TO: Clark Hansen, CEO, Anima Mundi Development
Partners
FROM: Davis Hayter, New Business Development
DATE:
Friday, March 1st, 2019
SUBJECT: Investment Opportunity: 4Ocean Recycled Bracelets
My role
within AMDP involves researching emerging companies needing investment in many
different industries. Along with being profitable, I seek out companies that
prioritize both social and environmental responsibility. I recently discovered 4Ocean,
a sustainable jewelry brand that uses their sales revenue to remove plastic
waste from the ocean.
After
extensive research, I have come to the conclusion that 4Ocean would be a
strong candidate for investment from our firm after we attain more financial
information. In this memo, you will find the following:
- AMDP’s
standards for investment.
- 4Ocean’s
origin and
concept.
- Traction,
opportunities, and finances of 4Ocean.
- My
in-depth recommendation.
Investment Standards of
AMDP
Triple Bottom Line
Companies are graded on
three bottom lines: profit, people, and planet.
- Profit: Company needs to be showing
capital gains in order to prove their concept works.
- People: Company holds an exceptional
reputation among customers, employees, and communities.
- Planet: Company prioritizes environmental
awareness and either works to make a difference or is cautious of the
carbon footprint it leaves.
Carbon Footprint
Carbon footprint refers to the collective amount of greenhouse
gasses a company emits. These gases include carbon dioxide, methane, nitrous
oxide, and fluorinated gases (Ferguson).
Greenhouse gasses directly impact global warming, making them an important byproduct
companies need to reduce.
Corporate Social
Responsibility
Companies that take corporate social responsibility have
awareness of the type of impact they have on social, economic, and
environmental facets of the environment they inhabit (Investopedia). Not
only are they aware, but socially responsible companies also work to improve
society in these aspects as well.
Social Enterprise
Social enterprises can be
recognized for conducting many different social business models such as providing
opportunity employment, creating transformative products or services, and
making donations (Social Enterprise Alliance). The most applicable type
of social enterprise for this memo is one that has positive environmental
impacts through innovative products.
4Ocean
4Ocean was created when two
surfers, Alex and Andrew, took a surf trip to Bali, Indonesia. What they found
on their trip was massive amounts of plastic along the coastline. At one point,
they even witnessed village fishermen pushing their boats through piles of
plastic washed up on the shoreline (About, 4Ocean). They saw that nobody
was doing anything about this rising issue and wanted to create change.
Ultimately, 4Ocean was born.
This company uses recycled
material removed from the ocean to create bracelets. They use the revenue from
selling these bracelets to fund and grow ocean cleanup operations. They have
found that each bracelet purchased equates to one pound of trash removed from
the ocean. Since its’ founding in 2017, 4Ocean has managed to eliminate over 4
million pounds of trash from the ocean (About, 4Ocean).
Gaining Traction
In just two years since
being established, 4Ocean has gained traction globally as an impactful “for
profit” organization on our environment. Tom Huddleson Jr., CNBC reporter,
referred to the company as “a big idea for a multimillion-dollar business to
help clean the world’s oceans.” With growing media coverage, 4Ocean has
vastly grown their brand.
Jeff Kart from Forbes
stated, “Not bad for a project launched by two surfers who were inspired to
take action by piles of plastic pollution during a surf trip.” This has
allowed them to rapidly expand their reach. To date, they have cleaned up
coastlines in 27 different countries (Forbes).
Creating an Economy for
Plastic Waste
4Ocean has also contributed
to the growing economy for recycled plastic (About, 4Ocean). They have
done so by selling their collected plastic waste to facilities who repurpose it.
In recent years, the demand for recycled plastic has been on the rise globally.
It was reported in 2018 by Environmental Leader that “In terms of recycled
PET (RPET) used in US and Canadian end market applications, total volumes
increased by more than 5% in 2017” (Hermes, Environmental Leader).
With recent technological
innovations, companies have increased their range of uses for recycled
material. For example, clothing brands have recently created high quality
material from recycled plastic. Zoggs, an Australian swimwear brand,
created a bathing suit line made with yarn created from regenerated plastic
waste (Danigelis, Environmental Leader). 4Ocean has ultimately created
another stream of income by becoming an established supplier in this growing
economy.
Company Financials
With 4Ocean selling each
bracelet for $20 each, the company reported in September of 2017 that it had sold
over $30 million in bracelets (Make It, CNBC). There is no information
about the true profitability of this company. The only information found is
their promise to remove 1 pound of trash with each bracelet purchased. But
how much does removing that trash actually cost? It is unclear. However,
the company indicated they reinvest 40% of their profits into their cleanup
projects and 10% into various partner charities.
4Ocean reported that it
currently employs over 150 people worldwide. Although the company has not
released how much they pay their employees, they stated workers have wages of a
“considerable amount” with full medical benefits (Make It, CNBC). They
also market their cleanup times and locations to the public for volunteer
opportunities.
At this time, the founders
of 4Ocean are satisfied enough with current growth to set their next goal as
removing 10 million pounds of garbage from the ocean. This will require a
substantial increase in company operating income in order to accomplish this. However,
4Ocean is confident they can do this. Their ultimate goal is to become the
largest ocean cleanup organization in the world.
Recommendation
After extensively
researching 4Ocean, I believe this company is a promising lead for investment.
However, before we commit to funding, we need to know more about their profit
margins and capacity for growth. It is important to know for starters what
their profit margin is for each bracelet. This would give great insight to
their true capacity for expansion.
I believe it would be worth
further investigating this company. They have a fantastic culture and concept
that has impacted our oceans for the better. Once we have more information on
their financials and business plan, our investment decision will be made for
us. Say the word and I will set up a meeting.
Works
Cited
Chen, James. “Corporate Social
Responsibility (CSR).” Investopedia,
2019, p. 1.
Danigelis, Alyssa. “Zoggs Debuts
Econyl Swimsuits, Reduces Plastic Waste.” Environmental
Leader, 2019, www.environmentalleader.com
Hermes, Jennifer. “US Recycling
Rate Rises Just Slightly but End Market Demand Stays Strong.” Environmental Leader, 2018,
www.environmentalleader.com
Kart, Jeff. “Bracelets Fund Ocean
Cleanup, 1 Million Pounds And Counting.” Forbes,
Forbes Magazine, 30 July 2018, www.forbes.com
“Social Enterprise.” Social Enterprise Alliance,
socialenterprise.us/about/social-enterprise/.
Thompson, Kelly. “Home.” How to Become a Professional Plumber -
Training & Licensing Guide - Ferguson, 2018, www.ferguson.com/content