Slag is the molten runoff created while producing steel in a traditional blast furnace. The material has been prized as a greener cement alternative for creating concrete, the Earth’s most abundant human-made material. The runoff is facing supply chain issues, however, as the steel industry looks to greener methods of production.

Increasingly, steel producers in the U.S. and Europe are turning to electric arc furnaces (EAF), which are smaller, more energy efficient and run off of electricity, rather than coal. Cocoon is a new startup built on the belief that greener steel production and the creation of concrete slag doesn’t have to be an either/or proposition.

For all of the concerns around concrete production, demand is only growing. Cement only makes up around 10-15% of a concrete mix, while accounting for around 90% of its emissions. As such, the industry is constantly searching for environmentally friendly alternatives. Cocoon is building a solution it has deemed “e-slag,” a processed bi-product of more energy-efficient steel production that serves as a cement alternative.

“The challenge with steel slag is that it’s got a higher iron content. That’s one of the things that limits its ability to react as a cementitious material,” co-founder and CEO Eliot Brooks tells TechCrunch. “We have a two-step process that looks to address that high iron content and the challenge it creates, and also then get the cementitious reactivity at the other end of the process.”

Still in the testing phase, the U.K.-based firm’s technology is designed to slot into existing steel production workflows. The standard system involves slag pots on rails or mounted to the front of a large truck, which dump the molten material into a large pit. The slag is then allowed to cool, before being crushed up and sent off to cement producers. Cocoon’s solution is housed in a shipping container that sits in a pit, collecting the molten material as it’s poured from slag pots.

The company recently raised a $5.4 million pre-seed. The round features Wireframe Ventures, Celsius Industries, Gigascale Capital and SOSV. The latter has been backing Cocoon for a while now, with Brooks working part-time from SOSV’s newly opened HAX facility in Newark, New Jersey. The founder was on hand when TechCrunch toured the space back in April.

The new funding is being used to build an R&D facility in London. Initial tests are being conducted at a steel plant in the north of England, followed by one in the U.S. Brooks hopes Cocoon’s technology will be integrated into a pilot plant at some point in late-2025.