Redwood Materials continues to help shape the battery market through innovation. The company has played a pivotal role in lithium-ion battery recycling efforts and has helped enhance the domestic battery supply chain. Today, it operates as a critical component within the North American electric vehicle (EV) market, providing sustainable solutions designed to keep automakers competitive.
These factors have made Redwood Materials a highly sought-after stock. However, the company is privately owned, meaning that you can’t access these assets without completing a few key steps. Here’s how you can use the secondary market to secure Redwood Materials Pre-IPO shares.
What is Redwood Materials?
Redwood Materials entered the market in 2017 as a lithium-ion battery recycling service and manufacturer. The company is based in Carson City and was co-founded by former Tesla co-founder, JB Straubel, and Andrew Stevenson.
Today, Redwood Materials fills a valuable niche in the North American market, offering key services such as recycling batteries, refining critical minerals, and providing access to cathode active materials. All of these actions help to lower reliance on imports.
Source – Redwood Materials
Redwood Materials manufactures one of the most expensive parts of Li-ion batteries, the cathode. These components require node copper foil and other key active materials that aren’t readily available in the region.
This situation has led to a dependence on imports, which weakens national security. Notably, North American battery cell manufacturers are expected to spend +$600B on overseas components over the next decade.
Closed‑Loop Recycling: Environmental Impact
The introduction of a closed-loop battery recycling and manufacturing process has helped Redwood Materials stay ahead of the competition. The company pioneered hydrometallurgical processes that outperform traditional methods of extracting valuable minerals from batteries.
Impressively, the company can recover 95% of critical metals, including lithium, copper, nickel, cobalt, aluminum, and graphite. Additionally, the new approach reduces energy and water consumption by 80%, while cutting carbon emissions by 70% compared to extracting the raw materials through mining.
The company’s flexible approach supports the recycling and reclamation of battery minerals from power tools, wireless headphones, Cell phones, laptops, tablets, robot vacuums, and EVs. These materials still hold value and can cut manufacturing time by eliminating the need to ship.
Historical Funding Rounds
Summary of Redwood Materials Funding:
Total Funding: Redwood Materials secured $1.87B across 8 funding rounds
Largest Round: Redwood Materials’ largest funding round secured $2B and was held in February 2023.
Investors: A total of 22 institutional investors and 2 Angel investors backed Redwood Materials
Latest Round: The latest funding round raised $1B and was a Series D round held on August 29, 2023.
Funding Rounds Breakdown:
- 1 Seed
- 2 Early-Stage
- 3 Late-Stage
- 2 Debt
Key Investors:
Redwood Materials has financial support from Goldman Sachs Asset Management, Capricorn, T. Rowe Price, OMERS, Microsoft, Deepwater Asset Management, Caterpillar, DOE, Ford, Baillie Gifford, Fidelity Investments, Franklin Templeton Investments, CPP Investments, Valor Equity Partners, Breakthrough Energy, The Climate Pledge, Emerson Collective, and more.
Why Invest in Redwood Materials?
There are many reasons why Redwood Materials stock could be a smart addition to your portfolio. For one, the company remains a crucial component of the US market. It offers its products directly to US battery manufacturers and automakers. This approach has helped to bolster the local market and reduce reliance on imports.
Environmental Benefits of Recycling
Mining for the raw materials needed to create batteries is very taxing on the environment. Additionally, disposing of batteries after they fail is another issue that leads to a negative environmental impact due to harmful materials leaching into the soil.
Redwood Materials provides an energy-efficient alternative that requires less water consumption and produces fewer carbon emissions. Additionally, it helps to remove harmful toxins from the environment before they end up polluting the area. Sadly, reports show that the US alone discards +3 billion batteries yearly. This waste creates +180,000 tons of hazardous waste.
Closed-Loop System
This closed-loop system means that Redwood Materials can offer quality products while reducing waste. Closed loop refers to utilizing the waste from the process and recycled materials to create the next batch of products. Many analysts see closed-loop systems as the best way to reduce the environmental impact of industrialization and still provide crucial products to the market.
Cost Effective
There are also costs to examine. It’s far cheaper to recycle these materials than to import them and have them shipped. Studies show that the majority of critical metals must travel 50,000+ miles before they arrive at a battery cell factory. This added travel time slows production and raises costs.
Redwood Materials Plans to Scale Up Operations
Redwood Materials has shared plans to scale up its operation in the coming months. The company has set a goal to manufacture and produce enough battery materials to service +1M EVs every year moving forward. These goals include scaling up production to 500 GWh by 2030, which is equivalent to +5M EVs yearly.
Redwood Materials has High-Level Partnerships.
Redwood Materials has strategic partnerships with key figures in the North American market and beyond. The company collaborates with brands like Toyota, Volkswagen, BMW, Ford, and Volvo as part of its end-of-life battery collection and recycling programs.
This program currently generates +20 GWh of batteries annually. Additionally, their agreement includes integrating as much recycled material as possible into new batteries.
Funding and Investor data sourced from Tracxn
1. Pre-IPO Secondary Marketplace
Secondary markets are purpose-built exchanges that connect pre-IPO shareholders with potential investors. These marketplaces can offer these assets because they work closely with employees, early-stage investors, and venture capitalists, who are crucial to the company’s pre-IPO growth.
Investing in pre-IPO shares of Redwood Materials could yield strong returns if the company’s valuation increases following its IPO. It’s common for company valuations to increase following an IPO. As such, it makes sense to add pre-IPO shares to your portfolio before the firm announces plans to go public.
Secondary marketplaces have many requirements. Here are some concerns you should be made aware of:
Eligibility: This approach requires you to be an accredited investor, meaning you will have to show at least $1M in liquid assets to qualify for access.
2. Private Equity Firms
Private equity firms gain access to pre-IPO shares during investment rounds. They then offer these shares to high-net-worth accredited investors with a commission. Notably, private equity firms are known to have extra stipulations, including blocking the sale of shares for years in some cases.
3. Employee Equity Sales
Many consider employee equity sales as the best way to acquire pre-IPO shares in Redwood Materials. This method of acquiring pre-IPO shares requires you to connect with former employees. It’s common for companies to issue shares as part of an incentive package. Notably, this profit-sharing method has become more popular, leading to more pre-IPO share opportunities for investors.
Private Transactions: There are a lot of hoops you will need to jump through to complete a private pre-IPO transaction, including creating specific legal agreements, conducting valuations, and setting in place any limitations on the transfer of the asset.
Brokerage: Brokers will take a lot of the confusion out of the pre-IPO process. These professionals can guide you through each step, ensuring full compliance and avoiding common errors untrained professionals make.
There are several risks that you should consider before jumping into the pre-IPO shares investment arena. Here are the top concerns:
Liquidity Risk
If you are looking for an asset that you can sell right away, pre-IPO shares are not the best option.
These investments can include sales and transfer clauses that prevent the transfer of the asset until certain criteria, such as the IPO’s completion, are met. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.
Finding a Broker
If you meet the requirements and are comfortable with the risks, several platforms offer access to pre-IPO opportunities:
Forge Global: One of the largest private stock marketplaces, offering shares in late-stage startups like SpaceX, Stripe, and Databricks. Minimums typically start around $100,000.
EquityZen: A popular platform allowing accredited investors to buy into private companies with minimums as low as $5,000. Past offerings include companies like Discord and UiPath.
Rainmaker Securities: A full-service broker that helps source and negotiate private share sales, including opportunities in companies like OpenAI, Stripe, and Palantir.
Hiive: A newer platform with live bid/ask pricing for hundreds of private companies. Transparent and low-fee, with minimums starting around $25,000.
MicroVentures: Offers pooled access to late-stage companies through special purpose vehicles (SPVs), including past investments in SpaceX and Instacart.
EquityBee: Allows investors to fund employee stock option exercises at startups, often at discounted valuations, with minimums around $10,000.
Augment: A digital-first marketplace showing real-time pricing for pre-IPO shares, targeting tech-savvy investors and offering lower transaction fees.
StartEngine Private: Launched in late 2023, this platform offers accredited investors access to Regulation D offerings in later-stage, venture-backed companies. In its first nine months, it generated $16.5 million in revenue, with average investments around $32,000
Important: Always perform thorough due diligence and consult a financial advisor before investing in private company shares.
Valuation of Redwood Materials and Future IPO
Redwood Materials has a current valuation of $5B, qualifying the company for Unicorn status. The manufacturer secured this value through a commitment to smart management, innovative designs, and keeping its workforce relatively small at around 1,600 people.
Today, Redwood Materials provides a glimpse into what an enhanced domestic supply chain for critical battery components in North America could operate like. The company has helped to pioneer new battery technology and fill the gap between recycled materials and new products.
Investors who hold Redwood Materials shares could be well-positioned for any future EV market expansions, especially in the US sector. The company remains competitive, and as the US moves more towards isolationism, its role will become even more important, possibly driving revenues higher.
Redwood Materials Conclusion
Investing in Redwood Materials Pre-IPO shares provides exposure to the rapidly evolving EV battery market. The company continues to develop advanced battery technology and domestic fabrication methods, which could help to even out the playing field for North American cell manufacturers in the future.
Notably, there are several risks to consider before making any pre-IPO share investments. Remember, there’s no guarantee that the company will retain or gain value after announcing an IPO. Additionally, you must consider that a company can change leadership and management, altering its course of action.
It’s recommended that you consult a financial expert to ensure that you remain within your risk appetite. For those who completed these tasks and qualify for Pre-IPO shares, Redwood Materials provides an exciting opportunity with lots of upside potential.
Learn about Other Pre-IPO Opportunities Now
Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Pre-IPO shares are typically available only to accredited investors and carry significant risk. Always perform thorough due diligence and consult a financial advisor or legal expert before making investment decisions.