Danielle Joseph, Director & Investment Officer, Closed Loop Partners
Closed Loop Partners (CLP) is an investment firm focused on building the circular economy in North America and beyond. The circular economy eliminates waste and keeps materials in play, creating a more profitable and sustainable future. CLP’s investments cover a broad spectrum of materials including plastics, paper, metals, electronics, and textiles. The investment side consists of three main funds:
- Closed Loop Fund, a credit fund which lends capital to municipalities and private operators to enhance and scale recycling infrastructure,
- Closed Loop Ventures, an early stage venture capital fund focused on the development of sustainable consumer goods and packaging companies, innovative recycling technologies, and advanced supply chains, and
- The Closed Loop Leadership Fund, a private equity fund which purchases majority stakes in companies to help with vertical integration and managing for growth of recycling infrastructure and related companies
The Center for the Circular Economy (CCE), CLP’s innovation center, brings different industry players together to enable the circular economy. For example, the Center launched the NextGen Consortium in 2018, a pre-competitive collaboration with founding partners McDonald’s and Starbucks to redesign the fiber to-go cup so that it’s widely recoverable at a global scale. In addition to collaborations such as the NextGen Consortium, as well as others like Connect Fashion, the Center team conducts extensive research and reporting that informs the investment team’s decisions.
What do you actually do all day?
I manage Closed Loop Ventures, which seeks to fund companies that are in some way closing the loop on materials that are otherwise viewed as waste. We look for companies that can remanufacture these materials into something with higher value, or use technology such as AI or innovative software to reduce waste generated in the production process or in the supply chain.
We look at very early stage companies that are pre-revenue, or have maybe had a few pilots in the market and have some proof of market demand for their product. We typically provide $100,000 – $300,000 to support them in the initial stages of proving out their concept and gaining market traction.
A big part of my job is sourcing new companies which means I talk to a lot of entrepreneurs, do a lot of due diligence assessing the risks and opportunities of a company, and negotiate terms. I also help our portfolio companies to scale by introducing them to new partners and customers and helping them to raise more capital. It’s really satisfying to work closely with companies from the very beginning.
Networking is an important part of my role; I go to a lot of conferences across different industries and spend time connecting with other accelerators and incubators. It’s a very relationship driven industry, which can make it tough for entrepreneurs who aren’t well connected so we look to help strengthen the network of our entrepreneurs.
What are some of the key skills for success in this role?
Experience with different types of investing is important, most people in this industry go through two years of investment banking or consulting at the large training firms first. Still others get started by founding a company and then going into venture capital.
Equally important is to have a deep curiosity about companies, supply chains and markets and how they work and work together. You’ve got to understand what these companies do and the environment they work in. You need to be able to discern if a founder has the wherewithal to succeed in these challenging markets or not.
What is your favorite part of your job?
I love so many facets of it. I get excited meeting incredible entrepreneurs who have innovative ideas and are solving problems in the market. I enjoy digging into the details of their companies and their markets. I love reading and learning about new verticals during the due diligence process.
It’s wonderful that we have so many different capital structures to help a business succeed. A lot of what I try to do with entrepreneurs is to educate them so that they can decide if venture capital is the best financing opportunity for them or if perhaps there are some less expensive options they can pursue.
I also love the portfolio management aspect and working through those strategy issues with our portfolio companies and helping them to navigate different scenarios using resources from my network.
What is the hardest part of your job?
The hardest part of my job is having to say “no” to companies. There are a lot of really amazing businesses out there and it’s hard when we have to turn down companies that aren’t a fit for our type of capital or aren’t going to scale at the rate we require. It’s especially difficult when I have to say “no” to people I’d love to work with. I try to refer them to other organizations when I can, and it helps that CLP has other types of financing available as well.
What is your proudest professional achievement?
My most pivotal moment was getting that first internship at New World Capital which later turned into a full-time job. There was a lot of luck and timing involved, but it was a very proud moment for me when I was able to convince my future manager that he should hire me as an intern so I could get my feet wet in the industry. That experience shaped me and my outlook in ways I wouldn’t have been exposed to at another firm. Taking a bet on a philosophy major was a risky move for the company, but I really proved myself there through my dedication and commitment to taking extra courses so I could learn the language on my own. It was a big leap of faith on both sides.
What are the game changers in your world?
Collaboration will be critical for accelerating the transition to a circular economy, as this shift requires systems change that impacts every stage of the value chain. I would love to see additional funds join the space so there is more money invested in the circular economy overall. We’ve co-invested with a number of other funds, but I’d like to see the ecosystem grow even more and to see more end buyers for these innovative materials and more consumers for these innovative products.
Innovative technology in the plastics supply chain will make a big difference to the industry as well. Things like chemical recycling, plastic reduction, and other ways of breaking down plastic #3 – #7 will be huge. There is some amazing tech out there, but it requires so much money to scale and investment to date has been limited. It’s something that a lot of industry players are looking at today, it will be interesting to see how we build out that infrastructure. Our Center for the Circular Economy issued a recent report called Accelerating Circular Supply Chains for Plastics that digs deeper into this subject area.
What was your path to this role?
I graduated with an undergraduate degree in Philosophy, Religious Studies, and Politics. I really wanted to do something good with my career and started working at the American Red Cross. I then learned that most of the time spent at a nonprofit was fundraising from people in finance, so I decided to go work at a startup. I loved the faster pace, and enjoyed seeing the impact that it was having on the people we were serving, but I was still doing a lot of fundraising from people who had money from other spaces. It got me interested in the people we were raising money from, so I decided to do a self-study on how finance worked.
The more I learned about it, the more I wanted to work in that space. I loved learning about concepts like using finance as a tool for good, and directing capital into companies that are creating positive change while still providing a financial return. This was also in the very early days of the impact investing movement and I was thrilled to discover that I wasn’t the first person to be thinking about these things.
I did a lot of informational interviews with finance and private equity professionals, which helped me get my first internship with New World Capital Group. I was incredibly lucky to join a team of excellent people who were able to teach me about investing in environmental opportunities. That really propelled me on my journey. Most of my mentors had MBAs so I decided to go back to school. I went to Stanford and learned about other ways of investing which made me a perfect fit to join CLP and this new wave of environmental sector investing.
What’s your advice to someone interested in a role like this?
Really think about what you like to do on a day to day basis. If you want to be in venture capital because you like helping companies grow, then you should go work in a company and help them grow to get that experience first.
Getting into the venture industry is incredibly difficult, there’s a lot of luck involved. It’s more helpful to have a deep passion about something else that you can then translate into venture. For me, it was investing and how financial markets move. There are also great venture investors who are passionate about other industries such as the fashion space, or the food and beverage industry. There are a lot of interesting ways to come at it.
Many top tier venture capital firms look for people who have some kind of training or experience at investment banking or consulting firms. Since I didn’t come from one of those institutions, I look more for people who have deep curiosity and are trainable.
One thing you can do if you’re really excited about this space is to start reaching out and building relationships. Strengthening your network is invaluable as you begin to think about your next steps.
What are your favorite resources?
Urban Future Lab is a great accelerator for clean energy companies in New York City
Fashion for Good is a big fashion accelerator in the Netherlands
AgFunder is a great accelerator for food focused companies
The main waste conference is the Waste Expo in Las Vegas. There’s also a good group called the Solid Waste Association of North America (SWANA) and Recycling Magazine is helpful. In general, any industry or trade publication tends to have the innovative startup insight before the more generalist publications do.
I’m part of several networks including the Women Investing for a Sustainable Economy (WISE), and I stay up to date via Waste Dive, Utility Dive, and Smart Cities Dive.
Who (or what) is your sustainability hero?
My first mentor in this space is an incredible man named Carter Bales. He was one of the first folks talking about investing for both environmental returns and financial returns. He is still one of the leading thinkers in the space, and he’s an incredible human who has guided me in ways that I am incredibly grateful for.
