnership programs and then also sustainable packaging globally for Walmart. And that’s how I really got into the circular economy and the potential for packaging to really drive significant environmental and social impact.

I co-founded an investment firm in the US called Closed Loop Partners, & at Walmart we helped anchor invest in the first fund there. And then I joined us full time as a Managing Director. And a few years ago, a number of our corporate partners, came to us and said, they’re interested in what we were doing in the US and appreciative of it, but the waste and recycling challenges that they’re facing in emerging markets.

At just about the same time, the Ocean Conservancy had come out with this research that found that most of the plastic that gets into the ocean comes from this region. If we invested in waste and recycling infrastructure, we could cut that flow of plastic, which right now is about 8 million tons a year. Or then that’s the same as essentially a garbage truck full of plastic backing up to the beach and dumping into the ocean every minute. The science and the research found that we could probably cut that flow in half just by doing some of that low hanging fruit. And that’s where the idea for circulate capital came from.

Sumeet: I think it’s one of the most unique funds in the world right now. You have managed to get the competing LPs invested in your fund. The thought process was unique and you found that a very precise niche, which was very easy for these corporate LPs to come on board. What were the main challenges that you faced while raising Circulate Capital.

Rob: One of the things that we really had to develop was “a rising tide lifts all boats” strategy to engage the corporate LPs and make the case that by developing a pooled investment strategy they could get further faster than doing this work on their own.

Many of the multinational corporations are our investors, like PepsiCo who was our first investor, Coca-Cola, Unilever, Chanel, Danone, Proctor and Gamble, Dow, CP Chemicals. They’ve been working in this space long enough to know that there is no silver bullet, there’s no magic solution and that they need collaboration. And so, this was one of the key elements in the fundraising process was helping them see our strategy as a way to solve their problem.

The other thing that’s important to keep in mind is that it’s not exactly a classic corporate venture because most of our LPs don’t want to be in the waste and recycling business. That’s not how they make money, right? They want this problem solved so that they can continue to deliver the products and brands and services that they offer. They see this strategy as a way to help enable that for them and all of their, their competitors so that they can compete in the marketplace effectively.