This June, the REEcycle team from the University of Houston's Bauer College of Business became the first undergraduate team to win the U.S. Department of Energy's (DOE) Clean Energy Business Plan Competition with their plan to create a sustainable domestic supply of rare earth elements.
REEcycle won each of the top three prizes including the overall competition, the People's Choice Award, which was decided by a public vote on Energy.gov, and the Audience Investor Choice Award.
Now in its third year, the DOE Clean Energy Business Plan Competition brings together student teams from U.S. universities that are taking next-generation clean energy technologies to market. Following months of regional competitions among 300 teams, six regional finalists advanced to the national competition in Washington, D.C. to present their business plans to a panel of judges from the private and public sectors. Members of the venture capital community participate in every step of the process, serving as judges at the regional and national competitions and providing mentorship to finalist teams.
REEcycle earned their spot in the competition by winning the First Look West consortium's regional competition, which is led by the Resnick Sustainability Institute at the California Institute of Technology, the University of Southern California, UC Los Angeles and DOE.
REEcycle commercializes technology developed by UH researcher Dr. Allan Jacobson, the Robert A. Welch Chair of Science and director of the university's Texas Center for Superconductivity. REEcycle has developed an organic, nontoxic method to extract rare earth elements from magnets found in discarded electronics. Their technology creates a sustainable domestic supply of critical rare earth elements that are essential to manufacturing clean energy technologies, including wind turbines, energy-efficient lights, thin-film solar cells, and motors and batteries for electric vehicles.
Following their recent win and as part of their DOE award, NVCA spoke with REEcycle team members Susan Tran, Casey McNeil, Cassandra Hoang and Bobby Jacobs about how they are building their company and advancing their vision to impact the U.S. clean energy economy. To see how their technology works, watch the REEcycle video.
"Success for REEcycle is being recognized as a fundamental driver of the clean energy and defense sectors. We look at all of these different areas that we still have to prove out, which people have been telling us from day one can't be done. As entrepreneurs, the challenge of overcoming these obstacles is very exciting."
National Venture Capital Association (NVCA): Congratulations to the entire REEcycle team for your recent win of the Department of Energy Clean. The growth and success of early-stage companies like yours often depend on strong mentorship and support from institutions and individuals. How have the resources at the University of Houston and the Wolff Center for Entrepreneurship played a role in the development of REEcycle?
REEcycle: Several key mentors from the University of Houston, the university's Wolff Center for Entrepreneurship and Caltech have been critical to getting REEcycle off the ground. Dr. Allan Jacobson at the University of Houston, our technical advisor, and Pradeep Samarasekere, a Ph.D. student and co-inventor of the process, have played a critical role in bringing our team and the technology together. They are part of the team.
Another mentor who has been key is Dr. Jim Kane within the Wolff Center for Entrepreneurship. He has stood behind us since day one. He believed in us, believed in the technology and has been one of the biggest driving forces keeping everything together.
Recently, Stephanie Yanchinski, Program Director of the FLoW Consortium and Director of Operations and Finance Enterprise Forum with Caltech's Resnick Sustainability Institute has been invaluable in forging significant connections for us, including with the Ames Laboratory and ARPA-E. Stephanie and the Resnick Institute have been essential in helping us for the recent competition; particularly with the funding we just received through their competition, which will propel us right through pilot stage to commercialization stage. Without these key individuals, there is no possible way we could have done it. All of these resources combined have helped us to accomplish some of our goals much faster than we would have been able to otherwise.
"Several key mentors from the University of Houston, the Wolff Center for Entrepreneurship and Caltech have been critical to getting REEcycle off the ground...All of these resources combined have helped us to accomplish some of our goals much faster than we would have been able to otherwise."
NVCA: Dr. Allan Jacobson, the Director of the Texas Center for Superconductivity at University of Houston has been instrumental in building your technology. Can you tell us about the tech transfer process and how you plan to commercialized it?
REEcycle: Dr. Jacobson and his PhD student Pradeep are the inventors of this process. As the University of Houston's faculty have been patenting all of these technologies and seen them dying on the shelf, they have increasingly prioritized finding teams that are able to commercialize the technologies. More often than not, the scientists will not be the ones to take technologies to market.
Our team was given an exclusive license to the technology. In our opinion, the tech transfer has worked well up to this point and we will be able to enter different markets where we see the potential for growth.
The only reason all of this has been possible is because of Ken Jones, the Director of the Wolff Center. He has allowed the Wolff Center students to get behind some of the technology that was ready to be commercialized. In the process of putting together the REEcycle team, we were met with some opposition from those who didn't think that it would be possible that undergrads could get behind these technologies and reach any viable commercial scale. Their belief was that you have to have a PhD or an MBA to be able to approach some of these technologies.
We hope that we have changed that paradigm and hope we have made a lot of advancements for the University and the Wolff Center to be able to grab ahold of these technologies that are coming through the research facilities.
"In the process of putting together the REEcycle team, we were met with some opposition from those who didn't think that it would be possible that undergrads could get behind these technologies and reach any viable commercial scale. We hope that we have changed that paradigm."
NVCA: To bolster U.S. production of rare earth elements, NVCA has been engaged with the Minerals Make Life coalition to encourage lawmakers to support legislative that furthers research and development of our domestic resources. As you all know, the concentration of rare earth elements outside the U.S., particularly in China as you reference in the REEcycle video, raises the important issue of supply vulnerability. Do you have a sense, if you are successful, how market disruptive your success would be and how it would provide a critical missing link in the supply chain?
REEcycle: I think it will be game changing for the United States to have an alternative supply, but I don't necessarily believe that we will be competing with China in any way. They still are going to be producing the same amount of rare earths as they always have been and they will be exporting the same amount. We are just adding an extra and much needed supply that the U.S. needs to have to build new products.
One of the issues that we are seeing with a lot of mining operations, even at the Molycorp mine in Mountain Pass, California, is that they are not able to single out the critical materials or the critical rare earths such as neodymium and dysprosium. In mining, they have to extract all of the minerals together, which means they extract about 60% cerium, which at this point in time is one of the worthless rare earths. They can't find enough places to use cerium. This is one of the key problems facing mining companies. They are not able to cost-effectively go after the more critical rare earth elements.
This is something that we have fundamentally changed. We are able to single out the rare-earths depending on their criticality. We can recycle specific elements at high purity levels and we know exactly which elements we will be retrieving. For instance, if there becomes an apparent need to begin recycling one of the other 17 rare earth elements critical to a particular industry, we could begin to retrieve those critical elements in high concentrations from end-of-life products. Fluid cracking catalyst would be a great example of where this may be a possibility.
One thing that isn't often mentioned is that China produces the majority of the world's dysprosium from one particular mine. Similarly rich deposits of dysprosium have not been found anywhere else in the world. Our ability to produce dysprosium presents a huge opportunity for not only the United States, but other countries that rely heavily on this critical element.
"It will be game changing for the United States to have an alternative supply [of rare earth elements]. Our ability to produce dysprosium presents a huge opportunity for not only the United States, but other countries that rely heavily on this critical element."
NVCA: Can you explain a little bit about the REEcycle supply chain? Do you have an international pipeline or do you rely on recycling U.S. products?
REEcycle: We are focusing on recyclers close to home right now, because we want to keep our shipping costs down, but as we grow we will expand to different facilities.
In addition, we have been looking to forge strategic partnerships with international companies. The European market has been historically ahead of America, a lot of their recycling directives are centered on electronics. If we had European backing and strong connections there, it may make sense to start up operations there. But at this point in time, our relationships with recyclers in the U.S. are highly beneficial.
One of the arguments against our process we often hear is that with low labor costs in China and India, they will be able to dominate us in terms of the prices we pay for some of these materials. One thing that should be noted with that, is almost every electronic recycler is trying to be certified under an E-Steward certification or an R2 certification. Those are both certifications that show that the recycling company is recycling in an ethical way; that they are not exporting waste; they are not exporting a lot of their scrap goods. They are almost forced through those certifications to keep those products within the US. So that hugely supports our goal of keeping these materials within the U.S.
NVCA: Tell us about how you put your team together and the role you each play, as well as how you balance the technical and marketing elements.
REEcycle: We formed this company within the Wolff Center for Entrepreneurship. There are thirty-five students accepted every year. We had known each other for a semester when we started to come together as a team and started to develop a company around this technology.
When we came together, we didn't know the exact skillset that everyone would fit. We only knew that we worked well together, that the technology was important and we saw the vision early on as to where the company could go. Over time and through working together, we have learned the specific needs everyone fits. Casey has some years experience in the recycling of electronics and understands that market. Cassie has worked in import-export companies for some time and she shines in the logistics of how we will transport a lot of these materials. Susan is a double major in accounting as well, so she does really well in the organization of financials and she will play a key role in the management of the financial framework we have to build out. Bobby Jacobs is great with marketing and sales. Many of the companies he formed early in his entrepreneurial career have been centered on that. He shines pitching to clients and meeting with customers.
NVCA: What does success look like? Whether it's an exit, or advancing your mission, what does success look like for REEcycle?
REEcycle: Success for REEcycle is being recognized as a fundamental driver of the clean energy and defense sectors. If we are able to provide our materials back to these markets, we can establish a strong customer base and if we can supply rare earth elements in a feasible and economical way where they can be used to develop new innovative technologies; that would be success in our opinion.
When we see the need in the clean energy sector and we hear all of these directives that are being passed down through the Obama Administration and through the Department of Defense, we see how necessary we are. It's really surprising to us that we don't see anybody entering this market in the US and that really drives us to move forward. It's a matter of making something work, instead of being just a project we worked on in class.
The challenge is really what keeps us going. We look at all of these different areas that we still have to prove out, which people have been telling us from day one can't be done. As entrepreneurs, the challenge of overcoming these obstacles is very exciting.