How The Rarest Company On Earth Raised $75M

0:00A key reason for doing this was to support the domestic production of critical national industries and to make our supply chains more resilient. Chips, data centers, energy production. At Altimeter, we just led the Series A in a company, I don't even know if we've announced it, but I'll announce it here, which is an all-American producer of rare earth magnets, right? So these are now viable investments. It doesn't matter if we're a$100 million company or a trillion dollar company, every dollar matters. Putting product in customer hand is the mission. If you're just copying and pasting China and trying to build a manufacturing business around that, you are doomed.

0:37Today, China mines 55 to 60 % of the rare earths. They manufacture 90 to 94 % of the magnets. They're actually importing the difference. So this is less of a raw material availability problem as it is a refining and manufacturing problem. Vulcan Elements is a manufacturer of rare earth magnets. Every piece of hardware, if it's moving and it needs high performance, you're going to need a rare earth magnet. And when you think about the next generation technologies that will define the 21st century, All of that has to have a rare earth magnet. Well, we have big news today. You just had a recent announcement.

1:10Could you share more about this? Yeah, so we're excited to announce that we have raised a$65 million Series A, bringing us up to a total investment to date of$75 million. One of the critical parts about Vulcan is that you're decoupled. So can you explain how this works and what does this mean? Yeah, so when we initially started this company, one thing that we realized is...

1:59John Maslin, CEO of Vulcan Elements. Welcome to Sorcery. Yeah. Thanks for having me. Well, we have big news today. You just had a recent announcement. Could you share more about this? Yeah. So we're excited to announce that we have raised a$65 million Series A, bringing us up to a total investment to date of$75 million. This round is led by Altimeter. So Brad Gerstner and Eric Kreisman, major participation from Rajiv Mishra's One Investment management. And we're really excited about the syndicate that we have. And these are the right investors and the right cap stack that's going to allow us to go and solve a real problem for the U.S.

2:39right now. Let's break this down. So like, what was the process like and why are these the perfect investors for it? So the process went faster than we were expecting. When you have a track record of being able to execute and use words like on time, on budget, building for America. And here's the proof. We were able to go from initial conversations to sign term sheets in about four weeks. Actually, maybe a funny story. I just had my first kid about a month ago. I signed the term sheet and my wife went into labor four hours later. So the timing was phenomenal. We got really fortunate on that. And the reason why these are the right investors.

3:22When you think about Eric and Brad at Altimeter, they understand hardware. They understand how to scale businesses outside of pure SaaS. When you look at their portfolios, when you look at their personal experiences, they understand what it takes in terms of workforce development, thinking about who are the right customers to have? How do we go and build this into a generational business? And when you think about funds like One Investment management, they do infrastructure, they do mining, they understand project finance and all of the different pieces that we'll need later stage as we go into hyperscale.

4:01So we need to get into Vulcan. What is Vulcan? How did this begin? Yeah. So Vulcan Elements is a manufacturer of rare earth magnets, which has been in the news a lot lately. This company started about two and a half years ago. I had just gotten out of the Navy and was at Harvard Business School completing my MBA, was looking at really the three critical components that will define the 21st century. Semiconductors, batteries, and rare earth magnets. And the way that we generally like to describe it here is if you think about your own body, a semiconductor is like your brain, a battery is like your heart, and a rare earth magnet is like your spine.

4:38And everyone was focused on semiconductors and batteries. Frankly, those are critically important and they should be worried about that, but we weren't thinking as a country about the third leg of that stool, the rare earth magnet, which converts electricity into motion. And we saw that China was producing over 90, up to 94 % of the global supply and the US was producing less than 1%. And when you think about the next generation technologies that will define the 21st century, whether that's autonomous vehicles or robotics or the data centers that enable AI, drone technology, all of that has to have a rare earth magnet turning that motor sensor actuator generator into motion so that we win the national security and the economic fight that we're going to be in for the next 25 years.

5:27Why is this so critical for the economy and for national resiliency? So let's talk about what does a rare earth magnet go into? When you think about national security, every satellite, every drone, every missile, every tank, every ship, every submarine, every piece of hardware that moves, that the Defense Department uses, needs a rare earth magnet. When we think about the broader economy, everything from MRI machines to hybrid and electric motors, your cell phone, consumer electronics, robotics, again, every piece of hardware, if it's moving and it needs high performance, you need torque in that motor, you need some type of heat tolerance, you're going to need a rare earth magnet.

6:15These are ubiquitous fundamental building blocks to our economy and they're getting more and more important. We just came off of re-industrialize. I missed you there. I know you just had a newborn baby, so you get an excuse, but re-industrialization is the heart of the conversation right now and America's manufacturing efforts. So I want to know from your perspective, what is Vulcan's role in re-industrialization? So when you take a step back and you think about the broader impacts of geopolitics or economic statecraft, one of the leading indicators of a country's military and economic might is its manufacturing capability.

7:00And you can look at multiple sources. You can look at The Rise and Fall of Great Powers by Paul Kennedy. You can look at Freedom's Forge by Arthur Herman. You can look at Ray Dalio's The Changing World Order. Every single one of those books has a very common thread. And as we think about re-industrialization, whether it's around drone technology or shipbuilding, the picks and shovels, the chips the rareth magnets the batteries if we forget about those we lose because we can't actually go and build those grand pieces of equipment that we're relying on as a country i think marco rubio said it really well during his confirmation hearing if america does not start manufacturing things we're going to have to ask china what we're allowed to build and buy in five years and that is down to a critical component level And that's why Vulcan Elements is so important, is we are going and filling that critical gap right now so that across the economy, across national security, we can go and deliver those amazing technologies that our grandkids are going to rely on.

8:07Manufacturing in America right now is laggard. It's been stagnant for a while. There's a calcium market on this. There's 22 % odds that Trump will bring back manufacturing during his term. That equates to around like 13.1 % of GDP. Right now, I think we're at like 9%. But there's 22 % odds that that will happen. What do you think about this? I'm bullish. I think he's already doing it. I can think of a couple of projects. personally in the rarest space where we can really put our thumb on the scale and make that happen. I think it's going to take an entire government and industry coalition to get this done.

8:47But I think we have the momentum and I think that we have the brainpower and the tailwinds to go and make it happen. So I'm very bullish on that. And we need it. We do need it. One of the critical parts about Vulcan is that you're decoupled. So can you explain how this works and what does this mean? Yeah. So when we initially started this company, one thing that we realized is it was phenomenally challenging to fully decouple from China outside of ownerships or any type of financial mechanism that ties you, JVs, partnerships, subsidiaries. It was really around the material, the equipment, and the software.

9:26So I think taking equipment and then talking or material and then talking about equipment and software. Today, China mines 55 % to 60 % of the rare earths. They manufacture 90 % to 94 % of the magnets. They're actually importing the difference. So this is less of a raw material availability problem as it is a refining and manufacturing problem. So being able to go and find that material, that is completely doable. We've already done that. It's readily available. There are additional mines in the United States and in allied countries that are coming online rapidly. So really where the problem that we had to go and fix was, was on the equipment side.

10:03If China, if China manufactures 94 % of the global supply of these magnets, where do you think all of the equipment to make those magnets comes from? It's virtually a hundred percent. So what we had to do is we had to actually co-develop some of the first pieces of magnet making equipment in the United States in the 21st century. It took a lot of engineering hours. It took a really phenomenally intellectually technical team on our side with candidly great manufacturing equipment producers who are here in the United States who just hadn't made that piece of equipment before. They were making complementary and orthogonal pieces of equipment.

10:37They just hadn't done it for the rare earth magnetics industry. And so what's nice about our small scale commercial facility that we're sitting in is it's a blueprint for our commercial scale. Every piece of equipment is not laboratory. It is small-scale industrial, and we're looking at partnering with the same suppliers and scaling that up so that we can not just do this here in the United States, but more importantly, we can actually create an entire ecosystem where you're thinking about indirect jobs. You're thinking about being able to maintain your parts and candidly making sure that you don't just need an MBA from Harvard or a PhD to get a good-paying job in this country.

11:16We can do all of those things if we go and kick down really hard engineering problems.

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12:33There were some like mom and pop shop manufacturers. But working through this and getting your own hardware and all of that, like what kind of talent do we have on American soil? I think people underestimate the talent that we have. When you look at those SMBs, those mom and pop shops that have been doing CNC machining or welding or any other type of metal work for the last 25 years, we have incredibly sophisticated technicians in this country. We have second, third, fourth generation welders and people who've worked on furnaces. And we have really dense pockets in our country. When you think about states like North Carolina or Oklahoma, Indiana, Pennsylvania.

13:18And so I think what we're seeing is now you have Silicon Valley thinking about it. You have DC thinking about it. You have more capital flowing to these areas. And what's important is people in high school or people in college or in their early 20s, they're saying, I can go and build. I can go and use my hands again. Can we go back to 1950? No, we have to be able to understand automation and how AI is going to actually influence next generation factories. But I think that through things like re-industrialization, that conference, and just all of the signaling that DC cares about this, that Silicon Valley cares about this, we're making it sexy again to some 14 -year-old, some 18-year-old who says, I want to go and build and serve this country with my hands.

14:11Uh, and the other thing that I would say is never underestimate America's ability to go and train talent. That is something over and over and over again throughout our entire history that we have been phenomenally good at. Let's talk about your team. So how did you assemble the talent for your team? We're in your facility right now in North Carolina. What kind of local talent did you pull or talent from outside state lines? Tell us about it. Asking who's on our team is my favorite question. That's the best question that you could ever ask me. Uh, so my co-founder, he's a PhD in electrical engineering with a focus on magnetics.

14:45He opened one of the first rare magnetics labs in the United States in two decades, uh, down at the university of central Florida, our COO, uh, his name is Jake Bowles. He was a boots on the ground, space X engineer for several years. And then, uh, as a senior manufacturing engineer at Ursa major, our chief of staff, Jonah, uh, He has deep defense background, working at the Pentagon, thinking about academic research around military readiness, ensuring that America continues to be the America that we've had for the last 75 years. And when you think about the technical team that we have, one of the reasons why we're in the research triangle is we did an analysis of the top 50 cities in the country.

15:31And we really looked at four parameters. The last two are the most important. The first was proximity to customers. Second was proximity to suppliers. But then the last two were states that were open for business, that want advanced manufacturing in their state. But the fourth, most importantly, is where can we find pockets of the U.S. where you can find incredibly talented PhDs, engineers, and technicians all within a 45-minute radius? So you can't build this in the middle of nowhere. You also can't build this in Manhattan. And the research triangle is one of the top four. So we've been able to find powder metal experts.

16:10We've been able to find PhDs who are one of three or four in the country with their backgrounds. And I've said this before, and I will say this a thousand more times, the technicians that we've been able to bring into this company, they are the smartest people at this company. You don't need to go to MIT or Harvard to make a difference. You just need to be intellectually curious, and you need to be willing to get your hands dirty and turn a wrench. Where are they coming from? What other companies or universities? Yeah. So we've recruited talent from North Carolina State University, from UNC Chapel Hill, from several of the community colleges.

16:54There's a lot of powder metal in this part of the country. There's a lot of aerospace and there's a lot of biomanufacturing. So this is one of those untapped markets that other companies come here, but maybe don't come here yet because, you know, we want all of that talent. When you think about untapped areas of the country that have just incredibly dense manufacturing talent and technical talent, this is an outlier. In today's high-speed business world, staying ahead means using the smartest tools possible, including the powerful capabilities of artificial intelligence. Meet Turing Intelligence.

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18:09Yeah. So one thing that we're doing with this fresh set of capital is we're moving to commercial scale. We're completing a multi-state site search right now. We're going to be making that determination here over the next couple of months. And then what we're going to be doing is scaling the team. So it's going to be a lot of technicians. It's going to be mechanical engineers, electrical engineers, chemical engineers, people who understand microstructure in metallography who are not afraid of turning a wrench. There are no desk engineers at this company. And as we look at who we're trying to bring on board, it's scale-up engineers.

18:47This is very sophisticated, advanced manufacturing. People tend to think this is buy a piece of equipment, press a button, make a magnet. That is not the case. You need to understand how every step is coupled to the next, and you need to make sure that your rate of learning is incredibly fast using 2025 tools. So we're going to be really indexing on those scale-up engineers who understand how you take something from small-scale commercial to hyperscale. Since we are in the facility, could you give a high level on how it's built out and the different systems you have to go through for the process of creating a rare earth magnet?

19:23Yeah. So right now what we do is we buy a rare earth metal that has either been mined or recycled from an end of life magnet, think an off-spec motor, a hard disk drive, a power tool, a wind turbine. We take that rare earth metal, we melt it down with iron and boron, and we turn it into a metal alloy. It's called strip-casted flake, actually. It's right here. And what you can see, if you look, is you can see the shiny pieces. Those are the rare earths that are perfectly blended and uniform into that material that we're making every day. What we then do is we throw it through, it's called hydrogen decrepitation.

20:01We're pumping the alloy with hydrogen to break it up into a coarse powder, a couple strands of your hair thick without hurting the structural integrity of that metal. That's that decrepitated powder right there. We then throw that through a high-powered jet mill. So it's an ultra-fine powder. We put that powder into a magnetic press where we're pressing that powder into a block within two solenoid electromagnets. So a magnetic field that aligns all of those particles. Think North, South Pole, like a magnet. And then what we do is we throw it through a centering furnace where we're effectively baking the magnets so all of those properties lock in.

20:37After that, we grind it down, we shape it, we coat it. And then we make a magnet like this. We made this in this facility. And that can go into a drone motor, a hard disk drive, a consumer electronic, a missile, a ship. I want to break down the use cases. like much more because I don't know if many people understand that magnets are in literally everything from like what you put on your fridge to missiles. So like, could you, could you go into more depth on the use cases for magnets and why it's so important that America has a geopolitical advantage here? Yes. And I think you, you just highlighted something important when people think it's a branding problem.

21:18When people think about a magnet, they think about a refrigerator. So there are two things that happen when you put a rare earth element into a magnet. The first is the flux density or the strength of that magnet significantly increases. So, and I can show you actually really quickly. These are my paper clips. Here's my example. These magnets can hold up to 150 times their weight. So that's what happens when you put a rare earth element in. The second thing that happens is the heat tolerance significantly increases. We're dealing with extremely high temperatures and operating pressures when you put this into a car or a defense application.

21:56And so that's why a rare earth magnet is needed for industry and defense. But when we think about use cases, again, these are ubiquitous. So what you see on the table right here, these are drone motors. And actually, if you pick that up, this one right here, when you look inside, those are all of the magnets that are creating the motion in that motor. so that's what this magnet for example that we made here with u.s material uh with u.s and allied equipment is going to go into because every motor the sensors that we use for navigation the actuators that we're using for robotics the generators that we're using for power systems they all use rare earth magnets and that's why we need to get magnets batteries and chips into the lexicon when we're thinking about the critical components that America needs to onshore at scale right now.

22:53What is the new admin doing to help strengthen America's position in this? I know there was a recent deal for the Pentagon and MP materials. If you can go into that as much as possible. So I think what the U.S. government was doing is they were doing exactly kind of what I was just saying we need to do. They were making sure that rare earth magnets are in the lexicon, similar to batteries and semiconductors. And so frankly, when we think about companies like MP Materials, we need multiple companies to succeed. In MP Materials, they operate the only scaled rare earth mine in North America right now.

23:27We want them to go and succeed and execute and scale. That said, we need several 10 ,000 ton facilities. We need several companies going and creating competition and innovating and doing this better and faster and cheaper. And so I think that the United States government has made the initial first moves in a way that we haven't seen in a long time using authorities that we haven't used in decades to actually go and make this happen. And I'm excited to see what they do over the next year. So let's talk about your current production. Where does that stand? Yeah, so we opened our doors to this facility on March 31st.

24:05And actually, the Chinese export ban on rarest happened five days later the same week on April 4th. And in four months, we are already producing magnets. We are making magnets and shipping them to customers, qualifying them with customers across our disk drives for data centers that enable AI, automotive applications, drones, robotics, several different defense applications. One thing that we're really proud of here is we've won several DOD contracts over the last nine months with every branch of the military, top priority programs, making sure that the defense industrial base has the material that it needs to go and scale up.

24:48How are you able to do that? You're such a young company. So I think it's two things. One, it's the amount of pre-work that we did getting this facility ready, making sure that all of the wraparound utilities and electrical and heat exchangers and water chillers were ready to go, that they were at spec. I think that that's something when we talk about re-industrialization and building new manufacturing companies, it's not sexy. But if you miss it, you're delayed six months. Or you get your equipment and you need to completely redo all of the piping. or all of the welding, which that burns money, that burns time, that burns trust.

25:25We nailed that in this facility. And then the second thing, and it's why we nailed that in this facility, is our team. One thing that we have done is the rate of learning here is exceptionally fast. So our COO, his challenge was when he started the company, I told him, go and build a team like you would have seen at SpaceX or at Ursa Major, where you were moving, you were executing, you were kicking down hard engineering problems every day. We're not admiring problems, we're fixing problems. And that's what we've done. I mean, we're very fortunate in that, you know, the last five positions that we've filled, we had over 500 applications and that's with zero marketing.

26:06That's with a very low media presence. People hear about the mission and they want to come and work here because they know that this is important to the country. So team is everything. How has this resulted in customers? When you think about the execution plus what's happened with the geopolitical trade war, where rare earths and rare earth magnets become kind of the centerpiece between the US and China, the demand has been completely overwhelming. We could have sold this pilot facility out 15 times. We actually sold it out over 12 months ago, over 95 % capacity, leaving a little bit for samples for customers that we really want to go and work with.

26:48And so what it's done is it's driven a lot of demand. It's a good and it's a bad thing. It's good because we know we have product market fit. We know that there are people who want to buy our magnets. It's a bad thing because we want to deliver product to customers. We want to go and fix this problem as quickly as we can. And that's why we just raised this fresh round of capital so that we can go and start doing that. Love premium merch just as much as we do? That's why Sorcery uses 4th Wall. Everyone from creators like Marcus Brownlee to podcasts like Acquired2Orgs like the Smithsonian Institute are using 4th Wall.