Microsoft Funds Hard Drive Recycling Startup; Potential ITAD and Supply Chain Benefits Coming?

Microsoft’s Climate Innovation Fund has invested in Cyclic Materials, a startup that improves hard drive recycling processes. Target customers include IT asset disposition (ITAD) companies, data center operators and cloud service providers. A financial figure and business valuation were not disclosed.

Cyclic, founded in 2021, is based in Toronto, Ontario, Canada. The company's patent-pending technology, known as CC360, allows ITAD companies to recover earth materials and key metals contained in end-of-life hard drives. The associated business strategy: Help ITAD businesses, computer makers and their suppliers to build more circular economies.

The Microsoft Climate Innovation Fund focuses on areas such as direct carbon removal, digital optimization, advanced energy systems, industrial materials, circular economy, water technologies, sustainable agriculture, and business strategies for nature-based markets. The $1 billion fund now backs dozens of startups -- including Cyclic.

ITAD and Executive Perspectives

Early Cyclic adopters include Sims Lifecycle Services (SLS), an ITAD business in West Chicago, Illinois. SLS has tested CC360 in recent months. In a prepared statement, SLS Chief Commercial officer Sean Magann said: “This solution enables us to drive further value out of disposed hard drives, by reclaiming the critical rare earths, while maintaining the data security of the hard drives being disposed. An additional benefit is the reduction of magnets clogging our shredders. We look forward to deploying this technology across our operations.”

But why did Microsoft invest in Cyclic? In a prepared statement, Brandon Middaugh, senior director, Microsoft Climate Innovation Fund, said: “Microsoft is working to achieve zero waste across our direct operations, products, and packaging by 2030. This means adopting a circular economy approach. As demand for rare earth elements continues to grow in importance, we’re excited to support the creation of a sustainable supply of these materials with this investment.”

Related: Microsoft's overall sustainability strategy and timeline.

Concluded Ahmad Ghahreman, co-founder and CEO of Cyclic Materials: “We’re thrilled by this endorsement from Microsoft’s Climate Innovation Fund as a key strategic investor who is like minded in creating a circular supply chain for rare earth elements contained in hard drives used in their data center operations. This support enables us to accelerate the deployment of our commercial facilities, which is a critical step in growing the domestic supply of rare earths in North America that support the energy transition. Additionally, we value the input that SLS has provided, helping us to validate our new CC360 technology that we believe will prove invaluable to large data center operators such as Microsoft as they work towards their circularity and sustainability goals.”

ITAD Market Growth Forecast, Conference

The investment comes at a key time. Technology companies are scrambling to find rare-earth materials for next-generation products. And IT businesses are striving to make the most of existing materials from spent products.

The anecdotal evidence: Annual spending on ITAD is expected to reach $34 billion by 2030, up from $16.8 billion in 2022, according to Research and Markets. That's a 9.2% compound annual growth rate (CAGR), the researcher said.

A market reality check will arrive at ITAD 2024 -- an IT asset disposition conference scheduled for July 23-24 in Miami, Florida. The event typically attracts roughly 1,200 attendees, 100+ exhibitors, 50+ speakers and more.