Blockchain recycling firm SMX sees valuation skyrocket 14x in SPAC listing – Ledger Insights
Security Matters (SMX), the blockchain startup focused on traceability for recycling and the circular economy, has announced a Nasdaq SPAC listing. SMX is already listed in Australia, but the merger with Nasdaq’s Lionheart III Corp gives SMX a pre-money valuation of $200 million. At yesterday’s close, the SMX market cap in Australia was AUD 20 million ($14 million). So the valuation is about 14 times what it was yesterday.
It is a truly global firm with most key personnel based in Israel, originally listed in Australia, and now the SPAC company is based in Ireland but listed on Nasdaq in the US. The startup’s 2021 financial statements showed zero revenue.
If there are no redemptions of SPAC shares, the combined valuation will be $360 million, including $116 million in cash.
Whether or not that can justify the overnight price jump, there’s at least one good reason why collateral can be valuable. In 2023, the EU will introduce a carbon tax on imports that will require products to report a C02 footprint. So material traceability suddenly becomes an urgent matter. But the lack of revenue means there is a way to go to fully exploit the business potential.
Security means some technology
Meteoric value growth aside, Security Matters has some interesting products and partnerships. It developed a molecular marker that permanently labels solids, liquids and gases to enable identification. This token then allows a digital twin to be stored on the blockchain, which can be used to authenticate products or provide traceability.
It also developed conveyor belt technology to read digital markers for sorting and recycling facilities.
We were surprised that the company had zero revenue because it has been associated with some big brands. For example, TrueGOLD created a joint venture with Security Matters and the Perth Mint to track gold and ensure its supply chain is ESG compliant. It provides traceability from mines to refineries, depots, mints and wholesalers to retailers.
In 2020, SMX was involved in a blockchain plastic recycling pilot with BASF’s reciChain. Last year, the company raised $4.7 million in funding.
It has a fair number of competitors. There are several types of material marking solutions, such as Applied DNA’s CertainT, iTRACE and SecureMarking. Most blockchain startups use these third-party tools.
On the blockchain front, some of the most active startups are Netherlands-based Circularise, UK-based Circulor and Everledger. Circulor just announced $25 million in funding, but it has many high-profile clients, including Jaguar, Volvo, Mercedes, Boeing, TotalEnergies and Trafigura.
Several incumbents are getting in on the act, for example GreenToken by SAP. And several Japanese industrial firms are using blockchain for plastic recycling, including Teijin, Mitsui Chemicals, Mitsubishi Chemicals, Asahi Kasei and others.
