Over the past 12 months, millions of dollars have been poured into companies providing electronic waste (e-waste) recycling or marketing services, both for consumers and for businesses.
Some of the more significant deals: $23.5 million in Services B funding for electronics collector and remarketer Optoro; $105 million in Series C backing for mobile-phone recycler eRecyclingCorps; and a $350 million acquisition by early investor Outerwall (formerly Coinstar) for gadget recycling kiosk provider ecoATM.
"There is a very strong sustainability push by IT and equipment manufacturers that has manifested itself in this activity," said Sheeraz Haji, CEO of researcher Cleantech Group, pointing to a number of related deals showing up in his firm's i3 deal tracking service. "Companies are paying far more attention to end-of-life issues. The upgrade cycles are massive for corporate and consumer IT."
Converging market drivers
To be clear, companies that manage technology collection, refurbishment, recycling or remarketing have existed for years. eBay has managed a marketplace for collecting and redirecting up to $100 billion in hardware annually for at least a half-dozen years. The value of the secondary IT market is estimated at more than $300 billion.
Several factors have converged to stoke more interest in services for disposing of IT hardware at the end of its life, redistributing excess electronics inventory or collecting gadgets. Among them: the pace of innovation surrounding mobile technology, an OEM push to collect and reuse rare earth materials, the rise of formal corporate sustainability programs, and the shift among many big companies away from massive on-premises data centers to IT infrastructure and applications delivered by cloud service providers.
One vivid illustration is the recent deal between MarkITx, a marketplace for buying and selling used IT equipment, and real estate broker Jones Lang LaSalle (JLL). Under the relationship, JLL clients will be able to use the MarkITx exchange to trade IT equipment from data centers that are being dismantled, upgraded or consolidated, said Frank Muscarello, founder and CEO of the Chicago-based company, which has raised about $5 million to get off the ground. Considering that JLL is involved in more than 20,000 sustainability projects annually, the upside is enormous for the exchange, JLL and its ultimate clients. "IT hardware, in particular, is a commodity and therefore should be traded as one," he said.
Muscarello described MarkITx's role as a "central clearing house" that businesses can use to derive more value out of unwanted technology assets while keeping the stuff out of landfills. Just like an exchange that trades commodity futures, MarkITx uses analytics to act as a matchmaker between IT buyers and sellers, offering pricing guidance to its members. It helps companies recoup up to 40 percent of their original investment, while ensuring that the equipment is headed for either a second life or a certified refurbishment. Although Muscarello can't name names, the startup is working with more than 1,400 customers on five continents.
The lingering e-waste challenge
There is tremendous upside for companies such as MarkITx and others focused on the e-cycling issue.
The U.S. Environmental Protection Agency estimated that about 1.4 million tons of computers, monitors, printers/copiers, peripherals and mobile gadgets were collected in 2010 (the most recent year for which it provides stats). A significant amount of that is trashed. For example, only about 40 percent of the computers were recycled that year, and the percentages go down from there.
While all the big high-tech and electronics companies have been reducing the toxicity of their products — reducing or eliminating lead, cadmium, mercury and other hazardous materials — the other side effect of letting those assets go is that many companies are missing out on the chance to extract materials that still could have significant value, Haji said.
The EPA figures, for example, that recycling 1 million mobile phones can recover 50 pounds of gold, 550 pounds of silver, 20 pounds of palladium and more than 20,000 pounds of copper.
Literally dozens of resources are available for consumers to turn in individual items, including well-known resources such as Gazelle, eRecyclingCorps and ecoATM. You may be less acquainted with the many resources focused on businesses.
Be sure to check if the resource you are considering carries a certification verifying that it is managing its recycling and disassembly processes responsibly. The two main labels to look for are R2 (Responsible Recycling) Solutions, developed by a multi-stakeholder group in a process that was partially facilitated and funded by the EPA; and the e-Stewards certification, used by more than 50 major companies to guide disposal practices, including Wells Fargo Bank, Alcoa, Bank of America, Boeing, LG, Samsung and Bloomberg. All that aside, here are nine worth more attention:
Started in 2001, this R2-certified company was just named a "Visionary" on research firm Gartner's December "Magic Quadrant" report for IT asset disposition and disposal. It claims to help increase the recovery value of equipment by 50 to 80 percent. Apto is also a Microsoft-certified refurbisher. Based in Atlanta, the company has partners in Europe, Asia and South America that can help manage multi-region engagements.
This company built up a client base of more than 1,000 customers before being acquired by the world's largest wholesale technology distributor, Ingram Micro, in October. Its R2- and e-Stewards-certified services are available in more than 40 locations, serving 140 countries.
With both R2 and e-Stewards certifications, dataserv has been around for more than 30 years. It owns and operates 16 facilities, and is capable of servicing equipment from more than 75 countries around the world. On the company's client list are two of the top five printer and copier manufacturers, one of the leading makers of automated teller machines (ATMs), and four out of the five top personal computer companies in Europe and the United States.
Redemtech and TechTurn are just two small technology recycling and recovery companies that distributor Arrow Electronics has snapped up over the past several years. The company manages 15 processing facilities in eight countries. It was the first company to move to earn e-Stewards global status for its operations from Basel Action Network; the process is ongoing for at least the next two years. Arrow processes 7.2 million assets annually, and in November announced a deal to offer its services with a big IT outsourcing company, Infosys. (Watch more on Arrow Value Recovery in the video below.)
Another company with global capacity, ITRenew is based in Silicon Valley, Calif. One of its big differentiators is proprietary data sanitization software, used to clear confidential data from hardware that it is managing. Its specialty is high-end enterprise technology found in data centers.
We already mentioned this company's latest round of funding, $23.5 million from Revolution Group. That was on top of its series A round of $7.5 million earlier in 2013, led by Grotech Ventures. Last fall, the company expanded its operations in Washington, D.C., to accommodate about 150 people. The six-year-old company's main service is helping big-box retailers resell high volumes of excess, returned or damaged inventory, using business intelligence and analytics software to manage the process.
Founded in 2009, this French provider of electronics remarketing and reconditioning services runs eight processing facilities in Europe with a presence in France, Spain and Poland. It raised close to $10 million in funding about a year ago from backers such as Seventure Partners, FSN PME, Telecom Technologies Transfer and Alpha Capital Partners. Recommerce's customers are mainly telecommunications carriers, distributors, manufacturers and e-merchants. In October, it inked an agreement with Ingram Micro Mobility to provide services related to corporate mobile phone fleet buybacks.
This Canadian startup uses an online marketplace platform to help telecommunications companies, and audio/visual technology suppliers (among others) "harvest value" from their surplus inventory — often helping buyers achieve savings of 20 to 70 percent over traditional sources. Its long-term vision it to divert 1 billion pounds of product from global landfills. In November, it added a service to cover mobile phones and tablet collection.
Sims was just named a "Leader" for IT asset disposition in Gartner's December report. It has multiple facilities that have been certified to e-Stewards standards and runs 42 sites around the world.
E-waste photo by KYTan via Shutterstock