Ejvind Pedersen is no stranger to bankruptcy. He tried it once with his first startup in 1994. Then he came close again with his second venture when the financial crisis hit in 2008. Pedersen later went on to found Scanmetals, a Denmark-based recycling company that uses a novel green technology to recover metal from incinerated garbage.
While the road has been bumpy, Scanmetals seems to have struck gold in recent years. The company has grown rapidly, with Nordea as its banking partner from its humble beginnings in a small factory in Vestsjælland to its current international operations that recover around 45,000 tonnes of metal from incineration waste each year.
Pedersen was named Denmark’s Entrepreneur of the Year for innovation in 2018 by Ernst & Young. In 2019, the company gained the backing of Kirk Kapital, an investor with ties to the Lego family, with a 3-digit million Danish kroner investment. This summer, in a deal financed by Nordea, Scanmetals was able to repurchase the German subsidiary it previously had to sell, reclaiming 100% ownership over the Scanmetals brand. The company now has operations in Denmark, the UK and Germany, with plans to open factories in Portugal and Spain and expand further across Europe.
“When I accepted the Entrepreneur of the Year award back in 2018, I told everyone in the room that Scanmetals would be one of the 25 biggest companies in Denmark within five years. Now I’m running out of time, but that’s still the idea. Maybe not in five years, but definitely within 10,” says Pedersen.
The starting point: A good idea
If there’s one thing Pedersen doesn’t lack, it’s conviction.
“As soon as I’m convinced my idea is good, I go for it,” he says.
With no formal education but experience managing lead and tin smelting plants for a Danish company in South America, Pedersen was determined to come up with a good idea related to recycling. He discovered that there was metal in the slag from incinerators that’s left behind after the burning of household garbage.
Using X-ray scanners, compressed air, vibration and manual sorting, Pedersen developed a process for extracting metal from the ash and selling it to smelters, refiners and other manufacturers. The remaining non-metal slag is sold as road fill, for example, to pave the state’s highways. In addition to promoting a circular economy, the technology does not require water or chemicals, unlike other metal recycling technologies.
In 2011, brimming with ideas and ambition but strapped for cash, Pedersen sold half of his business to a Swedish-German company. Around that time, Pedersen started working with Nordea, which agreed to finance Scanmetals’ move to a larger production facility in Slagelse.
“It went very well. We did better every day and made money each year,” Pedersen says. Scanmetals soon expanded operations to Birmingham, England, as well as Bremen, Germany. However, in 2015, Pedersen bought out the Swedish-German shareholder, selling them the Bremen factory, which continued to operate under the Scanmetals name.
“Financing is a huge issue”
Nordea has been by Pedersen’s side from the cradle to its current position as global market leader in the field.
“Financing is a huge issue,” says Pedersen. “Since I joined up with Nordea, around 2011, they have always been very understanding and open about my ideas. There’s a lot of trust between myself and the bank, which has given me the possibility to do what I’ve been doing.”
Nordea Senior Relationship Manager Klaus Kaltoft Olesen, who has worked with Pedersen from the start, agrees trust has been key to supporting Scanmetals’ growth journey. He describes Pedersen as “a brilliant, self-made” entrepreneur who saw that he could create a lot of value with this business.
“We believed in Ejvind’s ideas and his company. Even though he’s had some big bumps along the way, he has always found a spectacular way of delivering on what he promised as well as providing us with the material we need. It’s not only a question of key figures matching with our models. It’s a matter of trust between people,” says Olesen.
Pedersen inspires a similar trust and loyalty among his employees. He is the kind of owner that walks down the factory floor every day with his dog, knowing everyone by name. Instead of firing employees, he believes in second chances.
“We treat our people well, pay good salaries and bonuses and keep people informed. We have an open door, open book approach,” he says.
We believed in Ejvind’s ideas and his company. It’s not only a question of key figures matching with our models. It’s a matter of trust between people.
Nordea Senior Relationship Manager Klaus Kaltoft Olesen
Importance of a strong capital partner
In 2018, Pedersen had ambitions of expanding Scanmetals further across Europe. Both Nordea and Vækstfonden, the Danish state’s investment fund, encouraged Pedersen to find a strong investor that could contribute not only with capital but with a broader network and other competencies.
In his acceptance speech at the Entrepreneur of the Year awards, Pedersen told the audience, if anyone was looking to invest 20 million kroner in a good idea, to let him know.
The comment got some laughs but also caught the attention of Andreas Færk, Chief Investment Officer at Kirk Kapital, the family-owned investment company tied to the Lego family. Færk emailed Pedersen the next day, expressing interest in getting to know him.
“We were attracted to Scanmetals being a green circular economy company. That’s a key investment theme for us. But Scanmetals is also a great company in terms of how they treat their people and the financial output they deliver,” Færk says.
While Scanmetals had other suitors over the years, most wanting a majority stake in the company, Pedersen had turned most of them down. However, Kirk Kapital’s willingness to accept a minority share, its active contribution and long-term investment horizon piqued his interest.
With its 3-digit million investment in 2019, Kirk Kapital became a minority shareholder in Scanmetals in 2019 and has since been able to bring more formal structure and governance to the company.
“They have educated people who can help us prepare the information that bankers require for big ticket financing,” says Pedersen.
A willingness to take bigger bets
This summer, with financing from Nordea, Scanmetals was able to reacquire its old German subsidiary, Scanmetals Deutschland GmbH, in a 3-digit million transaction. Having a strong capital partner in Kirk Kapital has allowed Nordea to help the company even more from a credit perspective, according to Morten Egon Jørgensen, Head of Commercial Banking Unit in Nordea Business Banking.
“We wouldn’t have been able to help this company the way we have now without the support of a very strong investor,” he says.
The purchase not only allows Pedersen to reclaim 100% ownership over the Scanmetals brand, it also gives the company a foothold in Europe’s largest market, Germany. It makes the company 50% larger and more diversified, with a better foundation to stand on when tapping into neighbouring markets.
“Together, we’re all willing to take bigger bets on how fast we’re willing to expand the company,” says Kirk Kapital’s Færk.
As for Pedersen, he’s enjoying riding the green wave.
“It’s garbage. It’s dirty. But there are also a lot of positive things about it,” he says. “The whole world is looking at the environment and sustainability. That’s what we are. We have a lot of support for what we do and a lot of interest from all over.”
When it comes to advice for other startups seeking to grow, Pedersen says you need to believe in your idea 100%.
“Be honest with other people, but mostly with yourself,” he says.
Make sure you have a strong bank that you trust to back you up, as well as family and friends who support you as you will work a lot of hours.
Finally, you need to be able to take risks and accept that you could lose everything, he says:
“I did, and it’s not so bad.”
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