By Sami Yaghma, Jul 30, 2024
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A little-known startup named Redwood Materials, a private company specializing in lithium-ion battery recycling, is changing the way we think about supply and demand. Already partnered with major organizations such as Ford, Panasonic, Toyota, and Volvo, and named to Fast Company’s 2024 “Most Innovative Companies” list, Redwood Materials is rapidly positioning itself to become a major player in the US EV supply chain. Investing in Redwood Materials could be a promising venture, and although it is not currently publicly traded, accredited investors have some avenues to explore. This guide will help you understand how to invest in Redwood Materials and what to consider before making a decision.
Invest in Redwood Materials
Redwood Materials, founded by Tesla co-founder JB Straubel, focuses on recycling lithium-ion batteries to create a sustainable supply chain for battery production, addressing significant environmental and supply chain challenges in the battery industry.
Currently, Redwood Materials remains a private company, making investment opportunities mostly limited to accredited investors through pre-IPO platforms.
Redwood Materials offers both risks and potential growth opportunities for investors, backed by substantial funding and strategic partnerships with major automakers and financial institutions
Redwood Materials, a private venture-backed startup based in Carson City, NV, was founded in 2017 by JB Straubel, a Tesla co-founder. The company’s mission is to advance a more sustainable future by recycling lithium-ion batteries, addressing the global supply chain imbalances and bottlenecks that plague the battery industry. By focusing on creating a circular and sustainable supply chain for reusable battery materials, Redwood Materials aims to reduce the environmental impact of battery production significantly.
According to Statista, US EV sales could reach 2.5M units by 2028, and the EV market is growing at a 18.2% CAGR. Currently, the majority of battery production happens overseas, including the majority of the planet’s lithium ion refining capacity as well as other dependencies for raw materials. This means battery materials must travel tens of thousands of miles before being used in a final product, opening the potential for further pollution and supply chain interruptions. Redwood is working to change this and bring battery creation stateside, by establishing circular supply chains, by recycling lithium-ion batteries to produce domestic anode and cathode materials from repurposed batteries. By recovering critical materials from end-of-life batteries, they are paving the way for a more sustainable and efficient battery production process. Redwood Materials is currently focused on recycling stationary storage batteries, which are essential for the growing electric vehicle (EV) market.
Noteworthy progress has already been made by the firm in cultivating partnerships with major automakers and battery manufacturers such as Ford, Volvo, Toyota, Volkswagen and Audi, with its Panasonic partnership commencing in 2025. These partnerships are vital for scaling their operations and ensuring a consistent supply of recycled materials. With the increasing demand for electric vehicles and the corresponding need for sustainable battery solutions, Redwood Materials’ role in the industry is set to grow exponentially.
According to the company, its recycling technology is capable of recovering about 95% of nickel, cobalt, lithium, and copper from end-of-life EV batteries utilizing elements such as hydrogen and calcium in the process. By shortening and simplifying the global battery supply chain, Redwood Materials is helping to meet the growing demand for electric vehicle batteries while minimizing environmental impact. The company’s initiatives are expected to significantly contribute to the projected growth of the lithium-ion battery recycling market.
With plans to broaden its recycling operations and construct new facilities, the future prospects of Redwood Materials are promising. The company plans to build a $3.5 billion EV battery recycling factory in South Carolina, which will bolster its production capacity and support its growth.
In addition to expanding its facilities, Redwood Materials is collaborating with Ultium Cells, a joint venture between General Motors and LG Energy Solution, to enhance battery recycling and materials processing. The company is also sourcing cathode active material and anode copper foil to Toyota, indicating significant expansion in their supply chain partnerships.
In September 2023, Redwood Materials raised $1 billion in a Series D funding round to expand operations. Additionally, the company received a conditional commitment for a $2 billion loan from the U.S. Department of Energy to support their battery materials initiatives.
Redwood Materials has attracted significant investments from notable financial institutions holding stakes in the company including Goldman Sachs and T. Rowe Price, which have collectively contributed over $2 billion in private investments. Other key financial backers include Fidelity Investments and the Capricorn Investment Group.
Corporate investors also play a crucial role in Redwood Materials’ growth. Some of the key investors include:
Ford Motor Company
Amazon’s Climate Pledge Fund
Microsoft Climate Fund
Breakthrough Energy Ventures, backed by Bill Gates
These investments highlight the widespread confidence in Redwood Materials’ mission and potential.
As of mid 2024, Redwood Materials remains a private company and is not publicly traded. This status means that the company does not have a redwood materials stock symbol, which means those looking to buy Redwood Materials stock on the public exchanges are not able to because it is a privately held company. This limitation also means that Redwood Materials is not included in any ETFs, further restricting exposure for ordinary investors.
Accredited investors have the advantage of accessing private investment through specialized platforms. Platforms like Linqto provide exclusive opportunities to invest directly in Redwood Materials before its shares become publicly available or the company experiences a liquidity event. This platform allows investors to buy pre-IPO shares, offering a chance to get in on the ground floor of a potentially lucrative investment.
The Linqto platform not only facilitates the purchase but also provides valuable insights and research to help investors make informed decisions. Investors seeking to invest in Redwood Materials via Linqto must fulfill specific criteria and be able to sustain the inherent risks of private investments.
Qualifying for pre-IPO investments typically requires meeting certain criteria to earn the status of an accredited investor. These criteria include:
Having a net worth of at least $1 million, excluding the primary residence
Having an annual income of at least $200,000 ($300,000 jointly with a spouse) for the last two years
Holding certain professional designations, such as Series 7, 65, or 82 licenses from FINRA
Meeting these benchmarks will qualify an individual as an accredited investor in the U.S., which is a designation that deems individuals or entities as being financially capable enough to participate.
Invest in Redwood Materials
Pre-IPO share investments entail procuring private company stock in a firm before it goes public, a move that could yield high returns but also bears considerable risks. Information asymmetry is a key risk, as private companies are not required to disclose as much information as public companies, making thorough research and due diligence crucial.
Pre-IPO investments are often impacted by market volatility and macroeconomic factors, which may affect the company’s success post-IPO. These investments are considered higher risk due to their lack of liquidity and regulation, so potential investors should be prepared for the possibility of losses. It’s important to understand the complexities involved in pre-IPO investments.
Investing in Redwood Materials presents a unique opportunity to support a company at the forefront of sustainable energy solutions. With its innovative approach to recycling lithium-ion batteries and creating a circular supply chain, Redwood Materials is well-positioned to address the growing demand for electric vehicle batteries and reduce the environmental impact of battery production. The company’s partnerships with major automakers and significant financial backing highlight its potential for future growth and success.
However, it is crucial to consider the risks associated with investing in a private company that is not yet publicly traded. Market volatility, regulatory changes, and competition are all factors that could impact Redwood Materials’ operations and financial stability. As such, potential investors should conduct thorough research and due diligence before making any investment decisions. By understanding the complexities and potential rewards of investing in Redwood Materials, investors can make informed choices that align with their financial goals and risk tolerance.
No, Redwood Materials is a private company and is not publicly traded.
You can invest in Redwood Materials directly as an accredited investor through pre-IPO platforms like Linqto, after conducting your personal risk assessment.
Investing in Redwood Materials carries the risk of market volatility, regulatory changes, competition, and technological advancements that can affect the company’s operations and profitability. It’s important to consider these factors before making any investment decisions.
The key investors in Redwood Materials include Goldman Sachs, T. Rowe Price, Ford Motor Company, Amazon’s Climate Pledge Fund, and Breakthrough Energy Ventures. These investors play a crucial role in supporting the company’s initiatives and growth.
Sami Yaghma
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