Every year, the pharmaceutical and chemical industries lose raw materials worth billions of euros—chemicals that remain fully usable but never reach a secondary market because Enterprise Resource Planning (ERP) data, quality documentation, and regulatory information are never consistently consolidated centrally and made available in a timely manner. This is exactly where InCycling comes in: The Berlin-based startup has developed an AI platform that aggregates this scattered data and automatically transforms it into tradable material profiles—thereby reducing write-offs as well as capital, storage, transportation, and disposal costs. In September, the company launched its seed funding round, which is expected to be completed by the end of November—following a first year that saw the company go from bootstrapping to three major client pilot projects and approximately 800,000 euros in revenue.

InCycling was founded by Dr. Karym Zupan El Sayed and Sascha Karhöfer. Both have worked for years in complex industrial systems in the healthcare, chemical, and pharmaceutical sectors, where they witnessed firsthand how much material, energy, and usable value is lost because systems are not designed for a circular economy. They represent a trend that is becoming increasingly visible in the AI and deep tech landscape: founders who don’t view an industry from the outside, but rather build from within it—with years of experience, a network, and a keen sense of the actual problem. In this interview, Karym and Sascha discuss the biggest hurdles to a functioning secondary market, what’s driving InCycling’s growth between Berlin and Erfurt, and what needs to change so that a long-overlooked problem can become a thriving new market.

Karym, you launched your seed round in September—following a strong first year for InCycling. What has surprised you the most during this time, and what do you hope to achieve next with the seed round?

Dr. Karym Zupan El Sayed: What surprised me most was how deeply rooted the problem is. It is not primarily a data or technology problem, but a structural one: surplus material arises from fluctuating customer demand, safety stocks, changing production plans, or projects coming to an end. Companies have known for years that raw materials and chemicals worth millions of euros remain unused or have to be written off. What has been missing is an effective and scalable way to bring these materials back into the economic cycle within existing corporate processes.

And of course, there is always the hope that a use for the surplus will eventually be found. But the deeper we went into the issue, the clearer it became that without targeted market identification, suitable buyers, and the necessary regulatory assessment, this potential often remains untapped. Once we were able to show corporate partners that we could quickly assess their surplus raw materials and identify potential markets for them, the reaction was often: “Why hasn’t someone done this already?” This large-scale structural need validated our thesis faster than we expected — in our first year, we signed three pilot projects, two of them with DAX-listed companies.

The seed round is intended to help us scale our already validated business model and take the next step in our development: moving from service-oriented customer projects to a scalable SaaS business. The focus here is on further developing our AI-powered matching system and automating compliance processes. At the same time, we aim to strategically expand our commercial and technical teams to implement multiple enterprise integrations in parallel and meet the growing demand. For the coming year, we plan to expand our team from the current 8 employees to 19. This will provide us with the personnel needed to accelerate product development, further advance our technological foundation, and expand sales and customer support in line with our growth.

InCycling uses AI to generate actionable material profiles from ERP data, quality documentation, and regulatory information. Which task is the most technologically challenging for the AI in this process—and where is the “human in the loop” still indispensable?

Dr. Karym Zupan El Sayed: The most challenging part is not the matching itself, but the extraction and normalization step: transforming unstructured or semi-structured data—such as specifications, safety data sheets, regulatory documentation, and ERP field entries—into a consistent, machine-readable material profile. Chemical and raw material data can be disorganized, formatted inconsistently, and often hidden in scans, PDFs, or outdated ERP fields. Getting this first step right is the foundation for everything that follows.

People remain indispensable when it comes to compliance decisions and borderline cases: regulatory interpretation, quality decisions, and building trust in transactions involving real industrial risk. AI can flag, structure, and pre-qualify information—but the final approval of a compliant listing or an assessment of a borderline material still benefits from having an expert in the loop and knowing which business partner would be the right fit for a specific substance. We built InCycling precisely according to this principle: automate 80 percent of the work, but keep humans in control of the decisions that matter—and rely on personal networks for the final mile in recurring business.

Sascha, surplus chemicals are often still fully usable yet never make it to a secondary market—a problem you know all too well from your own time in the industry, both on the sales and purchasing sides. In your view, what is the biggest hurdle today: data, technology, or companies’ internal processes?

Sascha Karhöfer: To be honest, all three factors play a role in some way, but if I had to choose one, it would be internal processes and organizational habits that have mostly developed over decades. The data is available, and fortunately, the technology to structure it now exists as well. However, most companies lack an internal department or workflow dedicated to surplus. It falls between purchasing, finance, production planning, quality control, and sometimes even waste disposal—and no one has an incentive to turn it into a business model that would reduce write-offs, capital costs, and transportation and disposal costs.

This is exactly the gap that InCycling fills: We integrate with existing ERP and quality management systems so that the identification of surplus becomes an automated byproduct of normal operations, rather than requiring a new internal process to be built from scratch. And with our InCycling AI platform, we take care of the rest and manage the saleable surplus for our partners.

100 metric tons have already been sold, and more than 500 additional metric tons of material are in your pipeline. What have your first pilot projects with major customers taught you about this: when does a surplus actually become an economically viable raw material?

Sascha Karhöfer: The turning point isn’t the chemical properties, the quantity, or the value alone. Most of the surplus we see is still fully usable. Documentation and trust are the deciding factors: the moment a material has verified quality data, a clear regulatory status, and a transparent chain of origin, it is no longer just “potential waste sitting in a warehouse” but becomes a valuable raw material that a buyer can actually purchase with a binding commitment.

Our pilot projects have taught us that speed is crucial here—the faster we can capture these materials and create reliable substance profiles from them, the higher the likelihood that they will be sold rather than disposed of. Our advances in automation are key here: the more efficient we become, the lower the value and quantity thresholds at which trading becomes worthwhile. That is why we are consistently optimizing for time-to-listing as well as for the effectiveness and precision of material-buyer matching.

Karym, InCycling combines the circular economy with a concrete business case: lower depreciation and disposal costs, while making better use of existing resources. In practice, what is most likely to motivate companies to change their existing processes?

Dr. Karym Zupan El Sayed: The business case must be tangible. Companies need to see a positive impact on their bottom line without the transition to the circular economy becoming overly complicated. If we can show a company that every euro of surplus material currently incurs additional costs for storage, transportation, and disposal—and that a portion of that value can be recovered on a compliant secondary market—it sparks a conversation that finance, production, and procurement teams will take seriously.

Our goal is to make the circular economy economically scalable. After all, when reusing surplus material pays off for companies, it creates a sustainable incentive to keep existing resources in the economic cycle longer. It is precisely this combination of economic benefit and environmental impact that we aim to enable with InCycling. Every material we divert to a suitable further use can prevent write-offs, conserve resources, and reduce unnecessary disposal.

InCycling was founded in Berlin and is now establishing an additional location in Erfurt. What role does Berlin’s AI and innovation ecosystem play in your development—and what potential do you see here for AI solutions that rethink industrial material cycles?

Dr. Karym Zupan El Sayed: Berlin is InCycling’s headquarters and our home. It gives us access to deep-tech talent, a fast-paced AI and startup ecosystem, and proximity to the network of investors we’re now tapping into for this funding round. This is where we’ve built our leadership team and joined our accelerator programs.

In Erfurt and the wider Thuringia region, we plan to hire talent to build out our compliance module. This is a standalone, development-intensive product component. While Berlin is more vibrant for startups, Thuringia offers a more attractive cost structure for scaling operations, serves as an important logistics hub, and is located in close proximity to pharmaceutical clusters.

Sascha, let’s look two to three years ahead: What would need to change in the chemical and pharmaceutical industries for you to say that InCycling has turned a previously overlooked problem into a viable new market?

Sascha Karhöfer: We know that InCycling has been successful when the trading of surplus chemicals is no longer a manual, relationship-driven side business, but rather a standardized, automated process firmly embedded in the day-to-day operations of chemical and pharmaceutical companies. Surplus will then no longer be viewed as a planning failure, but as a well-managed byproduct of highly regulated industries with long lead times. In a few years, there’s no reason why InCycling shouldn’t have become an industry-wide infrastructure, much like what has happened with payment processing or logistics tracking. In just over three years, success for us will look like this: hundreds of corporate customers whose surplus is automatically recorded and listed, a liquid network of buyers that—thanks to precise matching and trust in the source of the surplus—turns secondary materials into a normal procurement channel, thereby making the disposal of surplus the exception rather than the norm.

If we achieve this, we will have built the missing layer of infrastructure for the industrial circular economy and thereby created the ideal win-win-win scenario: generating revenue for our clients, offering competitive products to buyers, and protecting our environment at the same time.

Thanks for the great conversation.