Scott Dunn On Raising $100 Million To Remove Uncertainties From An Electric Future

In a captivating interview with Scott Dunn, the visionary CEO of Noveon Magnetics, we unravel the compelling narrative that traces his remarkable journey from the quaint communities of Baltimore, Maryland to the forefront of manufacturing innovation in Texas.

Scott’s story is infused with a deep-seated passion for creating and an early immersion in the complexities of production. His career trajectory led him to establish Noveon Magnetics—a company poised to redefine the landscape of rare earth magnet manufacturing.

Noveon Magnetics has attracted funding from top-tier investors like Aventurine Partners and NGP Energy Capital Management.

In this episode, you will learn:

• The trajectory from Maryland to Noveon Magnetics exemplifies a passion-driven odyssey through the manufacturing landscape.
• Noveon Magnetics pioneers sustainability by producing rare earth magnets directly from recycled materials, reducing dependency on China for critical resources.
• Building a multidisciplinary team proves essential in navigating the complexities of manufacturing, blending innovation with the wisdom of seasoned professionals.
• Noveon Magnetics strategically raised over $150 million, emphasizing the importance of investors deeply understanding the intricacies of the manufacturing business.
• With a keen eye on global challenges, Noveon Magnetics aims to be a mature player by 2028-2030, contributing significantly to the energy transition and de-risking critical materials in manufacturing.
• Advocacy for a mindset that compresses timelines, recognizing that everything takes longer than expected but encouraging swift adaptations to change.
• The importance of making timely changes within the company is underscored, fostering a culture of adaptability and continuous improvement for long-term success.

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About Scott Dunn:

Scott Dunn works as a Chief Executive Officer at Noveon Magnetics, which is a Building Materials company with an estimated 70 employees; and founded in 2014.

Scott is part of the Executive team within the C-Suite Department and their management level is C-Level. He is currently based in San Marcos, United States.

Connect with Scott Dunn:

• Datanyze
• LinkedIn

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the dealmakerrs show. So today we have a really exciting founder. We’re gonna be talking about the good stuff that we like to hear you know the building scaling financing. But also we’re gonna be talking about people how to go about you know, getting the right people on board. All we’re gonna be talking about.

Scott Dunn: What.

Alejandro Cremades: You know, really you know the um, some of the pizz all advice that I think that are going to be really ah helpful as you’re looking at building your ah business. You know there’s going to be some really nice nuggets that our guest there’s going to be sharing us today and then also how to get the right people for the right reasons when it comes to investors you know people that are going to be.

Scott Dunn: Pretty.

Alejandro Cremades: The right folks that are going to understand a company like yours and I think that you’re gonna be inspired you know with our guests today and with all of these different things that really made a really exciting journey so without further ado. Let’s welcome our guest today Scott dun welcome to the show. Thanks.

Scott Dunn: Hey alanro thank you for having me and yeah I hope I Hope you haven’t delivered too much promise and I do have some wisdom to share but we’ll see.

Alejandro Cremades: So originally from Baltimore scott give us a walk through memory lane. How was life growing up.

Scott Dunn: A Mary Maryland’s a great state it’s it’s it’s beautiful it’s got mountains. It’s got ocean. It’s got bay. It’s got some really great small community feel. Um I’m a ravens guy I’m um, I’m an Orioles guy again like I said. In in some introductions earlier. That’s’s’s ah’s that’s a blessing and occurs depending on the year for the ravens. It’s generally pretty good for the Orioles. It’s good about once every 10 years. But um, yeah, Maryland’s a great state but at the same time when you want to start getting into some manufacturing and supply chain and. Ah, kind of hard tech you know type stuff you usually end up in some other places. Texas is obviously probably a prime destination at least within the us for that and so here we are. We’re we’re in San Marcus Texas now. So we’re about give or take 20 miles South of Austin Texas right in between Austin and San Antonio and not very far at all from Houston from Dallas and of course everything down south madam Morris raynosa monterey and and here we are growing a manufacturing business in Texas.

Alejandro Cremades: So tell us about how you are how you work you know, getting that exposure to manufacturing early on.

Scott Dunn: Yeah, um, you know I was fortunate with a lot of risk my my my family was actually kind of involved in in in manufacturing we had a couple of very small family businesses. We did steel ah steel fabrication, body armor ballistics. We tested. You know, polyerra mid ceramic glass and then and then you know firearms ordinance things like that. So I grew up in manufacturing I was kind of forced to work there in the summertime and usually those responsibilities got a little bit cooler every year that I became a little bit more mature. Um, but. You know that exposure for me was a lot of folks get to know early on what they want to do and I don’t know if I had that fully figured out but I knew it had something to do with manufacturing I I wanted to make something I wanted to see all of the complexity and all of the means of production and people come together and deliver something that. You know our country actually really does less and less but which is just a massive massive massive challenge and and you just maybe maybe I’m a simple guy you know touch feel smell to be able to do that and go home every day after doing that was something I I felt and and experience as at a young age. And I just knew whatever it was going to be It was manufacturing and so that was kind of my maybe my my bug and my origin story. Um, you know as a young guy in Maryland before basically you know getting into a manufacturing business in Texas.

Alejandro Cremades: Now talk to us about getting into college in how that was for you because also you were working there and and paying the bills. But yeah, you also had some really interesting experiences there in the classroom. So talk to us about that.

Scott Dunn: Yeah, so you know I first of all I I did an extra year of high school I did what they call a post-graduate year. Um I think that was the most important year in my life. Um, for for me to just kind of get away from home and. Learn more about what’s out there and and and who and who you are and um, that was pretty cool I I did that ah at ah in New Jersey for a year then I spent some time after that at ah, what they call a service academy so in the us the different branches of the military have their own like respective service academy. I went to a pretty well known one. It’s called the naval academy in Annapolis in in Maryland actually um, that was a really great experience too. I learned some things there about time management and how to just be tired all the time and and and things like that. But um I think also more importantly I realized what I didn’t want to do which. Was probably a career in the military I was I was I was I was thinking maybe about some other some other things and and some civilian schools presented other opportunities but plus some other some other medical stuff that kind of was restrictive. So um I actually finished or graduated a college at a civilian school so I graduated from University Of Southern California um and it was really at Usc where I would say that this story kind of starts to really become a story about rare earth material or and rare earth magnets. Um I basically had a lot of impact in ah from one professor in ah in a single class.

Scott Dunn: Really started to change the way in which I was viewing the world through the lenses of on the 1 hand like resources resource, utility resource efficiency and then on on the other hand on the on the other side of that that coin maybe maybe not a different lens on the other side of that coin is is sustainability. And and what does that actually mean in the face of population pressure and demand on resources and and you know is it an increased supply problem or is it a managed demand problem and what what role does technology play in in all of that equation. So um, it was around that time that I really started to kind of. I’d say go down the rabbit hole and kind of take the red pill. Um, but I also had a background going back to some of the family stuff as a younger guy and just making money through college where I scrapped metal. Um I scrapped. Aluminum and copper and brass at the at the at the body armor company I scrapped a lot of iron and steel and all kinds of different steel. Um, at the steel company as a kid growing up and ah I I brought that into a little bit of a professional experience and and that’s actually where I met a cofounder as well was was at a company out out of college that was focused on certain. Ah. They call like recycling reverse logistics takeback and and and metals recovery and so a lot of those things basically all converged um on top of a geopolitical event and that event was in 2010 where the world sort of woke up to a threat which was that.

Scott Dunn: All of the rare earth material that we essentially totally depend on was going to stop being exported from China to Japan in order to become a lot of the magnetic materials and finished products that that we use in our daily lives and um, you know markets did some very weird things at that time. And as a young guy who doesn’t have mouths to feed you just want to you know, like like anybody who kind of gets the bug. You just kind of want to go there and and be there and and and and learn it and and and maybe there’s some money to be made a course but um, so it was around that time where. We basically picked up so this is now 14012 picked up moved to China started just working in factories knocking on doors figuring out what kind of side gigs and projects we could have and and get going to just learn this space and it was it was in China where the rest of the cofounding team essentially kind of came together. Um, and and and basically brought those ideas and a lot of that work. Ah back to the us to form a rare earth magnet manufacturing business and ah that was in about 2015 so I’ll take a breath there because I know we’re staying on background. Um, because obviously a lot’s happened since since 2015 and and and I can’t even believe I’m saying it out loud but end at 2023.

Alejandro Cremades: So I guess the um you know for the people that are listening. You know to to really get it. How did all of this you know, develop into novion magnetics and what is novion magnetics today. How do you guys make money.

Scott Dunn: I’m glad you asked that question that way. Um, because that that is that is that is something that I think people forget to just like understand on point blank. Um, so simple answer to the most important part of your question. Is novion magnetics manufactures what are called rare earth permanent magnets so we make a widget. We make a component that is the result of significant material science physics chemistry engineering and all the rest of it. But the output is basically a component that is sold. To anyone on earth who is who is who is ah building and ah and assembling and integrating the highest performance the most electrically efficient um, highest energy density kind of smallest lightest weight electric motor or generator that can be built today on earth. And those applications for those motors and generators are pretty pretty diverse. It’s basically you know the hard disk drive and something as small as as that or even certain things in our mobile devices all the way up to five Megawatt wind turbines and everything in between. Power tools compressors, pumps motors power train for the ev for the for the for the hybrid power train but there’s actually other pumps and motors even in internal combustion engine vehicles that that use these materials. Um and medical device.

Scott Dunn: Aerospace defense motion control robotic arms and and and and industrial processing lines where if you’re going to convert electrical energy to mechanical motion or or in reverse you’re going to harness mechanical motion to become electrical energy. The magnet is playing that role and so we sell the magnet. To all of those different end uses um that that basically play all of those roles in our lives. Um, so that is what our business does. That is how that is what it what it sells that is how it how it makes money the way that we really make money is to not only do that but to do that in a way that is also very unique. And and so I’ll say a little bit about that as well. Um, historically most of the rare earth material on earth comes from China and even more so downstream of let’s say source. Ah the manufacturing of these types of components is even that much more dominated by by China. And and that’s fine. That’s just kind of how the world was for for some time but as we started to depend on these materials more and more the dependency on China became a kind of worse and worse risk or specter of instability and ah uncertainty and so what we do? That’s unique. Is. We not only ah, kind of in in in an attempt to disrupt this supply chain. We not only focused on a recycling capability. Um, we we actually kind of accidentally invented a novel material that is higher performing it is what allows us to use recycled material and so.

Scott Dunn: What’s really unique about our business is outside of China there are very few magnet producers a like less than 5 and there are none in the world including China who make a finished product from directly from recycled inputs. So there was this kind of performance and sustainability. Breakthrough if you will that was the basis of commercialization of what our manufacturing process was and then what that final product is that we deliver to a customer base in the face of these other geopolitical and supply chain uncertainties and so um, that’s obviously you know a pretty cool story. Um, and and there’s a lot more to say about what you have to do to pull that off and still be successful. Um, but that’s really what our business does. That’s how it makes money It’s also what’s particularly unique about our business versus you know other magnet manufacturers outside of China which in which there are few or or even globally where. We we even throw all of China and into that basket.

Alejandro Cremades: And as you guys were thinking about the team to ah putting the team around this to Ram things up. How did you think about the team especially like really making sure that you have the diverse backgrounds the different perspectives. So how did you go about doing that.

Scott Dunn: Yeah, there there were there. There’s kind of two ways I look at it with the benefit of hindsight. Um the first is that we we were. We were going to grow a manufacturing business from scratch. And this is a manufacturing business or this is the type of manufacturing that requires many many many disciplines. Um you know material Science Physics Chemistry Computer Science mechanical electrical automation engineering you know data and and language modeling and all the way down to. Really a lost art which is highly highly skilled machinists and then on on down to technicians operators and handlers and so the first thing was we were going to have to build a very very diverse team which probably was was also going to be best built by individuals who had diverse backgrounds and kind of. Were multidisciplinarians themselves and so um, that’s what we did I mean we we we we went and brought in a lot of different folks from a lot of different areas and literally we’re kind of like a small un from from also a lot of different countries into a single manufacturing business. To to try to to bring all this together and and and commercialize the the technology and and build ourselves for scale and then secondly you know you really do want some adults in the room so to speak and I don’t necessarily mean that in a way that takes anything away from myself and others maybe as founders but having the right dose.

Scott Dunn: Across the right amount of of individuals who have also just like come from like mature you know, very high volume very high mix manufacturing living on razor thin margin and understanding what operational excellence is and having come from those environments knowing knowing what that is. Helps us understand like how we’re going to get there as a business as well. And so we we definitely brought in the right folks there? um on all levels technical operational financial. So um I would probably say that um, if I was to kind of put a little bit of a button on that. The most important thing is people and I mean that internally ah you’re not going to get anywhere without the right people but you also got to get the right mix of folks that’s going to fit what it is that your business does and how it’s going to allow you to build a business for where it needs to go and how it’s going to get there and the way that you do that. Is you know all of the pioneer spirit that you get from the startup folks that are typically from very diverse backgrounds and and and varied backgrounds. But you also got to you got you got to introduce the right dose of of chaperone if if that’s the right word. Um, and if if you can build the right chemistry in the right culture. With that personality mix. Um, which by the way is not easy to do and it’s still not over with here 9 times out of 10 you are on the right path going forward and and more importantly for the audience investors are not stupid and there’s a I know that they don’t just say this to say this.

Scott Dunn: They pick up on that very very quickly and it usually is probably the reason they end up investing in a business at an earlier stage and so I’d probably emphasize that for the audience.

Alejandro Cremades: And talking about investors. How much capital have you guys raised today.

Scott Dunn: Oh I should be armed with this right off the top. My head. Um so we have raised. Let’s see in equity. We have raised about ah about 150000000 I think it’s a little over 150000000. We do have some other. Ah. You know, like equipment financing and real estate financing on some of the facility buildout. So it’s it’s it’s probably pretty close to maybe 175000000 in total invested capital plus um we are technically through a series b but I say that um this series x. Means different things at different times depending on where you are in in the market cycle. Um, we’re probably like a series c plus company in terms of the amount of capital. We’ve raised and probably where we are from an operational standpoint but we we did have some ah government involvement in our business early on. That you know was what was meaningful. Um, and so we’re we’re technically a series b funded business with with with institutional capital and um, yeah, that’s that’s that’s the answer. Well.

Alejandro Cremades: And then when he came down to really making sure that you had the right investors you know for the right reasons and that they really understood the business. You know how did you go about doing that.

Scott Dunn: That’s a great question which is ah back to people really in this case, it’s just external. Um I would advise anyone as much as they can when you when you when you find at an earlier stage in your business in particular. When you find the types of investors that are themselves the deep study what I’ll call it. Um, they’re not They’re not bringing in consultants on the second phone call and probably going to tell you what bill you have to pay at close for that and you actually see you know the pencils up. Sorry sorry the the page is out and the pencils down and that team that will represent your business to an investment committee is really digging into the details that are how your business is going to be successful or what are those key risks that they can understand and quantify about your business. Honestly, you know obviously I say this within reason the term sheet does not matter and that investor being a part of your business and a part of your board does. Um and I would say that that has made all the difference for us. We. We did not take a Vc term sheet ever. Um, we took carefully. Ah, growth private equity capital most recently and um that that has made all the difference I really believe for a manufacturing business which which is its own type of risk and very difficult to understand and um I think that has I think.

Scott Dunn: So far I I look around the table I look around the table that was set before that table and um I feel either lucky or okay, maybe maybe we were maybe we were really wise despite our youth who knows which blend of that it is But. We we have the right folks and continue to have the right folks around the table who understand our business and understand how to really talk through key risks that have been identified and how to mitigate those risks and then otherwise what other key areas or metrics of our business will lead to success. That that we can remain focused on or can address together and I Honestly don’t even remember most of the high ah high level. You know headline term sheet takeaways at all I Just remember where we’re headed and kind of who who is there and helping us get there along the way and that. And know it sounds cliche to say that but it I mean it really is so much more important than T’s and C’s it really is.

Alejandro Cremades: And as you’re thinking about people. You know we were talking about internal external. You know the approach the perspective when it comes really to people you know, imagine you were obviously vision is a really big one not to get them and rolling to the future into what’s possible and get everyone excited you know and aligned.

Scott Dunn: You are.

Alejandro Cremades: So as we’re thinking of a vision imagine you were to go to sleep tonight Scott and you wake up in a world where the vision for the company is fully realized what does that world look like.

Scott Dunn: So that’s a fan. You got some good questions. Um, so for our business let me see how to tackle this in a couple of layers here. So I’ll I’ll go where the puck is headed first. Um.

Scott Dunn: Like like is the story for many other kind of critical materials. Let’s call them whether they’re related to batteries whether they’re related to semiconductor or or in this case, energy conversion and and the rare Earth Magnet We We are headed for. A little bit of a pinch and a little bit of a squeeze I mean we’re we’re seeing we’re we’re seeing basic squeeze on energy whether it’s thermal coal or or oil and gas I mean generally from a resource perspective. We are on some timeline headed for. Some kind of a pinch or a squeeze on resources and it’s the result of yes population pressure and and draw on those resources as much as it is probably geopolitical and technology and so for our business where we’re headed is we intend to make as significant an impact as possible. To reduce risk across the supply chain for rare Earth materials especially when demand starts to sort of peak. Let’s call it or or start to get a little bit out of control which is about 2028 and 2030 our goal by about then is to have done. Very few things very very well for very few customers in order that we have an extremely mature process in business and operation that is kind of the launching point for significant other output and market share. Let’s call it.

Scott Dunn: Because by 28 to 2030 the amount of production that must exist in this country alone versus today is about 10 to 15 times what exists currently, you can’t invest and build in it quickly enough and that is generally the rule of thumb for all of the rest of the world outside of China. And we we feel like we are and and we’ll continue to put ourselves in a position in the next couple of years to be in a position by 2028 certainly by 2026 to start investing in readiness and capacity and capability and deliverability in 28 to impact the global supply chain for these materials. In order to complete that that energy transition story and and de-risk critical materials at least in this kind of node of the supply chain. So that’s it for our business long-term so to kind of take a couple of steps back what we need to do in the near term which is kind of what’s underway here. What we’ve raised capital for. Um, is basically ah capacity you know, ah, let’s call it overall sort of ah this facility here is kind of our phase one before we look at other markets you know Europe Asia things like that um capability so consistency repeatability yield. And ultimately deliverability. So how well are we delivering you know millions and millions and millions of parts per month across a customer base to build the trust build the credibility and um, you know obviously become a um, very very meaningful going concern as a business if we do that right.

Scott Dunn: We will earn the right to allocate significantly more capital towards what those ambitions and what that plan is for you know 2028 and beyond and so um, and and so lastly in order to do that again. It just comes back down to the team and the people. We’re growing at an alarming rate I never thought I would be this kind of Ceo. Let’s call it where you don’t know the names of everyone who works inside of your company but that day actually kind of came about two months ago and then you kind of catch up. But then there’s a new wave of hiring. So then you’re behind again. Um we we we really are doing everything we can. To build and train a workforce which in our space is not off the shelf. Um, how you produce these materials how you then produce those parts and deliver those components to a customer takes a lot of trades and skills and disciplines and then the right technical management. Financial operational leadership to again, just really kind of keep us on the rails and and and and executing the way we need to in the next call it 18 months plus that will allow us to ah or have us earn the right to continue to again allocate capital and and execute over the longer term.

Alejandro Cremades: So now imagine I was to put you into a time machine and I bring you back in time and I give you the opportunity of giving that younger Scott 1 piece of advice for launching the business. What would that be and why given why you know now.

Scott Dunn: And that that’s what we’re doing here.

Scott Dunn: Plus. Like I said I got I got lucky on some big ones or whatever we want to call it you know with with with people and investors and things like that and man I never thought I’d be so cliche with some of the things that come to mind but I’m I’m going to rattle off a couple I think the first key piece of advice. Sort of a double-edged sword or two sides of a coin or whatever everything takes longer than you think it will. However I and you know sometimes to the chagrin of maybe a board I don’t necessarily like to say numbers I’m going to beat. Really don’t and I probably need to learn how to do that or we’ll have to do it anyways later when we go public but I really like to figure out how even if you miss 105 years can turn into you know, 3 and 5 years and if you think in those terms. It eliminates a lot of noise. It also makes it also sort of simplifies, workstream organization and culture in order that you’re doing what you? what what is essential? What is the essence of the business and as quickly as you can to get to that next stage and so um, I’m gonna say that you know.

Scott Dunn: Look It’s going to take longer than you think but do not let that be an excuse for sort of prolonging your expectations in your timeline. Um, those. That’s that’s key and it’s ah and it’s an art and it’s a dance. It’s not a science and and and but it but take take away what you can from that um and then probably the other thing I’d say about that is. When you think something’s not working inside of your company and it is earlier stage. It is therefore more nimble and it ought to be disrupting itself more frequently than maybe the larger businesses do or even your competitors do I would say that and this this happened has happened only a few times and it. May only happen a few more times but every time I have never regretted making a change too soon including Personnel including organizational structure including just maybe vision and direction and and and strategy. But I have always regretted. Making that change too late. Um, and I again it these sound like basic concepts. But um, if if you if you fear a little bit of the unknown quantity versus the known quantity I would like to just tell you that.

Scott Dunn: The the quantifiable pain and risk that we have let linger by actually not making certain changes sooner um is something is the only thing I’ve really ever regretted versus if we wonder if we made certain changes at the time that we did you know basically. Very early on and um I think I think those are probably 2 of the most important pieces of advice I’d like to give myself when I was you know in my late twenty s versus my late 30 s um and and hopefully that equates to wisdom.

Alejandro Cremades: I love it so Scott for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Scott Dunn: Oh um, so you know ah um, I’m actually terrible at that part of it I believe that there is an email address and then of course things like Twitter Linkedin and and and and so forth. Um for novion magnetics. Um, we have a team of folks that are. Constantly like you know scrubbing that reviewing that. Um and a lot of things make make their way to me or other stakeholders within the organization for whether it’s hiring you know media opportunities, um, interview requests or anything so like anything like that and um. Yeah, hopefully hopefully those are pretty accessible and available on the website or again some of those other channels and and and there really are people that are constantly funneling what information is necessary to all of the right stakeholders here and and and again we’re we’re small. We’re nimble still you know not quite a hundred heads. Probably will do about double that in the next year plus but we we we still are very much involved in all of those types of of exercises. So we’re we’re easy to reach.

Alejandro Cremades: Amazing. Well hey Scott thank you so much for being on the deal maker show today has been an on earth to have you with us.

Scott Dunn: Aahjadro thank you so much and I really hope. But you know there were some kernels of wisdom and that kind of a thing and more importantly, maybe we’ve inspired some folks to take a crack at this business or that business or challenge here or or promoting greater sustainability there or. Or or whatever it is and ah I really think I I’m a cosmic patriot if I’m going to steal a term from a gentleman named G K Chesterton I’m I’m a very optimistic person and I really think that all problems can be solved through technology and and and and teamwork and and um. Um, we can. We can basically redefine scarcity that way and ah maybe some folks took that away from this or ah can reach out to us and find out more and I just wanted to thank you again too very much for for reaching out to us and and for your interest. Thank you.

*****

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