Security Matters (SMX), the blockchain startup focusing on traceability for recycling and the circular economy, has announced a Nasdaq SPAC listing. SMX is already listed in Australia, but its merger with Nasdaq’s Lionheart III Corp gives SMX a pre-money valuation of $200 million. At yesterday’s close of business, the SMX market capitalization in Australia was AUD 20 million ($14m). So the valuation is roughly 14 times what it was yesterday.
It’s a truly global firm with most of the key staff based in Israel, initially listed in Australia, and now the SPAC company is based in Ireland but listed on the Nasdaq in the United States. The startup’s 2021 accounts showed zero revenues.
If there are no redemptions of SPAC stock, the merged valuation will be $360 million, including $116 million in cash.
Whether or not it can justify the overnight price jump, there is at least one good reason why Security Matters could be valuable. In 2023 the EU is bringing in a Carbon Tax on imports which will require products to report a C02 footprint. So materials traceability suddenly becomes an urgent matter. But the lack of revenues means there’s a way to go to exploit the business potential fully.
Security Matters technology
Meteoric valuation increase aside, Security Matters has some interesting products and partnerships. It developed a molecular marker that permanently marks solids, liquids and gases to enable identification. That marker then allows a digital twin to be stored on blockchain, which can be used for authenticating products or providing traceability.
It also developed conveyor belt technology to read digital markers for sorting and recycling facilities.
We were surprised the company had zero revenues 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 the supply chain is ESG compliant. It provides traceability from mines to refiners, depositories, mints, and wholesalers to retailers.
It has a reasonable 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 a $25 million funding, but it has numerous high profile clients, including Jaguar, Volvo, Mercedes, Boeing, TotalEnergies, and Trafigura.
Several incumbents are getting in on the act, such as GreenToken by SAP. And multiple Japanese industrial firms are using blockchain for plastic recycling, including Teijin, Mitsui Chemicals, Mitsubishi Chemicals, Asahi Kasei and others.