Investment Memo: Our Investment in Buddy – Transforming Metal Recycling! 

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We are thrilled to announce our recent investment in Buddy, a game-changing venture poised to transform and propel the archaic scrap metal trading landscape into the digital age.

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GD1 Co-Managing Partner John Kells with Buddy Co-founders Lisa and Stuart Kagan.

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The problem

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The global metal recycling industry is worth… a tonne (pun intended!)… yet operates on outdated processes, relying on WhatsApp messages, emails and spreadsheets to collectively trade hundreds of billions of dollars. This inefficiency leads to missed opportunities, lost revenue and significant operational challenges. In an era dominated by technological advancements, there is a glaring need for innovation and end-to-end process digitisation.

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A visionary solution 

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Buddy is on a mission to modernise this industry by introducing an intuitive global marketplace for B2B metal recyclables.

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This revolutionary solution seamlessly connects a hugely fragmented international market of scrap metal yards (sellers) with smelters, traders and brokers (buyers), creating an ecosystem that fosters efficient and transparent trades. In particular, the platform ensures a seamless onboarding process, comprehensive vetting, quick offer templates, bid comparison and automated contract generation. The platform integrates with WhatsApp, respecting the existing workflow of the industry.

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Buddy’s strategic approach

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• Empowering sellers: For sellers, Buddy opens up new horizons. It provides access to a wider network of buyers, offering the potential to transact at more competitive prices. No longer confined to one-on-one negotiations, sellers can now secure the best bid with minimal effort, marking a paradigm shift in the industry.
• Enabling buyers: Buyers, on the flip side, gain access to a significantly larger volume of recycled metal through a diverse range of trusted sellers. Buddy aims to break down the barriers faced by smaller recyclers, fostering a level playing field that promotes fair competition.
• End-to-end trading: Buddy's platform streamlines the entire trading process, from initial offer to the final contract, all within a user-friendly interface.
• Trust-building initiatives: With Buddy, you can see who you’re buying from and selling to and you can hold them to account through the platform’s ratings and reviews. Every user has a profile and Buddy captures multi-media content on-site so counterparties can ‘get to know’ each other and trade on their own terms. Buddy supports trades on any inco terms and any payment terms and it supports direct negotiation between counterparties.

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The stellar team behind buddy

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Buddy’s founders aren’t just ‘techies’; they’re ‘scrappies’ who deeply understand the problems faced by buyers and sellers of scrap metal globally. This dynamic husband / wife duo, Stu and Lisa Kagan, is a uniquely powerful combination with 25+ years of hands-on industry experience, strategic vision, innovative thinking and commercialisation expertise. The marketplace was built in partnership with Paloma, Australasia's largest venture studio.

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The opportunity 

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The global metal recycling market, estimated to be valued at $384 billion by 2030, presents a colossal opportunity. Buddy strategically benefits both sellers (high trade volume scrap yards) and buyers (foundries, mills, brokers) with a focus on trust, efficiency and global coverage.

ESG alignment 

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Primary metal production accounts for more than 10% of global CO2 emissions and using recycled metal in the melting process can reduce these emissions by 80%.

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Recycling metal conserves natural resources by reducing greenhouse gas emissions, reduces pollution, saves significant resources, reduces waste going to landfills and prevents the destruction of habitats from mining new ore (meaning land is being used more productively).

What’s more, metals can be infinitely recycled, without a decline in quality, and require less energy than making metals from virgin ore.(For example, energy accounts for 30% of primary aluminium production costs, but recycling aluminium scrap uses only 5% of the energy of primary production.) 

It’s critical, however, to achieve a more reliable and sustainable supply of recycled metal. By placing transparency and trust at the heart of the supply chain, we believe Buddy can reshape the future of metal production.

Buddy’s future initiatives include carbon tracking and reporting which will help companies with better visibility of their carbon footprint.

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A promising future

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In closing, we would like to thank Stu and Lisa for placing their trust in GD1 as the sole investor in this round. Our investment in Buddy transcends financial backing; it's a vote of confidence as these incredible founders tirelessly work to build innovation within an industry ready for change. Buddy's vision and execution strategy have positioned them as a disruptor in an extremely traditional industry. Stay tuned for the transformation of the metal recycling landscape!

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#BuddyRecyclesRevolution #MetalRecyclingInnovation #VCInvestment #GD1

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