How To Invest in Lab-Grown Diamonds: Are There Any Lab-Grown Diamond Stocks?

The market volume of eco-friendly, lab-grown diamonds is expected to increase from about 7.5 million carats in 2021 to nearly 19.2 million carats by 2030. But it’s pretty hard to invest in the industry. Keep reading to learn what your options are.

Matt Johnston   Updated April 21st, 2022

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What are lab-grown diamonds?

Lab-grown diamonds are growing in popularity. This is especially true for younger consumers who are increasingly concerned about environmental, social, and corporate governance (ESG) issues. Diamonds grown in a lab are considered greener and more ethical alternatives to mined diamonds.

De Beers’ 1947 slogan — “a diamond is forever” — made a diamond ring an essential part of getting engaged. Since then, the diamond retailer has touted the superiority of mined diamonds. And up until recently, lab-grown diamonds were mostly used in industrial applications.

Thanks to advances in technology, lab-grown diamonds are nearly indistinguishable from mined diamonds, at least to the naked eye. Concerning chemical composition, the two types of diamonds are the same. Physically and visually, they are also identical. You would need special laboratory equipment to distinguish one from the other.

It’s true their origins are different. Mined diamonds were formed about 100 miles underground over billions of years. They are products of the immense pressure and heat of the Earth’s mantle. Molten rock surging through the mantle drove the diamonds towards the Earth’s surface

How are lab-grown diamonds made?

There are two ways to make lab-grown diamonds. Both methods start with a flat sliver of another diamond called a “seed.”

One of the ways to grow diamonds uses extreme heat and pressure, similar to how mined diamonds naturally form underground. This high-pressure, high-temperature (HPHT) method binds carbon atoms to the diamond seed.

The other way to grow them is using the chemical vapor deposition (CVD) method. The CVD method creates diamonds by breaking down carbon-rich gas in a vacuum chamber. Carbon and hydrogen atoms are built onto the diamond seed from the decomposed gas.

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Are lab-grown diamonds better than mined diamonds?

Unlike mined diamonds, which formed over billions of years more than one billion years ago, lab diamonds take only weeks to grow. 

Further, lab-grown diamonds are now of equal or even greater quality than mined diamonds. That means traditional diamond companies like De Beers must emphasize the rarity of mined diamonds. To sell diamond jewelry, such companies have claimed that mined diamonds are rare and constantly appreciating in value.

Except for a few exceptions, the rarity of mined diamonds is a bit of a myth. Diamonds are not that different from cars. As soon as they leave the showroom, they start depreciating in value. And like gold, the scrap value of diamond jewelry is nothing compared to its purchase price.

In the end, even De Beers caved in and started offering a line of lab-grown diamonds through its Lightbox brand in 2018, though at prices significantly lower than mined diamonds. Did they do it to undermine the lab-grown diamond startups? Perhaps, the aggressive pricing strategy tried to signal to consumers that they shouldn’t have to pay exorbitant prices for something that isn’t rare.

Besides, environmentalists and human rights advocates have long opposed the environmental and social destruction from diamond mining. Mining is linked to the pollution of water sources and the destruction of natural habitats. Then there is the humanitarian toll associated with mined diamonds. Many diamond mines are located in conflict zones or regions where human rights abuses are much easier to hide and cover up.

The Kimberley Process was established in the early 2000s to help reduce the trade in conflict diamonds. Yet, the process is not perfect as the definition of “conflict diamond” it uses does not cover all human rights abuses. Also, diamonds tend to pass through many trading hubs from the mine to the shop, making it difficult to trace their origin. 

The other advantage of lab-grown diamonds is that they perform better in industrial applications. They can aid in drilling, cutting, and grinding better than mined diamonds. Lab-grown diamonds tend to be purer and harder than mined diamonds, making them about ten times more durable. This makes them more efficient at performing industrial tasks, leading to big energy savings. That’s significant since diamonds for jewelry only make up about 30% of the entire market. 

What are the cons of lab-grown diamonds?

Lab-grown diamonds are not without faults. The energy needed to produce them is significant. It’s fine if renewables are used, but manufacturers could also rely on fossil fuels. So it’s important to know who is growing the diamonds. Manufacturers like Aether are actually using carbon extracted from the air for their diamonds, but not everyone is that eco-friendly. 

The lack of available data also makes it hard to compare the carbon footprints of lab-grown diamonds with mined diamonds. 

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How to invest in lab-grown diamonds

What lab-grown diamond companies are publicly traded?

There are few publicly traded options for investors looking to invest in lab-grown diamonds.

Even to get exposure to De Beers’s lab-grown diamond brand Lightbox, you would have to invest in its parent company – the mining giant Anglo American Plc (AAL). But most of Anglo American’s sales come from precious metals like platinum and palladium, not from diamonds. 

Danish jewelry company Pandora (PANDY) recently launched a jewelry collection featuring lab-grown diamonds, but by investing in Pandora, you are investing in trendy jewelry, not diamonds.

Lab-grown diamond companies

  • Brilliant Earth (BRLT) – a reseller of mined and lab-grown diamonds
  • Diamond Foundry (private)
  • Aether Diamonds (private) – turns CO2 into diamonds
  • Blue Nile (private) – a reseller of mined and lab-grown diamonds
  • Eterneva (private) – turns ashes into diamonds

The two options you can actually invest in are publicly traded Brilliant Earth (BRLT) and private Diamond Foundry, which has stock available to accredited investors in secondary markets. Learn more about the two companies below.

Brilliant Earth Group (BRLT)

  • Market capitalization: $816 million

One publicly-traded option is Brilliant Earth Group Inc. (BRLT), which was founded in 2005. The company sells diamond engagement and wedding rings, gemstone rings, and other fine jewelry. It offers both mined diamonds that it claims are ethically sourced and lab-grown diamonds. Customers looking to verify that their diamonds are ethical can even use blockchain technology for extra transparency.

Of course, Brilliant Earth is not a perfect way of investing in lab-grown diamonds, but at least it offers both and can transition to lab-grown if there is more demand.

Brilliant Earth operates on an asset-light business model. Its customers typically pay it before it pays its suppliers. That allows it to scale its operations without making initial capital expenditures. All of its showrooms are also appointment-driven, meaning the company is less reliant on locations with high foot traffic and their associated high rents.

Brilliant Earth reported $380 million in 2021 sales and $26 million in net income. However, the stock lost over half its value over the past year, in part due to pessimism about high-flying growth companies in a rising rate environment. The company also had to remove mined Russian diamonds from its website due to the war in Ukraine.

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Minimum

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Diamond Foundry

Diamond Foundry Inc., founded in 2012, is a private company focused on creating lab-grown diamonds. In addition to being used to make fine jewelry, the company’s diamonds are also used for various applications in the semiconductor industry. 

Diamond Foundry’s diamond semiconductor technology has the potential to significantly improve on the current silicon wafer technology used to produce chips. Its lab-grown diamond material could be used to replace as much as 99% of a chip’s silicon wafer, adding performance benefits.

The company is backed by academy-award-winning actor Leonardo DiCaprio and a host of other wealthy individuals. Founders or founding investors of Google, Twitter, eBay, and Facebook are among some of the company’s other backers.

Although Diamond Foundry is not listed on an exchange, you can sometimes invest in pre-IPO companies like it through platforms like EquityZen. These platforms let you buy shares or private companies from employees or early investors.

However, to invest in a private company like Diamond Foundry, you need to be an accredited investor. An accredited investor is someone who meets at least one of the following three conditions:

  • Has earned income over $200,000 in each of the past two years (or $300,000 with a spouse) and expects the same this year
  • Has a net worth of more than $1 million (alone or with a spouse), excluding their primary residence
  • Holds one of three special licenses issued by the Financial Industry Regulatory Authority (FINRA)

But pre-IPO investing comes with its own set of risks. One of those risks is information asymmetry. Employees and early investors often know more about the company than you do. While not always the case, if these individuals are selling their shares, it could be they know something bad about the company. Though they may also need cash to buy a house or pay for college.

Private companies also have limited disclosure requirements. The SEC requires that publicly traded companies disclose lots of information to investors. Such information includes annual and quarterly earnings. Private companies do not have those requirements. That makes it difficult for investors to make informed decisions about a company’s financial situation.


Lab-grown diamonds are growing in popularity as an ethical alternative to mined diamonds. But currently, there are not many options for investors looking for exposure to this rapidly expanding market.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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