Pivoting from tobacco waste to textiles, Circ puts a fresh spin on clothing recycling

The fashion industry has come under fire of late for its outsize impact on the environment. From cradle to grave, it accounts for between 4% and 10% of the world’s carbon emissions and around 20% of the world’s wastewater. Only about 15% of the clothes in the U.S. are recycled, the Environmental Protection Agency estimates.

Some clothing and shoe companies have begun to wake up to the problem, pledging that their lines will be made of increasing amounts of recycled materials. That’s created an opening for materials companies like Circ, which uses a proprietary process to extract raw materials from discarded cotton and polyester.

Today, the startup announced a $30 million Series B round led by Bill Gates-founded Breakthrough Energy Ventures. It was joined by Inditex, the parent company of fast-fashion retailer Zara; Milliken and Company; and Landsdowne Partners.

“With this investment round, we’ve secured suppliers, purchasers, and major financial stakeholders to establish a much cleaner fashion future,” Circ CEO Peter Majeranowski said in a statement. “We already have all the clothing we need to make all the clothing we’ll ever need. Now, alongside our partners, we can make recycled garments accessible to every shopper.”

The company had previously raised $8 million in a round led by Tin Shed Ventures, the VC arm of privately owned outdoor apparel company Patagonia, which has long used recycled materials in its gear.

Circ began life as a biofuels company using its process to break down tobacco waste to turn it into feedstocks for renewable fuels. But, according to a Bloomberg report last year, when one Swedish commodities trading company asked if their machine could process T-shirts, Circ’s business model changed entirely.

“Suddenly, we’ve got the fashion industry cold-calling us — brands you’d see in any mall in Anytown, USA — who wanted a circular recycled textile solution,” Majeranowski told Bloomberg.

The company’s process uses subcritical water — water that’s kept under pressure so it can be heated beyond the boiling point — along with a chemical catalyst like sodium hydroxide (also known as lye) to break a material’s chemical bonds. There are other processes that can accomplish the same task, but Circ’s patents say that it can use fewer chemical catalysts, making it cheaper and less environmentally taxing. Circ’s process comes with an advantage, too: It’s able to digest cotton-polyester blends, which have been a barrier to textile recycling efforts.

To digest the fibers, Circ adds textiles to a large reactor along with water typically treated with a catalyst used to raise the pH, according to the patents. The mix is heated to 105 to 190 degrees Celsius (221 to 374 degrees Fahrenheit) at a pressure of 40 to 300 psi for up to 90 minutes.

The chemical recycling process produces basic building blocks depending on the inputs. In the case of cotton, the end result is either cellulose, which can be made into semi-synthetic fibers like rayon or lyocell. If polyester is added at the beginning, the end product is terephthalic acid (TPA), which can be made into polyethylene terephthalate (PET), a synthetic fiber commonly used in fleeces, for example.

Raw materials make up a significant portion of the fashion industry’s carbon footprint, Carmichael Roberts, who leads the investment committee for Breakthrough Energy Ventures, pointed out, and recycling is a quick way to bring that number down. “We see Circ’s ability to recycle blended textiles as a significant breakthrough,” he said.

Circ’s Series B adds more momentum to the recycling startup space, which has been heating up ever since COVID upended global supply chains. It was a theme several founders recounted at TC Sessions: Climate 2022.

Miranda Wang, co-founder and CEO of Novoloop, which specializes in upcycling plastics, said this last year was transformative for her company in terms of fundraising. Megan O’Connor, co-founder and CEO of battery recycling startup Nth Cycle, said that materials shortages coupled with the automotive sector’s sudden embrace of electrification have had a similar effect. And Matanya Horowitz, founder and CEO of AMP Robotics, said that automation and new technologies have started to change the conversation around recycling, helping to “decouple this trade-off” between economic growth and environmental damage.