Traceability allows companies to follow products and goods as they move across the supply chain and understand the environmental and sustainability impact along each step. By tracing digitally, it can be used across all facets of the business to support business goals including efficiency, resiliency, and responsiveness in addition to sustainability. Building on the blockchain makes this record immutable. Circulor is an industrial supply chain traceability provider built on the blockchain that allows organizations to monitor and track all facets of their supply chain impact in real-time. Whether it’s electrical vehicle raw material sourcing or a construction project’s environmental impact, the platform is versatile to improve ESG performance, reduced greenhouse emissions, and manage supply chain risk. The company works with organizations like Mercedes Benz, Boeing, Volvo, BHP, and Sky.
London TechWatch caught up with Cofounder and CEO Douglas Johnson-Poensgen to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $45.6M, and much, much more…
Who were your investors and how much did you raise?
Circulor raised $25M in its Series B funding round, led by The Westly Group. HG Ventures of The Heritage Group is a new investor which brings strategic value across their transportation, materials, and environmental services business in North America. Existing investors Volvo Cars Technology Fund, SYSTEMIQ Capital, Jaguar Land Rover’s InMotion Ventures, Future Positive Capital, BHP Ventures, Salesforce Ventures, and 24Haymarket continued to participate in the round.
Tell us about your product or service.
Circulor is the leading sustainable supply chain traceability provider. We offer enterprise software-as-a-service to enable organizations to monitor and track the provenance of the raw materials they are sourcing and using in their manufacturing and recycling supply chains. The Circulor platform creates an immutable record, tracking the physical flow of critical materials, following the journey from extraction to final production, as well as associated ESG characteristics and embedded carbon across Scope 1, 2, and 3 emissions. This means that anomalies can be flagged for further verification and validation to assist in targeting compliance and investigative action.
What inspired the start of Circulor?
In 2010, I was running BT’s defence and security arm and launched their cybersecurity business around that time. I was working with several cryptographers who were getting excited about something called ‘bitcoin.’ Although I didn’t buy bitcoin myself (hindsight is a wonderful thing), it did ignite a thought about the underlying technology of blockchain, and whether it might cross over into a real-world use case. Now we know this as Web3.0. This was the initial thought that led to the creation of Circulor. Then, from 2015 to 2016, I began talking to people about the potential for blockchain combined with other technologies to be applied to existing problems, such as the lack of transparency and trust in supply chains.
Distributed ledgers are a way of notarising transactions and making them immutable. Applied to complex industrial supply chains, it helps build trust. In Latin, the word Circulor means ‘to form groups.’ Enabling the network effect was and still is our real and growing value.
How is Circulor different?
Unlike other traceability solutions, we track the actual material as it flows through the supply chain, not just the transactions between participants. Rather than following the paperwork as a proxy, tagging and tracking the material itself allows us to provide far greater accuracy and detect anomalies. We do this by working with each supply chain participant to gather relevant data of the mineral or material and its journey through the production process, including its weight, mass balance, location, and elapsed time. Tracking raw materials such as lithium is not the same as, say, following the journey of a strawberry – a strawberry will undoubtedly stay the same from when it grows in the field, to when it lands on the plate. Circulor’s technology, in comparison, can track the material as it changes state from the raw material that comes out of the ground to the final product.
What market you are targeting and how big is it?
We aim to give companies worldwide full visibility of their supply chains – with a special focus on tracking the provenance, production flow, and GHG emissions of raw materials used in complex supply chains like EV batteries, solar panels, and construction materials.
Besides Europe, the U.S. industry is increasingly interested in not just the origin, but also demonstrating ESG performance.
What’s your business model?
Circulor’s traceability solution is provided as a subscription service. In addition to an annual subscription cost, customers are charged for implementation projects and any enhanced support that goes beyond what’s included in the base subscription.
What are your post-COVID office plans?
As a global company, most of our team works remotely and can operate from anywhere in the world. Although physical offices become less necessary, we opened offices in London, Berlin, and Singapore as spaces for collaboration, creativity, and learning to ensure our employees feel a sense of belonging. We are committed to secure and sustainable supply chains with our customers, so naturally, internally, our London HQ is based out of the Aircraft Factory, the most sustainable building in our landlord’s portfolio. During the office refurbishment, we put a lot of effort into upcycling furniture and making the best out of what was already in place to minimize waste. Our conference rooms have names like “Cobalt”, “Climate” or “Carbon” to reflect our intent. We are emphasizing a warm, inviting, collaborative environment where our employees can come if they want to.
What was the funding process like?
This is our third round of funding in two years, and we are well-practiced. In the current economic climate, it is a sign of strength that existing investors want to double down (not just follow on), and this happened here. Our pre-money was much higher than a year ago and there was no investor attempt to reduce it, even after the Russian invasion of Ukraine and the significant falls in the public markets led to many term sheets being torn up. We had an impressive number of potential new investors approach us and we had to make choices. Naturally, some of those investors also decided to pass. One always hopes that a funding round can be quicker than it proves to be once all the lawyers get busy, but we still did this quite quickly. This round had its first close only 10 months after our last priced round.
What are the biggest challenges that you faced while raising capital?
Speaking to all the interested investors and deciding who we wanted to work with. Climate tech and supply chain are the hottest investment spaces on the planet (literally as well as figuratively) and we had, and continue to have, considerable inbound investor interest.
What factors about your business led your investors to write the check?
We are working with carmakers including Volvo Cars, Polestar, and Jaguar Land Rover plus miners and energy companies like BHP, Trafigura and TotalEnergies, to trace their supply chains. Circulor managed to build a unique and robust network, tracking the provenance, production flow, and GHG emissions of raw materials used in complex supply chains like electric vehicle (EV) batteries, but also in solar panels, and construction materials. Steve Westly, the founder of our leading investor, The Westly Group said that Circulor is very much like Tesla, because we are by far the leader in the supply chain traceability sector.
We are working with carmakers including Volvo Cars, Polestar, and Jaguar Land Rover plus miners and energy companies like BHP, Trafigura and TotalEnergies, to trace their supply chains. Circulor managed to build a unique and robust network, tracking the provenance, production flow, and GHG emissions of raw materials used in complex supply chains like electric vehicle (EV) batteries, but also in solar panels, and construction materials. Steve Westly, the founder of our leading investor, The Westly Group said that Circulor is very much like Tesla, because we are by far the leader in the supply chain traceability sector.
What are the milestones you plan to achieve in the next six months?
We aim to give companies worldwide full visibility of their supply chains. Circulor’s client base grew by over 60% within the last year, including BHP, Southwire, Trafigura, Jaguar Land Rover, Blackstone, Blackearth Minerals, Urbix Inc., Element 25, Rock Tech Lithium, and North Coal. As the leader in supply chain traceability, we are focusing on continuing this exponential growth.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Extend runway by cutting costs, focus on revenue growth, and a clear path to profitability. Be disciplined.
Where do you see the company going now over the near term?
We are growing top line and we are very focused on the bets we make with our time and money. A harsh macro environment will cause others to falter, so this is the time to stand out of the crowd.
What is your favourite restaurant in London?
I always love dining with a view, for which my pick would be Galvin at Windows.
