Transitioning towards a more circular economy could lead to the net creation of about 700,000 jobs in Europe by 2030, through additional labour demand from recycling plants, repair services and other circular activities.

However, circular approaches other than recycling, such as minimizing the quantity of raw material, plus the reuse or swap of existing products, are only slightly introduced. In order to increase the cycle time of goods and the introduction of smarter circularity techniques, several stakeholder groups must work together. While the contributions of large, well-established corporations are undeniably significant, start-ups may also have a key role to play, with their ability to create disruptive technologies. EU start-ups play a major role in the transformation of the economy into a greener future. They will thus assist the economy in accelerating its transition to a more circular approach.

Let’s now familiarise you with some more key definitions, as identified by the University of Utrecht (2019):

• Circular start-ups are new entrepreneurial ventures, adopting the CE model
• Circular start-ups are largely under-researched. They can, however, become leaders on the roadmap to a more circular economy
• Circular start-ups develop innovations which are well linked with the CE model. They usually invest in waste management activities and promote solutions that can be distinguished as “circular innovations” – quite often identify new product opportunities overlooked by medium and large businesses.[1]

Source: www.canva.com

Here are some good tips to take into consideration while you start thinking about transforming your start-up into a circular one, as they have been identified in the Disruptor report developed by Circle Economy and the University of Utrecht (2019):

• Examine the operations and business models of circular start-ups to find circular solutions within and across industries, and integrate best practices into your own business models
• Engage with other circular start-ups in alliances and strategic partnerships, for example by unlocking the network, serving as off-takers (providing a guaranteed revenue stream for a certain period of time), or even as key suppliers (making sure the input side is covered), by delivering production capacity
• Engage with another circular start-up in a joint venture to jointly deliver a circular proposal or service
• Help existing businesses to improve their circular strategies, for example by offering relevant content or technology information, given that your business model is a pure circular one.

Circularity is not just recycling

It is only normal that when you hear about CE all you can understand is “recycling”. Actually, this can be expected at a certain level. But circularity is more than just recycling! As briefly mentioned in the first section, one of the most widely used conceptualizations of circularity strategies is the so-called 4R-framework.

It is comprised by four different ‘R-strategies’: Reduce, Reuse, Recycle and Recover. These 4-R strategies are the cornerstone of the CE model (see relevant diagram).

Source: https://www.circle-economy.com/

https://www.circle-economy.com/resources/disruptors-how-circular-start-ups-can-accelerate-the-circular-economy-transition

In order to better accommodate the start-ups involved in the creation of nature-based solutions, the main word ‘Regenerate’ is introduced, according to the same CE report referred to above. Nature-based strategies are designed to increase the use of ecosystem resources and offer the advantages that ecosystems bring to human beings.

In order to better understand the 5^th “R” strategy, here are some examples of ecosystem services:

• like green roofs or walls, as well as
• urban green spaces, which rely on a relatively small input of non-renewable natural capital and invest in renewable natural processes.

A simple hierarchy of priorities for waste management methods is defined by the R-list: priority is given to the first R (Regenerate) over the second R (Reduce) and so on, with the degree of circularity gradually decreasing down the list.

These techniques can be incorporated within the two types of resource cycles that define the Circular Economy: the biological cycle involving the flows of food and biological materials (e.g., cotton and wood) intended to return to the biosphere through processes such as composting or anaerobic digestion; and the technological cycle involving the flows of inorganic or synthetic materials.

Keep reading until the next section, where you will find a number of relevant real start-up innovative ideas, which utilise the 5 “R” strategies, and utilise in an ideal way biologically-based materials along with the flow of food, and have delivered innovative ideas that are really successful in the market!

Source: made by the module author using the tool Canva

Circular start-ups: adopting the biological cycle better than existing businesses

In the biological cycle, a relatively high percentage (36%) of circular start-ups run, while the remaining 64% are involved in the technological cycle. By comparison, a study of 46 existing firms on CE-related practices found that while 57% of these firms were centred on the technological cycle, only 4% were solely concerned with the biological cycle. The large percentage of losses and waste contained in food and drink supply chains can be explained by this heavy involvement of start-ups in the biological cycle. Approximately one-third of the food generated globally for human consumption is lost or wasted every year, according to the Food and Agriculture Organization (FAO), which provides plenty of opportunities to convert such waste into useful products.[2]

It is important to highlight this strong presence in the biological cycle due to multiple value models (where sequential cashflows can be created from the use of waste from one process as a resource in another) that tend to be mainly adopted by start-ups. For example, a coffee company that generates coffee revenue, its core industry, can also generate revenue from the waste-fed mushrooms, and whatever is leftover can be used as animal feed after harvesting the fungi. Such innovative ways of generating value are rarely implemented by existing businesses because they want to stay focused on their core product. [3] This is one more strong reason why start-ups, can become leaders in the circular transition of the EU.

Circular start-ups growth & policymakers’ role

It is a fact that, because of their early stage of development, market growth for circular start-ups is still at an early stage. Furthermore, circular start-ups should follow a variety of approaches to optimize their contribution to help maximize their transition towards the CE model. Others concentrate more on the supply chain, aiming to promote more circular activities to be followed by their business partners. In some situations, this can also lead to mergers and acquisitions, the legal, organizational and/or financial incorporation, by friendly or aggressive takeovers or joint ventures, of circular start-ups into existing companies’ own organizations.[4]

In establishing a favourable climate for circular start-ups in different ways, policymakers play a critical role, while also leading to the adoption of the wider CE agenda:

• Training opportunities and financial support (in the form of grants, low-interest loans or business incubators) may help circular entrepreneurs develop new designs and products and gain access to funding to broaden their activities and raise awareness of the brand.
• By removing regulations that hinder the implementation of CE activities, regulatory barriers frequently faced by circular entrepreneurs and large developed corporations alike can be minimized without inherently breaching the primary objectives of these regulations.
• Use of tools to raise consumer demand for the goods and services of circular start-ups, thereby helping those companies scale up and benefit from economies of scale. They may, for instance, introduce some favourable scoring requirements for tenderers into public procurement that integrate circular start-ups into their bid. Adjusting relevant tax policies could also be used to promote circular goods.
• B2B network facilitation will assist to consolidate collaboration between circular start-ups and existing companies.

[1] https://www.uu.nl/sites/default/files/disruptors_circular_start-ups_uu_e-version.pdf

[2] http://www.fao.org/food-loss-and-food-waste/flw-data

[3] https://www.uu.nl/sites/default/files/disruptors_circular_start-ups_uu_e-version.pdf

[4] https://www.researchgate.net/publication/336078237_A_Typology_of_Circular_Start-Ups_An_Analysis_of_128_Circular_Business_Models