March 19, 2008

RecycleBank raises $30M

The most low-tech of clean technologies, recycling, got a boost today. RecycleBank, a Philadelphia-based startup that runs incentive-based recycling programs, has raised $30 million in Series B funding led by the high-profile VCs at Kleiner Perkins, PEHub reports. RecycleBank’s round also included existing investors RRE Ventures and Sigma Partners, who together invested $13.1 million in a Series A financing last year.

RecycleBank seeks to revitalize municipal recycling by incentivizing the program for consumers. The more a customer recycles, the more “RecycleBank Dollars” he or she earns, which can be redeemed for discounts at over 250 different businesses. So by recycling more beer bottles, newspapers and shampoo bottles you can get discounts on Jockey underwear, Starbucks latt├ęs or even PetCo dog food.

The way it works is your recycling container contains a unique RFID in which you can recycle glass, plastic, metal, paper and cardboard. The recycling trucks identify each container and weigh the contents, crediting the household. Customers can track and manage their recycling and rewards through RecycleBank’s web site.

Making the recycling business a profitable one is a tall order. Amid a budget crisis in 2002, New York City stopped recycling glass and plastic altogether because the program was losing too much money (the Big Apple has since resumed recycling). But RecycleBank is all too aware of what a volatile market it can be; it points to the most recent Annual Nationwide Survey of Solid Waste Management in the U.S., which notes that 28 states have seen recycling rates go down since 2001.

RecycleBank makes its money from the municipalities themselves, who pay based on number of household involved. The company also gets a cut from the recyclers, assuming they see a boost in materials coming in.

Early pilot programs turned in some impressive recycling adoption rates. In two Philadelphia communities RecycleBank boosted recycling rates to 90 percent each, up from 35 and 7 percent, respectively.

Now the only real problem I see with this sort of business plan is theft. And to tell you the truth if theft of recycling bins, or midnight runs to steal your neighbors recyclables, is the problem then it means the system is working. I know that my house has started recycling and not many other people really do. I have been by myself many times in the parking lot of Wal Mart sorting through my different recyclables. This is only a good thing, and by the early numbers it really was an incentive that people will get behind and support.

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