A Pittsburgh environmental tech company just announced a VC round that could be the biggest of 2022, even with the year just starting.
Downton’s RoadRunner Recycling announced on Friday that it had raised a $70 million Series D round following a nearly $40 million raise in October 2020. Leading the latest round was General Atlantic, which launched its $4 billion Beyond Net Zero fund in July 2021 to support climate tech companies. Other investors included Avery Dennison, FJ Labs, Greycroft, Headline and Valo Ventures. The raise is one of the largest out of Pittsburgh in the last year, after a paltry volume of venture capital in 2021 had maximum deals of only $20 million from less than a handful of companies.
The main service RoadRunner provides to its customers is a customized and tech-driven recycling program that allows for more affordable, more efficient and more sustainable waste management. In doing so, it improves recycling rates from an average of 10% to up to 50%, according to the company. So far, RoadRunner offers its services in 18 cities, but founder and CEO Graham Rihn told Technical.ly it has plans to expand to around 20 more with the new funding. Some of its current customers include prominent local organizations like PNC Bank and Allegheny Health Network.
“The $70 million it mainly goes towards continued national expansion,” he said. “It’ll help expand our enterprise team, where our platform is delivered to some of the largest companies in the world that are trying to solve for sustainable waste management.” Beyond that, Rihn added that the company will rapidly expand its technology and product division, including tripling or even quadrupling its current workforce in that field over the next few years. (It counts over 400 employees total, with plans to reach nearly 800 by the end of 2022, per the Pittsburgh Business Journal.)
Though founded in 2014, Rihn only moved the business headquarters to Pittsburgh from New York City in 2017. From Pittsburgh himself, Rihn said he saw the potential for stronger quality of life and talent here to grow a company, and thinks there’s a community growing for people who don’t have roots here too.
Peduto thought green tech and life sciences could be the city's next big frontiers in becoming a full-fledged tech hub, not just an emerging one. Rihn agrees.
This massive raise also aligns with a trend prediction from former Mayor Bill Peduto in an exit interview with Technical.ly at the end of December. While Pittsburgh has largely solidified its status as a robotics and autonomy capital across the globe, Peduto pointed to green tech and life sciences as the city’s next big frontiers in becoming a more full-fledged tech hub, and not just an “emerging” one.
“I definitely think Pittsburgh is a good place for growing our climate tech type company. The ethos of a climate tech company totally matches what Pittsburgh is trying to do and what it’s done over decades,” he said, alluding to the city’s transition from an industrial steel and coal economy to one focused on tech, education and medicine.
But just because Rihn sees the potential for more growth of his companies and others in this space doesn’t mean he has the answer as to why Pittsburgh struggled to attract large VC raises in yet another record breaking year for capital. Though he admits he still has more people to meet and companies to learn about in Pittsburgh tech, and emphasized that he admires the firms in operation that have raised Series C and beyond firms, the CEO added that he wants to see more companies dream big on their missions from the outset.
“I think companies can go bigger and broader with their vision,” he said. “So, attract and go after a very large industry with a vision that can convince others that you are the company to team up with in that industry.”
Beyond rapid hiring — see open roles on its site — and customer expansion, Rihn said RoadRunner’s plans for 2022 include the launch of a customer-facing web platform for its services in the second or third quarter of the year. He also hopes to expand on the success of the past year, which Rihn said had a rate of around 100% growth across metrics including headcount, net revenue and tonnage of recycled materials.
Looking to the next financial move for the company, Rihn said that RoadRunner will be considering launching a public offering within the next few years, though it remains unclear whether that will be through an IPO, SPAC deal or other path.
“The company’s goal is to grow a very meaningful important business in this industry for the next 20 or 25 years, and the way to do that is through an IPO,” he said. “So it’s always been on our strategic roadmap.”
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.